(Sourced: The New York Times)
Britain has been a part of the European Union for a long time. The European Union is an extensive agreement between all its member nations allowing for greatly increased and deregulated international travel, immigration and trade. Their economies are heavily intertwined - kind of like a couple that has been married a long time and have a lot of joint purchases and accounts together. Brexit is Britain's recent decision, made by the majority of voters, to leave the European Union. They now have a few years to sever most of their attachments to the rest of the European Union, like a messy divorce. The UK joined a international political and economic community now known as the EU (then called the EEC) in 1973 after several years of attempting to, this time through a popular vote. Over time, the EU/EEC expanded its role. The particular issue that was decisive for Brexit was the free movement of people. The EU decided that the free movement of capital and trade was important, but not workable unless labor was equally fluid.
However, some feel that the free movement of people and trade has negatively effected the UK, for whatever reason (I won't go into it here), with arguments stemming from both the right and left, but mostly the right.
EU membership has been a contentious issue since the mid 2000s, and simply wouldn't go away. None of the main parties would address the issue of membership, as for them it was a strategically and economically vital aspect of the UK's foreign relations.
Fast forward to 2014/15. The Conservative party, facing the very real prospect of defeat in the general election (the election that decides who the Prime Minister is) promised to hold a referendum on EU membership in a bid to shore up votes. This paid off short term as the Conservatives won the election, but when the referendum was held, the government, who were pro-EU were defeated by the forces of their own and other parties.
What so bad about it?
(Sourced: The Japan Times)
Overall the UK has decided to move from a position of stability to instability, which is very bad for markets, at least in the short term. We've already seen the currency plummet against other currencies, prices rise and big employers start to look at relocating out of the country to somewhere more stable. This is either a short sharp shock before recovery, or a taste of things to come, depending on who you ask.
A separate reason why Brexit might be 'bad' is that is has opened up a new political divide between 'Brexiteers' and 'Remainers'. The referendum result was very close - 48% to 52%, with big differences between how young people voted compared to old, and how cities voted compared the the country side. This new political divide has only been getting deeper, and some people believe it has poisoned or is poisoning public debate over important issues. There has yet to be a big political change. The two biggest parties are still Labor and the Conservatives, but many think this is likely to change.
Remember that the UK is still in Europe, which is a physical location, as in the continent of Europe, as would California or New York still be in North America if they left membership of the United States.
But by leaving the EU, the UK has voted to exit the confederation that was formed to give its member states the same benefits that US states get from being part of the federation of the United States. You will recall that the difference between a confederation and federation is that the former is voluntary for its members.
So while each EU member state can have its own laws and is sovereign, they are also bound by treaties which are imposed on them much like US States must abide by federal laws (while still having their own state laws).
By exiting the EU the UK has lost all of the benefits of being a member of the largest free trade bloc, we have lost the freedom to travel, study, work and settle freely within the EU, and many more things without really gaining anything. We have effectively set ourselves back two or three generations.
Pros and Cons of Brexit
Attached is my interpretation on this situation, and I do realize that this matter is unfolding as we speak, the list can change over time.
By: Sunny Wadhwani
September 25th, 2022
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