BREXIT: RAMIFICATIONS
ON THE UK AND THE EU
An Academic presentation by
Dr. Nancy Agnes, Head, Technical Operations, Tutors India
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Today's Discussion
OUTLINE
Introduction
Implications of Brexit on the UK and EU
Impact on the UK
Growth
Jobs
Impact on the EU
Conclusion
INTRODUCTION
31st December, 2020 was officially the last day of the transition period that allowed the
United Kingdom (UK) to make their exit from the European Union (EU).
The end of this transition period which was a rather lengthy procedure was overseen by
two Prime Ministers and was also bogged with many extensions and delays, which split
the UK (Shannon Schumacher, 2019).
The process of making an exit from the EU was not an easy process and was quite
intricate.
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erstwhile Prime Minister of the UK – Theresa May, subsequent to the will of the
voters’, processed the notification for withdrawal as under Article 50 to the EU on 29th
March, 2017.
An agreement for withdrawal was deliberated with the EU which presented their new
terms of association. However, since the Parliament was divided, she failed to acquire
an approval (Nigel Walker, 2021).
May was succeeded by Boris Johnson who took over from her as the Prime Minister
of the UK.
The Conservative party of Johnson was successful in subsequently acquiring a majority
during the royally mandated election which was held on 12th December, 2019 (Baker &
Uberoi, 2019).
This facilitated Johnson to acquire the necessary approval from the Parliament for the
withdrawal agreement which was negotiated with the EU.
The agreement received the required legislative royal assent on 23rd January, 2020. It
was on this date that the queen agreed to convert this bill into a law (UK Parliament,
2021).
Formally, the UK made it exit from the EU on 31st January, 2020 but they moved into a
period of transition which eventually came to an end on 31st December, 2020.
Agreement with regards to the EU-UK Trade and Cooperation was accepted on 24th
December, 2020 and signed six days later (European Council, 2020) i.e, on the 30th
December, 2020.
Everything said and done, now that the UK has officially made its exit from the EU,
therefore it is necessary to comprehend the insinuations of this exit for the UK as well
as the EU.
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IMPLICATIONS
OF BREXIT ON
THE UK AND EU
The decision of the UK to exit the EU has for
one created a lot of uncertainty with regards to
the future of relationships in terms of trade
following Brexit.
It has been stated by Klaus Schwab (2017) the
financial repercussions arising from the UK’s
exit vote could already be felt. In addition, there
is tremendous scope that such impacts would
definitely increase following the implementation
of Article 50 from the Lisbon Treaty.
The Bank of England has remarked that owing to Brexit, a material slump has been
witnessed in the prices of certain European area risky assets, for example, bank
equities, where a drop in prices would be aggravated through concerns pertaining
to the profitability of certain banks in the Europe region (Bank of England, 2016)
and this was even before the leave vote was approved.
IMPLICATIONS OF BREXIT
ON THE UK AND EU
Brexit has already made a tremendous impact on the UK. There has been a drastic
slowdown in the UK economy and several organizations have shifted their
headquarters to the EU.
Needless to say it has also impacted jobs and growth.
GROWTH
The growth of the economy has been severely impacted by Brexit and this is largely
attributed to the uncertainty that revolves around the eventual outcome.
The economic growth of the UK slowed from 2.4% during 2015 to 1.0% during 2019
owing to uncertainty from Brexit.
It has been estimated by the government in the UK that the growth of the UK would
be further lowered by 6.7% over the forthcoming 15 years.
Though the prevalent terms of free trade were assumed, immigration continued to be
restricted (Daniel Harari, 2019).
Figure 1: Long-term GDP Impact from Brexit in the UK Source: Daniel Harari, (2019)
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JOBS
Young workers in the UK were most hit by Brexit.
A shortage of 3 million skilled workers will be experienced by Germany by 2030 (The
Local, 2017).
However, following Brexit, these jobs might not be readily available to workers from the
UK. Further, employers across the UK are finding it challenging to find candidates as EU
born workers left the UK, and their numbers dropped by 95% during 2017.
This has made a massive impact on low-skilled and medium-skilled occupations largely.
Brexit is largely deemed as a vote that was not in favour
of globalization and as an outcome it has weakened the
forces across the EU that were in favour of incorporation.
IMPACT ON THE
EU
Members from the right-wing anti-immigration parties
were especially anti-EU within Germany and France.
If they managed to gain much ground, they would be in a
position to compel an anti-EU vote.
In case either France or Germany makes an exit, the EU
stands to lose its most robust economies and it would
lead to a dissolution of the EU as such.
At the same time, a large segment of citizens from the EU continue to extend their full
support to the union.
The Pew Research Center conducted an extensive research throughout ten
European nations has revealed that almost 75% of the respondents who participated
in the research were of the belief that peace was promoted by the EU, while 55%
opined that the EU supported prosperity.
Also, a third of the respondents perceived a diminishing role of the UK (Wike et al.,
2019).
CONCLUSION
In short, it has been observed that following the referendum of the UK to exit from
the EU, the standard measures are indicative of a substantial growth in the level of
uncertainty.
Furthermore, it has been noted that there is high scope that Brexit would impat not
just the UK but also the economy in other parts of the EU via diverse channels of
transmission, for example; trade, immigration, uncertainty and investment.
Moreover, it is clear that in the near future, the major brunt of Brexit would prove to
be increased uncertainty in terms of economic as well as political aspects.
Such issues have the potential to reduce the pace of investment growth and private
consumption along with foreign trade, essentially within the UK; though the impact
of Brexit would also be felt majorly within the EU too.
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