To Brexit or Not to Brexit

Dr. Bayad Jamal Ali

On Thursday, the 23rd of June, the UK will hold a referendum to leave or stay in the European Union, and it will choose to remain or not, and there are fears of chaos in the British economy and a shock to the world economy in case the vote is to leave the EU. Yet, others see that if the UK leaves the EU it would be better off, and will regain its economic independence after a partnership of four decades.

The UK has an important economic relationship with what is known as the biggest market in the world – the EU. As much as 47 percent of the UK’s exports are sent to the EU, and 53 percent of the UK’s imports come from the EU, and more than 3.3 million jobs in the UK that are related to EU businesses. The size of European direct investment in the UK is valued at more than $700 billion dollars, which makes up around 50 percent of total foreign direct investments in the UK. Meanwhile, the United Kingdom pays around £190 million per week to the EU in membership fees.

Before the UK joined the EU in the 1960s, trade was less than 30 percent between both sides, now it has reached 50-60 percent. Both sides worked to change their policies to get rid of trade obstacles like tariffs and others to increase trade share. As a member of the EU, all trade negotiations and competition negotiations with the rest of the world were done by the EU on behalf of the UK as the biggest market in the world. As the UK economy makes around 16 percent of the EU’s economy, when the EU bloc negotiates on behalf of the UK, it will give immense power against the UK being alone.

The mathematics of profit and loss is used by both sides of the referendum. The pro-staying camp emphasizes the loss and chaos that will face the UK economy in case of leaving, and says it will result in an end to European investments in the UK, jobs created in relation to the EU, and a return of trade obstacles like tariffs, which will make things more expensive for UK consumers.

On the other side, the camp to leave the EU sees that the UK staying in the EU has a negative impact, and if they leave, they will regain economic independence and will flourish, ending issues of the migrant crisis, free labor movement of the EU that led to many job seekers from European countries like Poland, Lithuania, Romania, and others emigrating to the UK, as well as not paying membership fees to the EU.

This referendum is the first time that an EU member wants to leave the bloc, and there are different reports and interpretations of its impact, yet most economic and political institutions and analysts see that the UK is better off remaining in the EU. Let’s see how the British public decides.