June 24, 2016 by Ed Kennedy
Brexit: 7 Economic Questions now the UK voted to leave the EU
The United Kingdom will soon invoke Article 50 of the Lisbon Treaty and begin the 2 year process of removing itself from the EU. Here are 7 big questions that are now being pondered in the UK, EU, and around the world.
What sort of new economic deal shall Britain get from the EU?
Once Britain leaves a new trade deal between the UK and Europe will need take the place of its current single market arrangement. While the UK remains a major global economic power – and one that will remain attractive to trade with the EU – the reality is EU leadership does not want to reward a leaver. This means a hard bargain for the UK is coming, the question is just how hard it will be.
What approach will Britain take to global economics?
While the exit from the single market shall pose challenges it shall also allow Britain chance to pursue trade agreements with other nations around the world more freely. In this regard, while trade with Europe shall also remain crucial to the UK, so too must a new approach to trade be sought.
How shall it manage new relationships in a post-1973 world?
When the UK joined the EU Common Market in 1973 the economic landscape of the world as its know today was vastly different. In the years since Japan climbed to stratospheric heights before the bubble burst in the late 80’s and brought it back to earth. Germany reunited and emerged as the unquestioned economic power of Europe. Then there is China, who in 1975 was the 9th largest economy in the world by nominal GDP – and it is now 2nd largest, and by some measures the biggest.
All up, though this can be viewed as a time of opportunity for Britain it is also one of much challenge for the last time it looked upon the world with a EU-free mindset. Yet, there also are now new challenges at home
PM Cameron says he’ll go but how long will he stay?
Pro-Remain campaigner Prime Minister David Cameron has indicated in light of the decision he shall step down – and offered a date of October for a new PM to be in place – but at the same time will stay on for the immediate future as a point of stability amidst the uncertainty.
The problem posed here is political transitions of prime ministers rarely work out smoothly in British history. So, though Cameron is in no rush to leave, should it be felt his steady hand is one that instead is getting in the way. This is especially so because..
How shall Westminster navigate relations between UK member nations?
One of the offerings to Scottish voters during the independence referendum last year was a decision by Scotland to leave the UK would also see it leave the EU – and with it uncertainty as to when a newly independent Scotland would win admission as a new nation. With Brexit that offering has now fallen flat, and already signification has emerged that the independence issue is once again live in UK politics given the majority of Scottish voters supported a remain vote.
What’s more, with Brexit to pose a challenge to Northern Ireland where the majority voted to remain in the EU shall post a challenge as to what sort of new deal could be struck there, with calls even emerging for a reunification ballot among the two Irish nations. All this signifies uncertainty ahead.
What will Breexit mean in the mid term for the global economy?
Across the world the impact of Brexit will be felt with it the British Pound, the Euro, and other currencies fluctuating widely in the past 24 hours. Accordingly, this can be expected to continue for the near future. In the distant future – say 2 years from now with a UK exit from the EU well underway – contingency plans and formulated responses to this decision can be expected to have been implemented (for better or worse).
In the mid term though, the impact of Brexit across the next couple months shall be crucial. Beyond Europe alone, Asia shall be notable, with numerous British companies retaining strong business links in Hong Kong, with Japan’s Abenomics established to rejuvenate the Japanese economy with currency devaluation the surge of the Yen in response to Brexit is bad news for Tokyo, and the degree to which Australian and New Zealand businesses – who would’ve previously established a base in the UK if seeking access to the EU market – shall now potentially look for a Euro HQ in Ireland, Germany, or France, shall now all be in question.
The bottom line
With the apparent turbulence ahead it is possible in the days and months ahead many UK voters may ask ‘what if we voted to remain in the EU?’ Though this is a consideration, the reality many leavers shared the view of UKIP leader Nigel Farage – who held “’win or lose this battle, we’ll win this war” – the potential for this issue to have reared its head once again in years ahead loomed possible. Just the same as now the question is being asked could Britain one day rejoin the EU? (Yes it could but not easily)
Ultimately, in the UK, the EU, and beyond broader political issues about economic growth, the cost of living, and immigration shall continue to loom large. Just the same as these issues were core to the Brexit debate, so too do global markets now look over the Atlantic where the upcoming US presidential election brings with it the potential for its own market turbulence and uncertainty.
Ed Kennedy is a journalist and web designer proudly from Melbourne, Australia. Say hi to Ed via firstname.lastname@example.org or on Twitter @Edkennedy01