Impact of brexit on european union
After many delays and extensions, the U.K. finally left the European Union on 31 December 2020, and with that, Brexit officially came to an end. It is considered a momentous event in the history of Europe. With its withdrawal from the E.U., the European Union has been dramatically affected. The impact of Brexit has been felt by both people and businesses alike. Let us look at the impact of Brexit on E.U.
Weaken Forces in the E.U. that Favor Integration
People who voted for Brexit felt that immigrants and refugees from developing countries were taking their jobs and benefits. They were the cause of unemployment and housing shortages, putting a strain on social and public services in the U.K. They believed that once the U.K. leaves E.U., there will be more jobs for them. So, it is safe to say that Brexit is a vote against globalization. As a result, U.K.’s withdrawal from the E.U. has weakened forces in the E.U. that favor integration.
As the U.K. has left E.U., members of right-wing, anti-immigration parties, particularly in France and Germany, are anti-EU. Emboldened by the U.K., they could force an anti-EU vote if they gained enough ground, weakening forces in the E.U. that favor integration. If either of those countries left the European Union, the E.U. would lose its title of being the most robust economies and would dissolve.
However, all is not lost as the majority of E.U. citizens still strongly support the union. In a Pew Research Center survey across 10 European nations, almost 75% say the E.U. promotes peace, and 55% believe it supports prosperity. This means that it is highly unlikely that other countries would choose the same path as the U.K.
End to Free Movement in the U.K. for E.U. Nationals
Unlike before, when European nationals could move freely in the U.K., now things have changed. People from other E.U. member states already living in the U.K. must have documents from the U.K. government specifically allowing them to remain in the U.K.
If you are traveling between the E.U. and the U.K., you must show your passport at the border. People traveling for business have to meet additional requirements. If they do business regularly in an E.U. country, they may need to set up a local subsidiary. However, many services like broadcasting, telecommunications, and electronic services, may be taxed.
Income and Employment Rate in the E.U. will Get Hurt
The U.K. and E.U. ties were growing over the past 30 years. The bond between them ran deep, and the U.K. was among the E.U. 27’s largest trading partners. It accounted for about 13% of its trade in goods and services. But with the withdrawal of the U.K., the income and employment rate in the E.U. will get hurt.
IMF estimates that in an agreement where the U.K. and the European Union settle on a standard free trade agreement (FTA) where tariffs on goods trade are low but with higher non-tariff barriers, the EU-27 real output will be lower by 0.8%, and employment by 0.3%, in the long run than in a scenario where there was no-Brexit once all transmission channels are accounted for. If both the parties default to WTO rules, the decline in real output relative to no-Brexit would be even more significant, at 1.5% in the long run, and employment would fall by 0.7%.
The Aggregate Economy of the E.U. Will Grow at a Slower Pace
After Brexit, E.U. is going to miss Britain’s strong voice favoring market solutions and economic efficiency. The presence of the U.K. meant that there was a free market voice in the E.U. Without the U.K., the E.U. will be more protectionist. There are many experts who agree that the aggregate economy of the E.U. is likely to grow at a slower pace compared to the scenario when the U.K. was still part of the E.U. However, many others believe that though E.U’s economy will be affected by Brexit, it will face less damage than the U.K. because of its large size.
E.U. Nationals More Likely to Feel Unwelcome in the U.K.
Brexit has left many E.U. nationals feeling vulnerable and sometimes unwelcome in the United Kingdom. A large population of E.U. nationals reside in the U.K. Earlier, there were no rules for the European nationals to move within the U.K. But now they need to have a passport and relevant documents to stay in the U.K. Also, after Brexit, it has become an us versus them situation where the E.U. nationals feel like they are outsiders and consider them unwelcomed in the U.K.
Long Term Impact of Brexit on European Union
It will be challenging to measure the long-term impact of Brexit on the European Union, primarily due to the slump in exports caused by COVID-19 last year. As per the Bank of England, a long-term reduction in trade with the E.U. is to be expected. What other long-term economic impact of Brexit on European Union will be there, only time will tell.
Have you been looking for more business opportunities? Well, PSP.Academy is the best place to find it! We have a team of experts who can help with marketing and advertising your company in order to get those new clients coming through the door. Register Now to eminently propel and drive your prospect generation and conversion rates so they’ll be sky high before long!
