Once again, Brexit is making headline news… and not in the most reassuring of ways.
You may have remembered back in 2016 when the people of Britain voted to leave the European Union. The decision rocked the world. And the impending withdrawal has been looming in the world political and economic climate ever since.
The United Kingdom is still part of the EU as of November 2017. One can imagine why the UK’s departure has taken so long. The bureaucratic implications of such a secession are world-changing. So, naturally, millions of people around the globe are still wondering:
What will be the economic impact of Brexit?
Read on for the latest developments in the Brexit fallout and what it will mean for the rest of the world.
Brexit Ministers Resign Amid Draft Negotiations
If you had any prior convictions as to the effects of Brexit, they may have all gone out the window. The deadline for Brexit is due on March 29, 2019. But in the last few days, new challenges have risen in the battle to preserve the Brexit vision.
On November 15, 2018, members of Prime Minister Theresa May’s cabinet resigned. They include Brexit’s chief negotiator Dominic Raab and secretary Esther McVey. Their resignations come immediately after tense deliberations.
The British pound plummeted after news broke about the resignations. And now, uncertainty and doubt permeate Prime Minister Theresa May’s draft.
There was already doubt as to whether Parliament would approve the treaty. May insists that Brexit is still scheduled to go through on March 29, 2019. But with the resignations of Raab and McVey, May’s authority – and the future of Brexit – looks as shaky as ever.
How Did Brexit Happen?
You may be wondering what the events of November 15 will have on the economic impact of Brexit. But first, let’s backtrack a little and talk about how Brexit even happened.
At the height of Europe’s migration crisis, the United Kingdom found itself at a crossroads. UK citizens began to ask themselves:
Where does the future of the United Kingdom stand? Should it continue to be part of the EU’s single euro market with open borders and open trade? Or, should a future Britain hone in on its own economy, putting its own interests first?
The Brexit Referendum wasn’t a total landslide victory for conservative Britons. 51.9% of UK voters elected to leave the EU. 48.1% of Britons voted to remain.
The Economic Impact of Brexit
To understand what’s at stake, it helps to have a general idea of what the EU is and how it works.
Countries part of the European Union are all part of a single market. 19 of the countries under the EU use the euro currency. There are other countries that are part of the EU, even though they follow their own currencies.
Citizens of EU countries can move and work in other EU countries. The EU has its own parliament. It also follows an agreed set of rules regarding transportation, trade, and agriculture.
The Impact of Brexit on the UK Economy
Europeans living and working in the UK can continue to under the current draft. But the UK’s borders will become tighter, allowing in fewer European workers and refugees.
There will also be no border between the Republic of Ireland and Northern Ireland. Not only does this mean that the Northern Ireland Troubles will likely not re-erupt. It also means that workers can continue to commute between the border.
But many economists argue that trade in the UK will suffer immensely as a result of these tighter borders.
Britons and EU citizens will likely feel the effects the most. 64% of experts believe that the UK’s real per-capita income levels will be lower in the next decade. 57% of them also believe that the EU’s real per-capita income levels will also be lower.
Many of these expert panelists see an uncertain future for the UK after Brexit. But there’s a general fear that Europeans and UK citizens will be earning less money 10 years from now.
If Brexit does go through and the UK leaves the EU’s single market, experts believe the economy will slow. The gradual economic decline could even result in losses worth up to £70 billion.
Former cabinet members Raab and McVey were reluctant to sign off on the recent drafts to begin with. Their immediate resignations signify a protest against May’s plans for Brexit. Three other junior ministers resigned, as well.
Conservative Brexiteers believe that the current draft is not hard enough. Many believe it will be nearly impossible for the UK to truly break away from the EU.
McVey believes that May’s proposal will result in a loss of up to £39 billion owed to the EU. This is a fear that many have projected, with some experts suggesting that the UK would owe far more.
The Economic Impact of Brexit on the US
Brexit and the presidential election of Donald Trump may be completely different events. But they aren’t quite isolated, either. Both events show that many Britons and Americans are unhappy with the political establishment, as well as the economy.
Politics aside, what could the Brexit effect on the US look like?
A volatile global market would impact US mortgage rates. The US government could hold off on raising real estate interest rates for the time being. As a result, American homeowners could pay lower mortgage rates in the coming years.
Many Americans also invest a lot of their retirement in the stock markets. Drastic changes to the stock market due to Brexit could impact people’s retirements.
Exports from the US to the UK could spike. Depending on the future value of the British pound, it may become more expensive to travel to the UK, as well.
Right now no one knows for certain what the economic impact of Brexit will have on the UK and the world.
Hardliner Brexit supporters believe Theresa May’s current draft will hinder the UK. There’s even the possibility of new leadership rising in the UK’s Conservative Party. If that were the case, a more stringent Brexit could become a reality.
But if Prime Minister May’s draft does go through, the UK will officially leave the EU on March 29, 2019. And only then will we truly know the economic effects of Brexit once and for all.
If you’re planning to start a financial career overseas, it may seem like a turbulent time to do so. But never fear! By staying informed and knowing what you’re getting into, you can dominate in the world of finance. Even after a Brexit!
Educate yourself on the types of careers you can experience overseas. Check out this article for more information!