The European Union (EU) was established in 1993 and is an alliance of currently 28 European countries which have joined together to form an economic community, with common monetary, political, and social aspirations (Law, 2016).
The United Kingdom (UK) had a significant referendum on 23rd June 2016, which allowed people to decide whether the Britain should either leave the EU or remain. Subsequently, the outcome of this election was that the majority of the British public voted to leave the EU, resulting in the process being referred to as ‘Brexit’ (European Commission, 2019). This was formed from the words ‘Britain’ and ‘exit’. The referendum turnout was significantly high with the outcome of 72%, resulting in more than 30 million people voting, however a staggering 17.4 million people actually voted in favour of Brexit (BBC News, 2019). This helped the leave campaign win by taking 52% of the votes compared to 48% of the population who wanted to remain (Franklin et al., 2019).
After the vote came in, David Cameron stepped down as prime minister and Theresa May took over. This led to Theresa May triggering Article 50 of the Lisbon Treaty on 29th March 2017. This is the legal process that sets out how a country in the EU might willingly leave the union and the steps a country needs to take in order to withdraw (The Institute for Government, 2016). However, Brexit was not able to happen straight away as once Article 50 had been triggered, there would be a two-year negotiation process taking place, hence it was planned for the UK to officially leave the EU on 29th March 2019. Therefore, Theresa May had to plan a new Brexit deal however it was rejected by members of parliament thus resulting in Brexit being further delayed twice as it was pushed to 31st October 2019 (BBC News, 2019). Members of Parliament then rejected Theresa May’s Brexit deal for a third time, this resulted in her resignation and Boris Johnson took over as the new prime minister on 24th July 2019. Despite, negotiating an improved deal, further complications meant the latest extension has been pushed to 31st January 2020 after the pivotal general election on 12th December.
However, it remains to be seen if the United there will be a ‘deal’ or ‘no-deal’ Brexit. If there was a ‘no-deal situation, then the UK would leave the EU with no agreement about the separation process and leave single market and customs union (BBC News, 2019). Moreover, a week after Boris Johnson was elected prime minister, he pledged an extra £2.1 billion which was precisely to prepare for if the UK left the EU without a deal (BBC News, 2019).
Furthermore, the government wouldn’t be able to aid all of the businesses that were affected as they would be forced to make incredible decisions on which companies and industries to save, as well as being under the environment of sharply worsening public finances (Wilkes, 2019). In this case, without having clear values, the debate over subsidies will be inundated by policymaking (Wilkes, 2019). It could also lead to an increase in gas and electricity prices, travel, house prices, importing goods from the EU, and even healthcare. https://www.bbc.co.uk/news/uk-politics-47470864 However beforehand, even when the government was led by Theresa May, they promised £4.2billion in preparation for a variety of Brexit possibilities (BBC News, 2019) which emphasises that Britain would be ready to tackle the financial aspect.
There are a variety of reasons as to why the UK would want to leave or stay in the EU and how it would affect the nation’s relationship with the union itself and the rest of the world. This can be highlighted in a PESTLE analysis. One political factor could be political freedom which is the ability of a nation’s citizens to participate freely in the political process (Schramm, n.d.). This could be seen as a strength as it would benefit the UK as they would have more liberty as a nation because they would be under less restrictions and regulations since they would not have to follow the guidelines of the EU anymore, hence they would be more independent. On the other hand, a political factor that could be a weakness could be taxes, this is because someone simply has to pay for the whole process to happen which will probably be taxpayers as well as citizens and businesses (Wilkinson, 2016). In addition, whilst the UK is in the EU, they have would have EU membership, however if they leave the EU, they would not have guaranteed access to the single market and therefore would lose this bargaining tool. Moreover, another political factor would be sovereignty which is which refers to supreme political authority, independent and unlimited by any other power (Barker, 2005). The UK would benefit from being autonomous since they would not be governed the EU thus it would be an opportunity would be able to make their own decisions whilst acquiring more command over the country’s own dominion. Besides, trade restrictions could be seen as a threat because it might hamper companies from doing business in or with the UK.
Furthermore, Brexit has a major impact on the UK from the economic point of view. One economic factor could be the restrictions on small and medium enterprises. This is because whilst the UK is within the EU, small and medium enterprises did not receive much benefits as they were confronted by restrictions associated with trade regulations between European member countries (Elmansy, 2016). Henceforth, when Britain exit the EU, it can be a strength as these restrictions will not affect small and medium enterprises which thus can lead to having a beneficial impact on this sector within the marketplace. Moreover, the higher number of immigrants had led to problems in relation to jobs and housing. After Brexit immigration will not be cut, however the British government will have more control over the immigration policy and its own borders (Elmansy, 2016) which is another strength.
However, the immediate effect of Brexit had a significant economic effect. Gross Domestic Product had lowered, stock markets were affected heavily with a $130 billion loss and unemployment was affected negatively. There was a fall in the interest rate as well as the value of the pound thus it was devalued which both had a major effect on businesses hence highlighting the weaknesses. The UK leaving the EU will also have a significant impact on the tax revenues as they will fall. Foreign direct investment also decreased because there was a lack of confidence from businesses to invest because of the instability of the country at this moment thus accentuating the amount of uncertainty that affected the UK. Alternatively, if there is a no-deal Brexit, it could possibly lead to a recession which is a weakness. In this situation, according to the Office for Budget Responsibility, if the UK leaves the EU without a deal, borrowing could rise to almost £60 billion, whereas if a deal is agreed it could only be £29.3 billion (Islam, 2019). Also, if there was no transition period, a no-deal Brexit could cause the economy to fall by 8% in the immediate after effect, while the Treasury had also predicted that by 2035 there could be a £90 billion hit to the economy (Islam, 2019). This emphasizes how significant a deal or no-deal Brexit can be for the British economy.
In addition, if there is no-deal, then the UK would have to follow the rules and regulations of the World Trade Organisation (WTO) which is a global organization that was set up in 1995 with currently 164 member states and is responsible for managing the rules of international trade between a number of countries (Manley, Foot and Davis, 2019). It is run by its member governments to enable importers and exporters to carry out their business. As Britain is currently a WTO member through the EU, it means that they will have to divide tariff schedules with the EU and split liabilities brought up from current trade disagreements. The UK is also likely to encounter trade issues because they will have to minimize their imports simply because of high taxes.
Moreover, the UK would not have to contribute to the EU budget anymore thus saving around £9 billion a year, this could be seen as an opportunity as it saves money which thus can be put into improving other sectors within Britain. In addition, as a part of the WTO, the UK may even trade with countries that are not within the EU which would subsequently encourage negotiation opportunities with several diverse countries. However, a threat could simply be that the situation of Brexit has never happened before as no other country has left the EU therefore it will take time to see the full effect of Brexit in the future to see if it was actually a positive or a negative decision. In addition, 50% of the UK’s exports actually go to European countries, thus, it will contribute to decreasing the British market and reduce their negotiating power as they will be leaving the EU (Elmansy, 2016).
From the social point of view, there were divided opinions from everyone on Brexit. Leave campaigners believe that departing the EU will reduce terrorism and security threats and would increase the ability to control borders as well as implementing more checks on people for safety reasons Union (Elmansy, 2016). Henceforth, this can be seen as a strength as it could potentially reduce terrorism. Nonetheless, one of the main leave campaign beliefs and one of the reasons why many people voted to leave was to reduce immigration. This was because they were fed the ideology that immigrants would come to the UK and take the British people’s jobs even though a lot of them are already working in the country in skilled jobs such as doctors, dentists, engineers and teachers, thereby helping Britain prosper. This is because immigration tends to bring a lot of labour with people who are skilled in those jobs which will help the country. However, this can be seen as a weakness as because of Brexit, immigration will fall thus decreasing the chance of skilled labour coming into the UK.
Moreover, when the campaign began there was a clear divide between the younger and older generation. This could be a weakness as there was a rift between them because the younger generation essentially wanted to stay in the EU while the older generation wanted to leave. Some voters even felt they were misled as they believed lies from false promises by leave campaigns which caused more debate after the outcome of the referendum. (During this unsettled period there would have been be a loss of jobs therefore unemployment rates would have also increased) An opportunity however would be that Brexit might help Britain repair itself and become more independent to become one of the leading nations in the world again. Alternatively, a threat from Brexit could be that the British market could become less attractive. As the UK is currently in the EU, it can attract companies like Nissan who built their factory in Britain and can export cars to EU countries without paying any taxes on them (Elmansy, 2016), but after Brexit this advantage may dissolve.
In terms of technologically, Brexit does not really have a direct impact however companies may start to use telecommunication and telecommuting so they can evade predicted labour constraints (Elmansy, 2016) thus can be a strength as well as an opportunity. During this period of uncertainty, companies might decide to look into obtaining raw materials for innovative products swiftly before they have to pay any extra taxes on the materials. Legally, since the UK will leave the EU, it will mean that some laws and roles will need to be rewrote and introduced such as the labour law thus being an extensive procedure. Environmentally, there are firm regulations that EU members must adhere to in order to protect the environment thus the UK should still try to enforce similar legislation when they leave the EU to preserve the surroundings.
Moreover, Liberalism is a theory that can be discussed in regard to Brexit. Liberalism can be defined as a political outlook attaching supreme importance to safeguarding the freedom of the individual within society (Kerr and Wright, 2015). Liberalists however, look at the world from a different viewpoint and argue that states do not behave according to a singular viewpoint (logic). They believe in anarchy however say that states are not the only principal factors as non-state factors also have great power. Regularity and predictability can be introduced in if states agree to be mutually bound by international agreements and treaties which can be done through political and economic communications. They are also convicted that there is a possibility for change in international relations in the long term and that global governance can be created.
Liberalists believe in interdependence and that extended coordination is possible between states in the international system and if there is more independence, then there will be increased wealth materially for Britain and that there will be more development economically once the UK leaves the EU. The UK also relies on EU migrants to fill parts of the labour market however, because of Brexit there will be less immigration therefore the labour may decrease which would lead to instability. Since the UK and the EU will separate, it will make the UK become interdependent which would the UK as they can establish themselves within the world as a big nation thus emphasising a benefit of Brexit on the UK. However, because of independence, it is important that the UK makes calculated political and economic decisions since they will not be under the governance of the EU anymore.
However, Britain leaving the EU could be reinforced by the realism theory as the UK will not be overseen by the regulations of the EU for much longer which thus supports the realist viewpoint of anarchy. Realists believe that states are key factors as they control international organisations and that states make decisions in order to maintain power so they can protect national interest and preserve survival. The idea of Brexit was because of competitive nature of humans that reflected on politics and self-interests of each nation. The exit of the EU could be due to the infrastructure contrasting human nature in the Schengen Agreement as countries had to compromise their power to the standardisation of power though regulations for the sake of free movement. However, realist believe that states must provide for themselves meaning that after Brexit, if there are security threats, then the UK should be prepared to handle it.
Overall, it will be interesting to see what type of relationship the UK will have with the EU post Brexit, as they could follow one of the existing relationship models such as the Norwegian, Canadian, Swiss, or even the Rest of World option under WTO rules. While there are uncertainties around Brexit, it remains to be seen if the outcome of Brexit will be positive or negative with the EU and the world however, it will become clear over time.