Professional Documents
Culture Documents
00135579
Final Paper
In 2016, Europe and the world suffered one of the biggest commotions of
history as Great Britain decided to leave the European Union. This departure (usually
called Brexit) has been one of the most polemic process of the century and has reasons
to be so. To Europe, Brexit will carry major drawbacks, given the fact that members of
this organization doesn’t only depend from each other politically, but economically and
socially too, and that Britain has been one of the wealthiest and most important
members of this integration almost since the rise of the organization. However, the
remaining members are not as helpless as it seems, and still counting with the major
advantage of the international integration as a lifesaver when the tides of the predicted
The one who called the tides was Great Britain, whose electors chose to leave
the European Union three years ago in a questioned referendum. The option of leaving
won by the minimum margin of 51,9 to 48,1 percent, and the authorities have proved
that handling the reality of the Brexit is far more complex that it seemed at first. Britain
is now in a complicated spot, when turning back is not an option and the process to get
an agreement with the European Union is far from reaching to an end. Therefore, on the
contrary of what its supporters may say, the departure of Britain from the European
Union soon will prove to be far more damaging to the English country than to the
concerns to economics, social welfare of the citizens and politics, as will be analyzed in
affirmation can be done: “Under all plausible scenarios, Brexit will male Britain poorer
compared with remaining in the European Union” (Van Reenen, 2016 ). Since 2016, the
deacceleration of its growth. This is not so rare considering the fact that companies and
investors take politics as a sort of weather vane pointing towards the direction that their
money should follow. When winds of instability blow in any country, great portions of
the economy tend to restrain their movements, causing a general slowdown that can
grow into a recession. British economy started this process right when the results of the
referendum where announced, and even though the most optimistic may say this was a
cyclical movement of the economy, statistics show that this reaction of the economy
was an initial response towards the uncertainty that this event provoked. We may say
that this uncertainty was caused by the fact that nobody saw Brexit coming, so, it were
A proof of this is the collapse of the Sterling from $1.50 to $1.33, within the
hours following the results of Brexit. As shown in attachment 1, the initial reaction of
the markets after knowing the results was negative, shown in the drop of the equity
markets, which mean “the buying and selling of shares” (Oxford, 2019). Also, the bond
interest rates rose considerably, which often is a matter of concerning, considering the
fact that this is a measure that rises with the risk of a country. However, the initial
reaction of the markets somehow stabilized with time but letting us see what the littlest
perception of instability can carry. However, instability was not just a problem of the
first days of Brexit, this issue being prolonged by the several extensions of the
negotiation process for a leaving agreement, a process which will be key in shaping
Europe’s future economy. The sole decision of leaving has created uncertainty, and
economics does not go along with uncertainty. The economy of Great Britain was also
damaged by the fact that several international companies had their headquarters inside
its borders, taking the English country the doorstep to the rest of Europe. Now that this
is not true anymore, companies have shown their discontent about Brexit by moving
executives decided to move to Amsterdam. While Brexit keeps on tracks, we can expect
more and more of these migrations, especially if the departure of Britain happens
without an agreement.
Now is time to get into the possibilities that Britain and the remaining members
of the European Union may take to lessen the effect of Brexit, that is to say the option
the trade costs that leaving will imply to Great Britain. The leaving with an agreement
(often called Soft Brexit) will leave Britain in a similar trading stance to what Norway
shares with the European Union. Norway, as part of the European Economic Area
trades freely with the European Union with no tariffs to any transaction. However, its
status of non-member of the European Union’s Customs Union makes Norway trade
with the handicap of the non-tariff barriers, “such as rules-of-origin requirement and
some of the benefits that always held, but also, will lose some, inevitably rising the
trade costs with Europe, but not as high as an exit without a deal. However, it is
important to take in account that any agreement that Britain can get with the European
Union has been planned as temporary, just as a transition between the current and the
new status, what ever it might be, so it can be assumed that, gradually, a total Brexit
may happen, as a total rupture between Britain and the European Union.
often has the requirement of allowing free movement of labor with the countries that
hold free trade with them. They did so with Switzerland, even when they maintain free
trade in goods, but not in banking or other similar services. Considering the fact that one
of the main arguments for the leaving was the immigration, a Hard Brexit is what seems
more likely, and its implications might be worse for the country. Under a Hard Brexit,
Great Britain will see its trade costs risen much higher than in a soft scenario. A Hard
Brexit would certainly imply an English departure not only from the European Union,
but from the European Union’s Custom and Single Market, both entities that assure free
trade. Without the free trade agreement, Great Britain will face the same tariffs and
barriers that any other country who does not have any agreement with the European
Union.
Some Brexit supporters declare that a Brexit without an agreement still being
more beneficial for the country. It is important to take in account that one of the main
arguments for the leave was the inability of the country to decide over their trade policy.
Within the European Union, Great Britain was not able to negotiate its own trade
agreements and their own rules of market. Even when Britain had the Sterling as their
own money, Brexit supporters claimed that the country was negated the possibility to
trade by their own, given the fact that European Union always trade as a block.