THE PRICE OF BREXIT
LEAVE VOTE WILL CAST LONG ECONOMIC SHADOW
Millions of Britons will head to the polls on June 23 to vote in one of the world’s most important referendums in decades. The question, as phrased, is a simple one: Should the United Kingdom remain a member of the European Union or leave the European Union?
The outcome could have massive economic implications. No nation has ever left the EU. The 28-member bloc is the world’s largest economic-political unit, boasting a combined US$ 16.2- trillion economy. EU President Donald Tusk has said an exit by the U. K. could lead to the end of “western political civilization itself.”
That kind of language has fuelled what has been an emotionally charged campaign by both sides. For international observers, the focus has been on what a departure will do to the global economy and financial markets, with many leaning toward more harm than good.
If the Leave camp wins, legal and political changes will take the rest of the decade to finalize. Brexit supporters have noted that a formal withdrawal would likely not occur until 2020. The referendum merely gauges the nation’s sentiment, requiring politicians to formally enter into separation discussions with EU officials.
“This means that there would be plenty of time for negotiations to clear up some of the most important uncer- tainties ... notably the arrangements which would govern U.K. trade with the remainder of the EU and the rest of the world,” notes Capital Economics.
But that would also mean that the political uncertainty of a Brexit could stretch on for decades — making the vote on June 23 all the more important.
One of the biggest benefits for citizens of EU countries is the ease of travelling and settling in member states. Nearly three million EU citizens are living in the U.K. and a Leave vote would put their residency status in murky territory. The Leave camp has heavily campaigned on the idea that current EU rules mean the country is being flooded with far more immigrants than it can handle. Net EU migration to the U.K. has been rising. Meanwhile, more than 1.2 million British expats live in EU countries. In the event of a Brexit, many expect there will be a grace period as U.K. politicians negotiate what will happen to their citizen’s existing rights. Some point to the potential for Britain to be part of the European Economic Area, the same as Norway and Switzerland, which has allowed them to have the migrant benefits of EU membership without the influence of voting on policies. But until such a deal is worked out, the residency status of millions will hang in limbo.