Saturday, June 18, 2016
Billy Long: How Britain's EU vote could affect the global economy
On the 23rd of this month, citizens of the United Kingdom (UK) will vote in a pivotal referendum to decide if Britain will exit – “Brexit” – or remain a part of the European Union’s (EU) 28 country partnership. This vote will require America – and other UK trade partners – to adapt politically and economically for whichever side prevails.
The question at-hand has increasingly divided the UK without regard for traditional political affiliations, and has not formally been posed to British, Irish, and Commonwealth citizens since 1975. Then, they voted to affirm Britain’s newly established membership in the European Economic Community (EEC) – an earlier framework of the EU with significantly less supranational influence. Since that time, however, UK voters have seen the EEC grow in size and scope with the establishment of European Parliament, new governing bodies for legal and foreign relations decision-making, the Euro currency, and economic regulations for individual member nations’ debt, deficit, and exchange rates.
UK Eurosceptics – citizens opposing EU membership – have understandably grown more weary with the decrease of sovereignty Britain has experienced, and see tying their economy and government to the same rules as 27 other nations’ as an inhibitor of their democratic process and prosperity.
Oppositely, although pro-EU voters may concede that the economic promises of joining the EU have fallen flat, they still maintain that the UK is boosted from membership economically through opened trade with other member nations and monetary supplementation of Britain’s public services. Mainly, though, their votes against leaving are charged by the impending societal uncertainty that could follow a vote for sovereignty.
Many EU outsider nations have hinted their allegiances against exiting fearing economic uncertainty. Some American officials have expressed support for the UK’s continued EU membership, and the Obama administration has even gone as far as to cast doubt on whether it would sign a stand-alone trade agreement with Britain after exiting. However, in a move that may put unease at rest, the European Central Bank, just nine days before the vote, announced that they would willingly partner with the Bank of England upon Britain’s EU exit.
Truth be told, this decision is solely in the hand of UK voters and either outcome would create new challenges. If they leave, the UK would be tasked with creating EU equivalent mechanisms to oversee international transactions to prove their individual potential for creating a risk-averse economic climate, and come to terms that they may lose investors in the short-term during the transition. A positive aspect, however, would be freedom from the EU’s demands, including ones that have stuck British, Irish, and Commonwealth citizens with higher welfare costs and limits to their tactical military spending. Likewise, this could be an opportunity to regrow the “special relationship” with America – diminished by the EU in past decades.
A vote to stay in the EU, while averting short-term instabilities, would signal the potential for new unblocked integration of the UK into the EU economic model. At least, this would maintain the same economic, immigration, and public policy issues UK voters have with the EU currently, but heighten compounding questions over whether sovereignty-minded Britain is a viable long-term piece of the EU vision, which embodies more socialistic values than UK citizens.
Whether this vote culminates in a new era of economic challenges for Britain to overcome or renewed loyalty to the European Union, the world must stand ready to adapt. America will continue having close ties to Britain either way, but must accept that these valuable trade partners will never have a truly free market as an EU member. Likewise, collaborating with their leaders would come under a new era of risk if tensions were to rise between an independent UK and the EU, or if their new economic oversight systems brought turmoil instead of prosperity.