BREXIT

Introduction
On Dec. 31, 2020, the transition period for the United Kingdom (U.K.) to withdraw from
the European Union (EU), otherwise known as "Brexit," officially came to an end. This
marked the end of a years-long process that was overseen by two different Prime Ministers,
included several delays and extensions, and left the U.K. divided.1 2

Brexit was the nickname for "British exit" from the EU, the economic and policy union that
the U.K. had been a member of since 1973.3 That changed on June 23, 2016, when the U.K.
voted to leave the EU.4 The residents decided that the benefits of free trade weren't enough to
offset the costs of free movement of immigration. The vote was 17.4 million in favor of
leaving versus 16.1 million who voted to remain.5

What Caused Brexit?

In 2015, the Conservative Party called for the referendum.  Most of the pro-Brexit voters
were older, working-class residents of England's countryside. They were afraid of the free
movement of immigrants and refugees, claiming in the process that citizens of poorer
countries were taking jobs and benefits. Small businesses were also frustrated by EU fees.
Others felt leaving the EU would create jobs. Many felt the U.K. paid more into the EU than it
received.

Those who voted to stay in the EU primarily lived in London, Scotland, and Northern
Ireland. They liked free trade with the EU, and claimed most EU immigrants were young and
eager to work. Most felt that leaving the EU would damage the U.K.’s global status.

Benefits of Brexit

UK achieved more freedom to create their own trade deals and regulations. Regaining
sovereignty is seen as a win even by those who opted to stay in the EU.

For example, under EU law, a citizen of another EU nation can decide to move to and live in
the UK with no restrictions. This has led to a large increase in immigration into Britain and
created difficulties fulfilling housing and service needs. Through Brexit, the UK will exercise
full control over its borders.

 Drawbacks of Brexit

By being a part of the EU, the United Kingdom benefits from trade deals between the EU and
other world powers. As an entity, the EU exerts stronger bargaining power as it is the largest
economy as a group. Therefore, by leaving, the UK would lose negotiating power and free
trade with other European countries. As the UK tries to recreate trade deals with other
countries, they may get less favorable results.
The uncertainty of Brexit also causes volatility and affects businesses operating within the
UK. Also goods and services will be subject to tariffs, increasing the cost of raw material into
Britain and finished products out.

 A union better equipped Britain to tackle threats to security, including terrorism and cross-
border crime.

Millions of British jobs linked to Europe and could be put at risk. Some sectors such as
nursing and manufacturing could experience a slump in skilled labour.

Conclusion

On the day of the referendum result, the pound dropped to a 31-year low. This reflected the
uncertainty investors felt for the UK’s future after Brexit. While a lower value currency
increases exports, the volatility of the pound shows a lack of investor confidence.

Brexit is a vote against globalization. As a result, it has weakened forces in the EU that favor
integration. Members of right-wing,anti-immigration parties are particularly anti-EU in
France and Germany. If they gained enough ground, they could force an anti-EU vote. If
either of those countries left, the EU would lose its most robust economies and would
dissolve.

On the other hand, the majority of EU citizens still strongly support the union. European
nations, almost say the EU promotes peace, and supports prosperity. In addition, more than a
third see the role of the U.K. as diminishing.

Brexit threw into uncertainty the status of London as a global financial center. U.S. stability,
though, means London's loss could be New York's gain.The long-term effects of Brexit could
be positive for the U.S.