A major crack in the EU (European Union) is heard around the world and economies start to tumble. The Leave campaign unexpectedly won against the Remain by 52% of votes versus 48%. The uncertainty of what is to come causes the pound to fall down steeply to its lowest level against the dollar since 1985.
Economic experts have long cautioned British voters of what could transpire if Britain broke away from the EU. Its implications could prove severe to the British economy that enjoys a healthy trade partnership with a group of 27 nations, and enjoys a major boost in domestic consumption due to its free movement policy.
Britain had an easy access to a single market, a single currency, and around half of its exports go directly to it. This withdrawal is expected to make the British market less attractive to investors. This would eventually lead to lesser job opportunities, lower growth and, therefore, a poor economy.
Supporters of the Leave campaign have complained about migration issues. With more than 330,000 immigrants coming in and out of the country, they feel that Britain has lost its identity to a certain degree. They call for more control on the influx of people and point out that this could increase the risk of terrorism.
It fails to highlight the fact that more people would actually help boost the market. More migrants promote economic benefits, better trade and a stronger labor force that is significant to various industries. Brexit instead calls for stricter borders, more limitations, which will only isolate Britain.
As a result, Britain could fall into a recession.
David Cameron was mistaken to call for a referendum, yet promises to support the call of the populace for change. But everyone knows he is likely to lose his job in the near future.
The results of Brexit are not good for the EU either, as Britain is the second largest economy among its members. This fraction only raises doubts toward its credibility.
The EU already has its fair share of woes regarding terrorism, the conflict between Russia in its stance on Ukraine, Greece’s bankruptcy problems, and stagnating growth. It fears that other nations would follow Britain’s example.
Meanwhile, Japan, South Korea, Singapore and other Asian economies expressed fears of longer uncertainty.
Photo courtesy: Public domain pictures