“Brexit” has been a hot topic the last few years. What is it, and how will it impact the rest of the world?
Most probably know the term is a short way of saying “British Exit” to describe the UK voting to leave the European Union. The idea had been simmering for a number of years. Great Britain joined the European Communities, which was primarily an economic organization, in 1973. The group re-branded as the European Union in November 1993. The name change was to recognize the shift in the group from being an economic group to a political group.
There was tremendous internal political conflict in Great Britain around the question of whether or not a referendum was required, or at least preferred, before the UK should take actions related to the EU. Finally, in February 2016, the British Prime Minister announced a referendum would be held in June of that year, with the single question, should Great Britain stay in the European Union, or leave. The vote was 51.89% to leave, and 48.11% to remain. The withdrawal then was scheduled for 11 PM London time on March 29, 2019. The UK and EU then set the parameters for negotiations of the exit.
As of now, no deal has been finalized. The parameters the Prime Minister has presented has not received approval from the British Parliament. There is an option to extend the time to negotiate. With that possibility far from certain, everyone is preparing for a British exit with no deal in place. This could have some significant ramifications. This would eliminate the 21-month transition period that was in the original plan. Here is how that would affect some aspects of life:
- Trade costs – Britain would become subject to EU external tariffs, which businesses would likely pass on to consumers in price increases. Further, the possibility of goods manufactured in Great Britain may face extra review by the EU, which could motivate some producers to relocate from Great Britain to somewhere inside the EU.
- Immigration – there could be major delays in approvals of people moving from Great Britain to the EU and from the EU to Great Britain. Citizens of one unit that are living and working in the other may be impacted, but no one has any idea how at this point.
- Money – Great Britain contributes to the EU budget, and that would end. However, some EU subsidies go to the UK, and those would go away. The combination of loss of those subsidies along with the trade ramifications have many British politicians worried about big job losses within the UK.
With the date of Brexit closing in, there is a lot of uncertainty of life after Brexit. At this point, most people hope for a deal to be struck, or for an agreement to extend the timeline. The world will be watching closely to see how everything unfolds.