Brexit Consequences for the UK, the EU, and the United States
How Brexit Will Affect You
Brexit is the June 23, 2016, referendum where the United Kingdom voted to leave the European Union. The residents decided that the benefits of belonging to the unified monetary body no longer outweighed the costs of free movement of immigration. Brexit is the nickname for "British exit" from the EU.
On March 29, 2017, the U.K. Prime Minister Theresa May submitted the withdrawal notification to the EU. It gave the United Kingdom and EU until March 29, 2019, to negotiate the following six main points:
- The U.K. does not want to continue allowing unlimited EU immigration.
- The two sides must guarantee the status of EU members living in the U.K., and vice-versa. The same applies to work visas, which are not currently required.
- The U.K. wants to withdraw from the European Court of Judgment.
- The U.K. wants a "customs union" with the EU. They will not impose tariffs on each other's imports. They are free to tax imports from other countries.
- Both sides want to continue to trade.
- The EU will require a cash settlement from the U.K. to meet existing financial commitments. Recent negotiations put the figure at .
The withdrawal plan must be approved by the European Council, the 20 EU countries with 65 percent of the population, and the European Parliament. Then the United Kingdom will copy the EU laws into its laws, which can later be amended or repealed. In March 2018, many laws would be similar to EU laws so the U.K. can keep trade and capital access.
The the EU quickly with no restrictions other than a new free trade agreement. The soft Brexit would allow the U.K. to retain complete access to capital but restrict the flow of immigrants. It would remain in the customs union. The to live and work in the country. It would also abide by the European Court of Judgment and EU laws without being allowed to vote. That is similar to Norway's relationship with the EU.
On March 19, 2018, the United Kingdom and the EU that is similar to a soft Brexit.
On August 9, 2018, the European Council offered the U.K. a "." It would keep the U.K. in the single market for trade while allowing it to restrict immigrants. In return, the U.K. must abide by all EU environmental, social, and customs rule. The deal is what the British dependency of Jersey already has. The European Commission and Parliament are opposed to such a plan. It would avoid borders between Northern Ireland and the U.K. or Ireland.
until the two parties agree on the terms of the U.K.'s withdrawal. They must agree on how to avoid a hard border within Ireland.
Consequences for the UK
The main advantage for the United Kingdom is that it can again prohibit the free flow of people from the EU. That was the primary reason people voted for Brexit. They were concerned about an increase in refugees from Africa and the Middle East.
The United Kingdom will be able to tax without following EU guidelines. It also won't have to pay EU membership fees.
The main disadvantage is that . The U.K.'s Treasury Chief Philip Hammond reported that his country's growth would slow to 2.4 percent in 2018, 1.9 percent in 2019, and 1.6 percent in 2020. He forecasts that exit fees will cost an extra 3 million pounds over two years.
Another major disadvantage is the potential loss of Britain's tariff-free trade status with the other EU members. Tariffs raise the cost of exports, making British products higher-priced and less competitive than other EU countries' exports.
It also increases prices of imports into the United Kingdom. comes from the EU. Higher import prices would create inflation and lower the standard of living for U.K. residents. If there is no deal before the March 2019 deadline, Britain due to customs delays. The U.K. is vulnerable because an extreme heat wave and summer drought caused by global warming has already reduced food output.
for The City, the U.K.'s financial center. It would no longer be the base for companies that use it as an English-speaking entry into the EU economy. The C reported that 5,000 jobs could be lost. That could lead to a real estate collapse in The City. Many new office buildings are under construction. They may sit empty if The City's financial services industry moves elsewhere.
The United Kingdom will lose the advantages of EU’s state-of-the-art technologies. The EU grants these to its members in environmental protection, research and development, and energy.
Also, U.K. companies risk losing the ability to bid on public contracts in any EU country. These are open to bidders from any member country. The most significant loss to London is in services, especially banking. Practitioners will lose the ability to operate in all member countries. This could also raise the cost of airfares, the internet, and even phone services.
Brexit will hurt Britain's younger workers. Germany is projected to have a labor shortage of two million workers by 2030. Those jobs will no longer be as readily available to the U.K.'s workers after Brexit.
Trade and travel in the island of Ireland will become more complicated. Northern Ireland will remain with the United Kingdom, while southern Ireland remains a part of the EU. the EU proposal that there be a customs border between Northern Ireland and Great Britain. The United Kingdom is Ireland's second biggest export destination.
But a customs border between Northern Ireland and the Republic of Ireland could . It was a 30-year conflict in Northern Ireland between mainly Catholic Irish nationalists and pro-British Protestants. In 1998, it ended with the promise of no border between the north and south Irish island.
It would also force across the border to go through customs on their way to and from work. The that the United Kingdom propose a solution. Otherwise, it must agree to the backstop of no customs border on the Irish isle. That would put the border between Northern Ireland and Britain.
Under Brexit, the . First, Scotland will try to stop Brexit by voting against it. But Scotland doesn't have the authority to do that. It could then decide to join the EU on its own, as some countries within the kingdom of Denmark have. Last but not least, Scotland's leader has also warned she may call for another referendum to leave the United Kingdom.
Consequences for the EU
It could take up to two years to negotiate the terms of a Brexit. Initially, some EU members asked for an earlier withdrawal. Germany's Chancellor Angela Merkel urged patience to allow the best outcome for all.
The Brexit vote could strengthen anti-immigration parties throughout Europe. If these parties gain enough ground in France and Germany, they could force an anti-EU vote. If either of those countries left, the EU would lose its most robust economies and would dissolve.
On the other hand, new polls show that many in Europe feel a new cohesiveness. The U.K. often voted against many EU policies that other members supported. International Monetary Fund Director Christine Lagarde said, “The years are over when Europe cannot follow a course because the British will object.” She added, “Now the British are going, Europe can find a new elan.”
Consequences for the United States
The day after the Brexit vote, the Dow fell 610.32 points. Currency markets were also in turmoil. The euro fell 2 percent to $1.11. The pound fell. Both increased the value of the dollar. That strength is not good for U.S. stock markets. It makes American shares more expensive for foreign investors. As a result, gold prices rose 6 percent from $1,255 to $1,330.
Brexit dampens business growth for companies that operate in Europe. U.S. businesses are the most significant investors in Great Britain. They invested $588 billion and employed more than a million people. These companies use it as the gateway to free trade with the 28 EU nations.
Britain's investment in the United States is at the same level. That could U.S./British jobs. It's unknown exactly how many are held by U.S. citizens. The uncertainty over their future will dampen growth.
Brexit is a vote against globalization. It takes the United Kingdom off the main stage of the financial world. It creates uncertainty throughout the U.K. as The City seeks to keep its international clients. U.S. stability means London's loss could be New York's gain.
In June 2016, for the referendum. He wanted to stop pro-Brexit opposition within his Conservative party. He thought the referendum would resolve the issue in his favor. Unfortunately for him, the anti-immigration and anti-EU arguments won.
Most of the pro-Brexit voters were older, working-class voters in England's countryside. They were afraid of the free movement of immigrants and refugees. They felt that EU membership was changing their national identity. They didn't like the budgetary constraints and regulations the EU imposed. They didn't see how the free movement of capital and trade with the EU benefited them.
Younger voters and those in London, Scotland, Wales, and Northern Ireland wanted to stay in the EU. They were outnumbered by older voters who turned out in droves.