Long Live Brexit!

Brexit has often been called a fatal mistake, and rightfully so. Especially economically, the UK has put itself in the most difficult situation it has ever been. The following question arises: does the European Union benefit from a potential Brexit deal? I personally suppose it does. There are various positive aspects to this decision, which I will discuss in this opinion piece.

“Britain isn’t just losing Brexit. Europe is wining it.”- Stephen Paduano, journalist for Foreign Policy

A popular opinion by the pro-leavers is that it will be Europe that will suffer on an economic level from the fact that the UK is leaving the European Union. This opinion, however, couldn’t be further from the truth. Of course it is a well-known fact that Member states could suffer economically from the consequences of the UK leaving. For the Netherlands, for example, it could eventually lead to a reduction of their economy by 1.2%. (Partington, 2018)

However there are far more benefits for Europe when it comes to the UK leaving. According to the Financial Times, the Brexit deal will result in a higher growth in export and saving rates. This year, the EU’s export rate will increase by 4,5% which is 1,4% higher than the UK’s. The saving rates will grow due to the fact that EU households spend less as a proportion of what they earn compared to the UK, which eventually results in higher saving rates for the EU.
In addition, the EU’s economic growth is currently faster than the UK. (Romei, 2019) The EU commission expects that this will remain the case for the next year. From this it can clearly be concluded that the EU is not economically dependent on the UK.

It will be the UK, that will suffer the most economically from its decision. The reality is that businesses that are currently based in the UK are looking for opportunities elsewhere in Europe. Frankfurt for example, is considered as a popular city full of upcoming business opportunities. (Ringg, 2018)
Another phenomenon is that numerous UK investment banks are moving. This will lead to thousands of job opportunities overseas which will contribute to a significant economic growth on Europe’s mainland. (Paduano, 2018)

Neighbour Ireland has turned into the best substitute by controversially offering lower taxes, less regulation and access to the single market. Ireland’s present tax rate lies at 12,5% which is currently one of the lowest tax rates in the whole of Europe. This makes Ireland a very interesting place for companies to start new businesses

It will be very hard for UK employers to undertake any business in one of the thirty countries that make up the European Union and the European Economic Area. Many factories in the UK are letting go their staff at the moment. One of today’s most important industries, the technology sector, is also shrinking in the UK. Technological businesses are leaving since they feel the UK no longer has access to foreign talent and financial assets.

The industry in the UK that will suffer the most from Brexit is the food processing industry. Farms and processing businesses depend on a workforce of 40%, consisting of EU born citizens, that will have to leave due to Brexit.  

The single market had various of advantages for the UK, which the country will of course try to preserve. However as Merkel has often stated, “there is no room for cherry picking”. The UK shall have to face the consequences of not having any negation power. This all paints a very uncertain picture for the future of their economy. Especially since a recent article admitted that the UK government will fail to roll over trade deals with the EU and other third countries (Fox, 2019)

Looking at the relationship between the UK and the EU, it is clear to say that the UK has always had a hesitant position towards the EU. Throughout history, the UK has consistently opposed the ideas of the EU, while the EU has always tried to take the UK’s wishes into account. Since the country’s admission, it opted out on several key parts of the EU legislation and of course the Monetary Union. In the end, it has been a one sided relation that has to stop. Europe should focus on what it has and the many opportunities the Brexit deal can bring, such as job opportunities and higher saving rates.  Brexit should thus rather be seen as a celebration; the further integration of Europe can finally begin.

References

Fox, B. (2019, February 12). UK admits it will fail to roll over EU trade deals. Opgehaald van Euractiv: https://www.euractiv.com/section/uk-europe/news/uk-admits-it-will-fail-to-roll-over-eu-trade-deals/

Paduano, S. (2018, October 17). Britain isn’t just losing Brexit, Europe is winning it. Opgehaald van Foreign Policy: : https://foreignpolicy.com/2018/10/17/britain-isnt-just-losing-brexit-europe-is-winning-it/

Partington, R. (2018, July 19). No-deal Brexit would harm EU countries as well as UK, warns MK. Opgehaald van The Guardian: https://www.theguardian.com/business/2018/jul/19/no-deal-brexit-would-harm-all-european-countries-warns-imf

Ringg, S. (2018, October 3). Japan waves goodbye to UK as “gateway to Europe” post Brexit. Opgehaald van Bloomberg: https://www.bloomberg.com/news/articles/2018-10-03/japan-waves-goodbye-to-u-k-as-gateway-to-europe-post-brexit

Romei, V. (2019, January). What will the EU look like after Brexit? Opgehaald van Financial times: https://www.ft.com/content/dec6968c-f6ca-11e7-8715-e94187b3017e