How Significant Is Brexit for the Direction of the Global Economy

Published: 2021-06-23
1148 words
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Harvey Mudd College
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The European Union comprised of European countries that came together to amalgamate their economic regulations in the early 1990s. The agreement included the movement of goods, people, capital, services freely between the member countries. The economic merger helped advance economic growth and at the same time promoted regional peace in the larger European region. From a paltry six nations who started the Union, the EU is now comprised of 28 nations making up the second biggest economy with one currencythe euro. Over the years, the union has promoted the economic policies of its member countries in addition to friendly and peaceful coexistence amongst the citizens. Businesses have boomed, many residents have migrated to better regions, companies and personnel have enjoyed the freedom of working in member countries and many ventures and opportunities did change the demographic and geopolitical landscape of the member countries. However, the exit of Britain has left many speculations on the global effect of their move. The move remains significant as it portends and exposes global fears of its adverse effects.

Popular known as Brexit, the decision by Britain to withdraw from the European Union came by surprise, and the consequences remain unclear. Additionally, how the British came to decide to exit from the Union besides the reason for leaving, remains a mystery to date. However, the primary concern of Brexit remains a public anxiety with many predicting a negative turn in the global economy in addition to instability in most of the European countries making up the European Union. According to Busch and Matthes (2016), beyond the borders of Europe, economists and governments remain skeptical about the effect of the move with many countries such as the United States predicting a domino effect not only on its economy but the entire world. In the first case, the Brexit exposes the EU with speculations that it may collapse as other nations such as the Netherlands, Italy, and France calling for their referendum (Staal 2016). The fall of the EU may trigger massive disintegrate of trade agreements and partnerships led by world economies such as China and the United States. Brexit stands out as a significant move to the two countries as they position themselves to absorb the economic shock and the reaction of other world economies. For example, the exit may trigger a stronger and stable dollar that may hurt the economy of the United States both in domestic trading and in the international markets. A stronger dollar will obviously make trading for most companies expensive since it is the primary exchange rate globally. The US would therefore pay close attention and give prominence to the development of the exit at home and away (Busch & Matthes 2016).

Brexit delivered a hard hit as most banks such as Barclays saw their shares drop by 20 percent. It remained a significant feature in global financial trades as Britain remained the most powerful and progressive amongst all the other members. It thus stood significantly as the majority of economic experts and organizations such as the World Bank and the International Monetary Fund, gave out a warning of massive losses to companies and countries alike. Of particular concern to the world economy, is the notion of a disintegrating region, a notion that played a significant role in allaying fears amongst different member states (Staal 2016).

Brexit further stands out as a great feature in the direction of the world economy as it will push non-member States and other countries worldwide improve their economic prospects and policies. For instance, China who has many trade pacts with the EU will now get back to the drawing board and increase its investment, for example, in people and infrastructure to accelerate its sustainability and inclusive growth to safeguard its markets and economic activities (Busch & Matthes 2016). Additionally, countries such as China will position themselves to take advantage of any downfall or collapse of the entire European Union as it may significantly suffer especially on international marketing of its products. As the world-leading contributor to economic growth, China will observe the progress and impact of the exit, since the move will impact on China's business deals strongly. It thus remains an essential feature in China's global trading. On the other hand, the exits will trigger a greater level of anxiety amongst United States companies as they keenly observe the reaction of China to the unfolding events in Europe. Its significance will majorly affect the US international policies, especially with China and other EU members (Staal 2016).

Although the entire process of the exit may take many years to complete, the prospect of disengaging with other European Union Members may trigger sluggish financial performance of major companies and business as they cautiously wait to feel the entire impact of the exit as uncertainty levels rise. It thus remains a significant feature in major global trading. At the same time, citizens who had crossed over to other EU countries will be forced to pay attention to the progress and political undertones of the exit. It remains a significant aspect of their stay in other European countries other than their places of birth (Schiereck et al., 2016).

A British exit from the EU will remain a heated debate and topic for quite some years before it fully comes into force. The discussions, forecasts, and speculations will additionally cause anxiety, fear, thinking, and doubts, aspects, and factors that will influence both negatively or positively world trade and economies. As more and financial experts, economic institutions, governments, and agencies continue to grapple with the implications of the exit, the attention accorded to the speculation will positively or negatively affect world trades, economies, activities, policies, and strategies undertaken by companies and governments. These are actions and decisions that will go a long way in influencing world trade, economics, migration, regional stability, and socio-political aspects of both European lifestyle and association. It will form a key component of the region's next move after the entire Brexit is finished. Countries such as Italy and France who are also watching the unfolding events keenly understand the complexities involved in such a move and its socioeconomic and political effects. The exit will thus form a primary component of regional worry and anxiety as they also prepare to undertake a similar process. Despite the entire process still in its early stages, it has overshadowed significant key events in Europe further giving prominence to the decision by British citizens. Although it remains to be seen the global impact, no one knows and comprehensively understands the implications of the move. As per now, the concern is majorly raised on speculations and assumptions. However, these very assumptions and concerns are aggravating the significance of the exit.


Busch, B., & Matthes, J. (2016). Brexitthe economic impact. A Meta-Analysis, IW-Report, (10).

Schiereck, D., Kiesel, F., & Kolaric, S. (2016). Brexit:(Not) another Lehman moment for banks?. Finance Research Letters, 19, 291-297.

Staal, K. (2016). Brexit implications for influence on EU decision making.

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