Being that it is almost one year after the European Union Referendum and two months after the United Kingdom made an intent declaration to withdraw from the European Union, much confusion has been dominant on the potential economic impact that the action might have taken. The IMF, the OECD, and the UK Treasury all came up with a published focus on the effect that Brexit could have brought to the economy during the Referendum campaign, as the arrangement was made on the forecasting bodies. Some of the short-term predictions on the impact of the decision made to move away from EU have hence been wide in the mark. On the other hand, some of the negative prediction that has been raised on the economy after 2019 is broadly believed. However, some of the negative expectations have not been enough in demonstrating either the UK government from its focus to come out from the European Union or the majority of the United Kingdom public opinion.
However, the negative expectation for the long-term effect of Brexit is majorly capable of creating a great influence when it comes the negotiation between EU and United Kingdom authorities. The clear impact is experienced in Northern Ireland and Scotland who wish on coming out of United Kingdom and remaining to be part of the EU. Focusing on the impact, Brexit in the UK has not only affected the immigration sector but has also made a significant impact in the United Kingdom trade partnership. Being that European Union is the most significant UK trade partner around a half of the United Kingdom trade is operating within the European Union. One of the benefits that UK has experienced from being a member of EU is the reduced trade cost, by making goods and services to be cheaper for UK consumers and allowing the United Kingdom businesses to export more
Some of the consequences that Brexit will bring along is lowering of trade between the United Kingdom and the European Union as a result of nontariff barriers and higher tariff. Additionally, United Kingdom would not experience many benefits from market integration within the European Union with the significant economic advantage of leaving the European Union is a lower net contribution to the budget of the European Union. The estimated impact of Brexit on the UKs living standards and trade, in this case, is identified with quantitative models which involve an incorporation of various channels through which trade impacts firms, consumers, and employees by mapping from welfare to trade data. Through the quantitative model, the model can take into account the impact of Brexit on the United Kingdom and the rest of the globe. According to the statistics raised by the model, it is optimistically predicted that in the next ten years after Brexit, the intra European trade cost will fall at twenty percent faster rate than the rest of the world (Emerson & Pelkmans,2017). Contrary, the pessimist, states that the European Union trade cost will continue by going up to forty percent faster than the rest of the world.
The main question which has created considerable uncertainty is that after Brexit, would the UK gain better trade deals with non-European Union countries? It would not have to make many compromises with the European states. However, it would hence mean missing out on the existing Japanese and United States deals which forecast on improving the higher income. Additionally, it is not clear on whether some significant regulatory benefits come out from Brexit since the United Kingdom is having one of the OECDs least labor markets and regulated products. The large majority when it comes to economic forecasts have made a firm conclusion that Brexit will create a severe damage to the economy of United Kingdom.
The economic consequences of coming out of European Union will be dependent on the policies that the United Kingdom will implement after Brexit. However, the UK economy will be affected by lower trade as a result of the integration with EU countries more than the contributions achieved to the budget of the European Union.
Emerson, M., Busse, M., Di Salvo, M., Gros, D., & Pelkmans, J. (2017). An Assessment of the Economic Impact of Brexit on the EU27. 22 March 2017.
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