What is Brexit, and what are its effects on the UK?
December 31, 2020 marked the official withdrawal of the UK from the European Union. this follows the approval of the withdrawal agreement presented by Prime Minister Boris Johnson after a series of such were rejected. Brexit is just a nickname coined for Britain exiting the European Union, an Economic and Policy bloc to which she had been a member since 1973. Therefore, the Brexit vote is the most significant event in Europe since the fall of the Berlin wall.
It is important to note that this is not the first time, the Britons had contemplated leaving the European Union. The idea of formation of a club of European Nations was contemplated immediately after the Second World war and the UK was hesitant to join it until 1973. Barely, three years after joining the Union, a referendum was conducted in the UK to determine whether to leave or remain in the EU. The remain camp won by 62% majority and as such the UK remained in the Union. However this did not signify the end of the debate, it would resurface three decades later.
Brexit vote & Process of leaving
The idea of leaving the EU had always been contemplated by conservative Britons. In 2013, the then Prime Minister David Cameron promised to conduct a referendum to determine the fate of UK in the European Union. Cameron was on the ‘remain’ camp and as such he was convinced that the ‘leave’ camp could not win. This assumption was a miscalculation that led to an unfortunate outcome according to the proponents who opposed the Brexit campaign. Unfortunately, 51.9%, that is approximately 17.4 million British citizens voted for the withdrawal of the UK from the European Union. PM David Cameron resigned the next day he was replaced by Theresa May.
There are a number of reasons advanced by those who argued for Brexit. Among these reasons were, High influx of immigrants, encroachment of UK’s sovereignty by EU, European debt crisis among other reasons. It is important to note that the high number of immigrants from Southern Europe countries seem to have fueled majority of UK citizens to vote in favor of the leave camp. The argument premised by those who wanted the UK to remain in the EU was that BREXIT was going to be an economic disaster.
Following three rejections of proposed withdrawal agreement, PM Theresa May resigned. Boris Johnson the Former Mayor of London was elected as the New PM under the Conservative party. However, through Mr. Johnson’s leadership the UK finally withdrew from the EU. Thus the agreement bill received a royal assent (refers to the Queen appending her signature to a bill to become law) on January 23, 2020 to become the agreement act granting the UK chance to leave EU. The UK formally left the EU on January 31, 2020 before entering a transitioning period that ended on December 31, 2020.
Effects of Brexit on UK’s Economy
Barely a year since the formal withdrawal from the EU and the effects are apparent. The UK’s economy has slowed in terms of growth since the beginning of the Brexit campaign in 2016. Consequently, it is important to note that several business enterprises have moved their headquarters from London, UK’s Financial hub. It is therefore, correct to argue that the UK has already suffered an economic setback since the Brexit narrative materialized.
In terms of Economic growth, uncertainty over the whole process slowed UK’s growth considerably. The growth which was at 2.4% in 2015 reduced to 1.0% in 2019. Consequently, the UK government has projected that UK’s growth will be lowered by 6.7 percent in the next fifteen years. On the day of the referendum, the British pound fell from $1.48 to $1.36. While this may seem lucrative to those dealing with exports, it was a burden to importation of goods. Therefore, the process has had negative impact on economic growth.
Consequently, the process has slowed down the growth of Britain’s financial center, London. While it is the EU that helped establish London as a global financial center, Brexit may see her lose that status. The growth of London which was at 1.4% in 2018, was slowed down to almost zero in late 2019. Furthermore, international companies and enterprises are shying away from London and opting to work in other cities. For instance, Barclays moved 5000 clients from London to its Irish subsidiary. Moreover, the Bank of America also transferred some of its bankers to its Dublin office and Paris.
