Europe After Brexit

Syrine Hadj Taieb

Business student

University of Sfax, Tunisia

June 5th2017

Europe After Brexit

             The European Union began in 1957 as the European Economic Community, which was created to foster economic interdependence among its members in the aftermath of World War II. On June 23, 2016, a majority of British voters chose to leave the EU in a referendum, largely in response to a series of destabilizing economic events that befell the EU from 2007 to 2016. Britain's exit, popularly known as Brexit, would be the first example of a member state leaving the bloc by means of Article 50 of the Lisbon Treaty. Most of the debate in the UK is naturally focused on whether outside the EU it could trade more freely with the world, escape EU regulations and reduce immigration. Equally important, however, is what the EU would be like afterwards; and how in turn this might affect post-Brexit relations between the UK and the EU.

             As a matter of fact, the departure of the UK from the European Union (EU) after more than 40 years leaves a major hole in the world’s largest economic and political union. Energy and climate change are EU policy areas in which the UK has made a significant contribution in the past. If the United Kingdom has left, they would lose its largest military power, one of its two nuclear weapons states, one of its two veto-wielding members of the UN Security Council, its second-largest economy and its only truly global financial center. The UK is the EU’s third most populous member state, comprising 12.76% of the EU’s overall population. This makes the UK an influential player in the Council of the European Union and in the European Parliament. 

Money is potentially another source of future tension in Europe. Britain's departure from the EU leaves a 10 billion euro a year hole in EU finances which risks further undermining the cohesion of the EU. Still, much will depend on the kind of relationship Britain establishes with the EU after Brexit.

             Besides, Britain is one of the EU’s most economically liberal member states. It was the driving force behind the development of the single market. The country has also been the EU’s leading advocate of increased trade in services across the EU, in order to create an internal market for energy, and mostly supportive of EU free trade deals. On the face of it, a British withdrawal from the EU would make the bloc less liberal and more protectionist and the strength of potentially protectionist member states would probably grow. A number of economically liberal countries in northern Europe have privately expressed concern at the loss of the UK voice.

             Not forgetting the risk of ‘contagion’, because Eurosceptics across the continent might treat a generous deal as an invitation to press their own countries’ special status or exit. Politically, the EU should therefore avoid the precedent of easy withdrawal. It may be better to prioritise political over economic considerations. The EU might find it challenging to present a united front towards the UK, due to the varying interests of member states. On the long-term, Brexit would change how EU institutions operate not just during the withdrawal period, but also afterwards. It would affect the balance of power among member states and therefore the policies that the EU would pursue. It would also change the resources upon which the EU could draw.

              As a conclusion, the future of the EU seems no brighter after Brexit, a recent VoteWatch Europe report suggests that Brexit could have very serious policy implications such as an increased regulatory burden on EU businesses, increased member-state contributions in the EU budget and higher taxation of financial transactions. However, the reality is unlikely to be quite so dramatic. The UK is not the principal reason that the EU has been moving in a liberal direction in recent years. Still, those in the EU who want to liberalize trade in services may find it harder to overcome opposition without Britain. When it comes to predicting the future both of UK and EU, no scenario can be ruled out. The EU establishment never seriously believed the UK would leave the EU, but that turned out to be a false assumption.

              Indeed, what happened when the Brexit negotiations were officially triggered was a surprise for the whole world. The shoe appears to be on the other foot. Europe is growing faster than Brexit Britain. Actually, The 19 economies that use the Euro expanded by 0.5% in the first three months of 2017 over the previous quarter. That's stronger than the equivalent 0.3% rate posted by the UK. Meanwhile, Britain's economy posted weaker growth in the first quarter because of a slowdown in consumer spending and retail sales due to the sharp decline in the value of the pound following the June referendum. 

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