A look at Bexit, part 2: If it happened

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Ten days ago I wrote about why many British people would like the United Kingdom (UK) to leave the European Union, a subject known as Brexit. The motives behind this anti-EU movement are socio-economic, though there are economists that say that behind all the stated motivation lies a generalized narcissistic victimization in the people’s view of their relationship to the EU. Meaning that this is a temper tantrum on a national scale.

Whatever the truth may be, the possibility that the UK might leave the European Union is

real; that’s why economists and think tanks have been analyzing the consequences for everyone involved: the United Kingdom, the European Union, various individual countries and even the rest of the world.

I said I’d speak about the reasons why Brexit is considered a bad idea yet, it’s impossible to do so without stating the actual expected consequences, as they are the cons to Brexit. I will go over them as objectively as I can.

Bureaucracy

As I explained, the English consider the red tape that EU regulations cause a reason why

they would like out, because it costs businesses money. According to the think tanks that have examined that assertion, it’s highly unlikely that the British government would change those rules as they are already in place but also because in the future, if they wish to trade and exchange with the EU it is most likely that the Union would demand that they adhere to their way of doing things, as they have made everyone else dealing with them do.

Additionally, those for Brexit need to take into account that in order to work out trade agreements with other nations –China, Japan, Australia- and other regions –EU, Pacific Alliance, MERCOSUR, ASEAN-, requisites will be set that United Kingdom will have to meet via regulations and economic legislation changes at home. It’s six of one or half a dozen of the other.

Money

As you might have imagine, it’s impossible to compare what the British government gave to the EU common funds versus what they gained in the form of economic benefits.

Yet we can speak of the economic treaties that the UK wishes to make with specific nations and regions outside the EU. I find it very reasonable to wish to expand the national economic horizons beyond the limits set by the EU, yet think tanks and analysts alike agree that to set those treaties in place would take years, and that the products and services offered by the UK might not be of a scale sufficient to be attractive to the other parties on those treaties. They suggest a rational and coherent study of Great Britain’s potential offerings in a global market context before jumping to seek out new ventures abroad.

This future economic potential brings us to the next point of contention for Brexit supporters:

Immigration

The same think tanks that recommend this self-scrutiny of the UK’s future potential state the

immigration changes as the main reason for the need to analyze. Nowadays, it is the immigrant population that keeps the UK’s birth rate afloat. The births of babies of foreign mothers represent 27% of the nation’s total births, a total that is going down every single year. If the birth rate is decreasing despite the immigrant-mother births, the United Kingdom, on its own, is shrinking fast. If they choose to put a stop to immigration (as is their wish), within 15 years they will have a severe workforce shortage; it would be a direct contradiction to their wish of increasing production for foreign trade.

Furthermore, any economic treaty with the EU is sure to have a demand for the free exchange of workers from the euro zone, unless the British aim for a Swiss-like treaty, which would have limitations that would definitely not be to their liking.

The economic reality

It’s impossible to get a clear and actual picture of a United Kingdom after Brexit yet every single expert, think tank and economist agrees that in the short and middle term the process

would be from negative to very, very negative. The British pound would plummet, as it’s already falling; yet that would mean that British products would be cheaper and thus more attractive. However, without trade treaties, nobody would be able to buy them… it’s a bona fide catch 22.

The devaluation of the currency would cause inflation, but again, this isn’t necessarily bad when looked at from the stagnation of the world’s economies.

The big blow to the United Kingdom would be the stop of Foreign Direct Investment (FDI). London is the world’s largest market nowadays, ahead of New York, Tokyo or Beijing; and 50% of the FDI there comes from the European Union, harbored by the benefits granted to both parties –the British banking system and investors, in this case- by their common bond of belonging to the EU. With the UK outside the Union, such investment would trickle away to other markets because the EU benefit would disappear.

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