End of an Era
The proponents of the Brexit deal have persistently maintained their position
that the UK will continue to stand on its unwavering position in the international
forum. However, their claims are more optimistic than the reality actually stands.
Brexit has been all the talks lately as a defining chapter in the four-decade long history of the European Union (EU). It stands for the on cards exit of Britain from the European Union, an economic bloc that served as an impermeable economic integration of 28 countries and stood sturdy in times of monetary and political fiascos like the Financial crisis in 2009 and the influx of refugees from the Middle East in 2015. It allows free trade and transit beyond borders and serves as an employment hub, deeming to be the most lucrative of the few economic agreements like NAFTA and SAARC.
However, in 2016 the majority British residents casted their opinion via a referendum to acquiesce a withdrawal from the EU; vote going 17.4 million : 15.1 million in favor of Brexit which was officially moved under Article 50 notification by then UK Prime Minister, Theresa May, to get the ball rolling in exiting the bloc.
The proponents of the Brexit deal, including the current prime minister of UK, Borris Johnson, have persistently maintained their position that UK will continue to stand on its unwavering position in the international forum. However, their claims are more optimistic than the reality actually stands. Despite remaining in one of the most profitable areas on the globe, Europe that is, UK has already started to witness tremors of an economic and political debacle. The UK economy has already started to project signs of stagnant growth; barreling from 2.4% in 2015 to mere 1.5% in 2018 as the uncertainty over the deals between the UK and EU loom in the air. The British currency also took a hit; pound sinking from $1.48 pre-referendum to $1.36 post-referendum.
The UK will be deterred on 3-fronts in effect of the exit: the foreign policy, ease of trade and labor force. UK has enjoyed a thorough foreign policy and has paved its way as an important figure in world politics, especially in Europe. However, after Brexit, UK contradicts its very own set notion of keeping their allies closer and quite possibly lose their supreme position in forums like the security council where their veto might not be as tensile after being a sole nation rather than being a member of a strong congregation. No longer will the UK citizens enjoy the freedom of movement throughout Europe and although the workers are allowed travel in this probationary period, unless Britain manages to extract a lucrative immigration policy, British labor will face considerable impediments in their work regime that might swell the British economy before it even gets a grip over its independent identity.
EU stands in a vulnerable position as well; given the exit of UK may incite the anti-immigration strata in other countries like Germany and France mainly due to their labor concentration being largely attributed to Britain. This corresponds to a very detrimental threat to the prosperity of EU where labor shortages may lead to a shed in production in most countries like Germany, being worlds 4th largest economy, is projected to face a shortage of close to 3 Million skilled workers over the course of the following decade and coupled with the imminent departure of Angela Merkle and a chaotic situation rampant due to the Covid-19 pandemic, bankruptcy and political chaos is very much plausible.
An underlying reality is the fact that British membership added weight to the decisions of EU throughout the Eastern Europe, Africa and Balkans. With Brexit, EU is susceptible to lose its collective reach and strength defining the supranational voice it enjoys over Trade policy and Human rights. The economic crumble in the future is easier to judge from the fact that just post Referendum, the Euro dropped a whopping 2% against the US dollar, evidently casting the weakening of the currency as well as the sentiments revolving around EU.
Rest of the international community won’t be affected directly though will take a noticeable shock following the British exit. UK stands as the 7th largest economy in the world and is hub to major investment from giants like US. Following the exit, UK will try to build ties with countries like China and US while also maintaining alliance with the commonwealth. Even in case of a Trade deal, UK will face tariffs as per WTO regulations which might inflame the UK’s economy with significant inflation, simultaneously denting international investment in UK. US stands one of the crucial Allies to UK, especially after World War 2, their interdependence has been significant. The $18.9 Billion trade surplus of US with UK reflect the colossal trade sync between the two countries.
The Brexit can swiftly turn this surplus into a deficit as an ensue to devaluation of Pound making the US goods expensive in Britain while UK goods cheaper in US. Moreover, countries like Russia have invested hugely in UK courtesy of it acting as a gateway to free trade with the rest of the EU countries. Brexit will dampen the growth of the Multinationals in UK and thereby pose a threat of a major pitfall in growth and an escalating chance of a bitter Global recession.
Despite of the complexities involved both pre and post Brexit deal, the most important question remains on the table, dependent on whether or not UK would be able to settle a comprehensive Trade Deal with the EU authorities or will it end up extending the Transitionary period. One thing is certain, however, that EU will turn more equivocal given UK’s huge impact relative to smaller standing of nations like Greece, will no longer deviate the Union. EU’s survival is possible if EU authorities negotiate a very tight deal with Britain, to avoid Brexit being conducive to other 27 nations to take a similar action in the future, already making a frenzy, implying how difficult it can get for any of the other countries to walk on the same lane. Lastly, Brexit might actually act in benefit to the world economy as UK will no longer be tied up to EU’s strict policies and if we resort to belief even half of what is narrated by the British premiers, UK might prove flourishing in terms of productivity and employment not only to Europe but for the rest of the world.