Since England's vote to leave the EU the country has been facing the reality of that decision. Mrs. May, their new Prime Minister, has announced her strategy towards the UK's decision to leave the EU. On January 17th she announced that she will be making a "clean" break from the EU. This means that she intends to unchain the UK from the regulations of the EU while working to maintain trade with the EU and countries around the world.
This is a more liberal approach to Brexit, which has alleviated concerns from businesses throughout the world. This vision of a "Global Britain" had an immediate effect by raising the value of the pound. The metaphor that Mrs. May drew was "Singapore on steroids". For according to the vision the Prime Minister has laid out the nation would be able to become more competitive in the global economy. This would include lower taxes, less needless regulation, and freer global trade than before.
However, there are several serious problems that remain unaddressed in this admittedly thorough response to the nation. The first is the lack of follow through. So far Mrs. May has focused on the immigration aspects of Brexit which is restrictive towards trade. Secondly, Mrs. May hinted that her vision would allow Britain to selectively access the EU's single market, which is the free trade market between all EU nations, such as in the auto industry. This selectivity is important because to remain in the single market requires that Britain remains in the EU. The problem here is that there is no longer a neutral judge to oversee these trade deals and that the World Trade Organization(WTO) restricts this level of access. If Britain can have selective access then so must countries like China and India. Even if they could overcome the WTO's restrictions, the EU is unlikely to be particularly receptive to Britain.
Mrs. May remained positive about the status of Britain's economy, citing pessimistic forecasts to prove the economy's resilience. Somehow she ignored the fact that Britain has not yet left the EU as a part of this positive perspective on the Economy. Nor did she mention the difficulty of negotiating a new trade agreement with the 27 countries within the EU or the 53 countries that the EU has established trade agreements with. Despite a receptive response from president-elect Donald Trump there is still a long road ahead of this Prime Minister.
The reality of the situation is that Britain has experienced some backlash due to the Brexit vote, however looking optimistically at the economy's ability to remain relatively unscathed is misguided. The EU has been united against Britain since the vote. Britain's exports make up 3% of the EU's GDP however, the EU's exports make up 12% of Britain's. Mrs. May has stated that she is willing to have no deal rather than a bad deal, which is a dangerous sentiment coming from the nation which currently holds a position of weakness.
"Doing Brexit the Hard Way." The Economist. The Economist Newspaper, 18 Jan. 2017. Web. 18 Jan. 2017.
2 comments:
The post-Brexit reality seems similar to the uncertain future of the United States under President Elect Trump in the sense Prime Minister May has spoken about what to expect, but without adequate evidence to support her claims. As the article mentions she has ignored the fact that Britain has not left the EU and the difficulty of negotiating a new trade agreement etc. Mr. Trump's rhetoric is similar because in his plans for economic reform he also ignores major obstacles and it shows a lack of understanding of the situation. The coming months should give us a better understanding of what to expect.
I see that Brexit has had a negative impact on the UK economy. Until the exit, growth was up .6% on a quarterly basis near the end of June. The referendum was held at the end of June and then following that the economy's growth contracted by .2%. In addition, I noticed that the pound's value plummeted the day after the vote. It will be interesting to see how this plays out.
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