On June 23rd 2016 the whole world had its eyes on the Great Britain, anxious to know whether or not the Britons would vote for the “Brexit”, which stands for the end of the British membership in the European Union. After weeks of "YES" and "NO" campaigns, the vote decided that 51,9 % of the British people wanted their country to leave the European Union.
In the following I will explain what the word Brexit means and shortly outline the course of events from the passage of the law for the referendum until the actual leave. Then I will take a closer look at the effects on the economy of Great Britain and the EU. I will structure this part into three fractions of time, describing the period before the referendum, the period between the referendum and the point of the exit and the time after the exit.
Table of Contents
1. Introduction
2. General Information
2.1 Definition of “Brexit”
2.2 Timeline of the Brexit
3. Development of the United Kingdom´s and European Union´s economy until the referendum
3.1 Impacts on the United Kingdom
3.2 Effects on the economy of the European Union
4. Development of the United Kingdom´s and European Union´s economy from the referendum to the exit
4.1. Implication on the United Kingdom
4.1.1. General economical situation
4.1.2. Financial markets
4.2. Impacts on the European Union
4.2.1. General economical situation
4.2.2. Financial Markets
5. Development of the United Kingdom´s and European Union´s economy after the exit
5.1. The United Kingdom as an “EEC State”
5.1.1. Main aspects of the EEA Agreement
5.1.2. Consequences for the British economy under the EEA Agreement
5.1.3. Impacts on the economy of the European Union
5.2. The United Kingdom as an EFTA State with bilateral Agreements
5.2.1. The Swiss Model
5.2.2. The possible consequences for the UK
5.2.3. Impacts on the European Economy
5.3. The United Kingdom as an independent European state
5.3.1. Basic outlines of the economic relationships
5.3.2. Consequences for the United Kingdom
5.3.3. The position of the European Union
6. Outlook for the Future
Objectives and Scope
The primary objective of this study is to examine the economic impacts of the United Kingdom's decision to leave the European Union, analyzing the fluctuations and structural shifts within both the British and European economies across different phases of the Brexit process.
- Economic development before the referendum
- Market reactions from the referendum to the formal exit
- Potential economic scenarios post-exit (EEA, EFTA, or independent state)
- Long-term outlook and structural economic recovery
Excerpts from the Book
3.1 Impacts on the United Kingdom
During the last twelve months before the vote took place, economic growth slowed down from 0,6 % to 0,4 %. The growing uncertainty concerning the outcome and the possible consequences lead to postponing of investments and shifting money from the riskier stock markets to saver forms of investments like gold or annuity certificates. The Financial Times Stock Exchange 100 index (FTSE) which includes the one hundred strongest papers traded at the London Stock Exchange also shows that the British economy got weaker as the date for the exit vote came closer. Within the last twelve months before the vote the FTSE dropped from more than seven thousand points to close to six thousand.
Summary of Chapters
1. Introduction: Provides an overview of the Brexit referendum and defines the timeframe and structure of the economic analysis.
2. General Information: Clarifies the terminology surrounding "Brexit" and details the timeline of events leading up to the 2016 referendum.
3. Development of the United Kingdom´s and European Union´s economy until the referendum: Analyzes the pre-referendum economic slowdown and negative trends in major stock indices like the FTSE and EURO STOXX 50.
4. Development of the United Kingdom´s and European Union´s economy from the referendum to the exit: Discusses the immediate market instability, currency fluctuations, and the initial policy responses by the Bank of England and the British government.
5. Development of the United Kingdom´s and European Union´s economy after the exit: Evaluates potential future economic models for the UK, comparing the EEA Agreement, the Swiss Model, and an independent state scenario.
6. Outlook for the Future: Concludes that a "hard Brexit" is the most likely outcome and predicts long-term recovery for both the UK and EU based on their strong economic fundamentals.
Keywords
Brexit, United Kingdom, European Union, Economy, Referendum, Financial Markets, FTSE, EURO STOXX 50, EEA Agreement, EFTA, Bilateral Agreements, Trade, Investment, Currency Exchange, Economic Growth
Frequently Asked Questions
What is the core focus of this research?
The paper examines the economic consequences of the UK's departure from the European Union, specifically tracking economic performance across three distinct periods: before the vote, the transitional phase, and the post-exit outlook.
What are the primary thematic areas explored?
The study focuses on the impact on financial markets, the performance of national and European economies, currency stability, and the potential regulatory relationships between the UK and the EU.
What is the main objective of the study?
The goal is to determine the economic risks and likely future trading relationships for the UK following the Brexit vote, specifically assessing models like the EEA, EFTA, or complete independence.
Which scientific methods are employed?
The author utilizes a structural, chronological analysis of economic data, including stock market indices (FTSE, EURO STOXX 50) and currency fluctuations, supported by a review of official reports and current events at the time of writing.
What content is addressed in the main body of the work?
The main body breaks down the economic impact chronologically, detailing the atmosphere of uncertainty, the reactions of major corporations, and the potential consequences of various post-Brexit diplomatic trade strategies.
Which keywords characterize the work?
The research is best described by terms such as Brexit, economic growth, financial markets, EEA Agreement, bilateral agreements, and trade barrier policy.
What does the author suggest about the EEA option?
The author argues that while the EEA Agreement would be the easiest to implement, it fails to solve key political issues for the UK, such as controlling immigration and reducing financial contributions to the EU.
Why is a "hard Brexit" considered the likely result?
The author concludes that because the UK government prioritizes ending free movement and EU payments, it is incompatible with the existing EEA or EFTA models, leaving full independence (a hard Brexit) as the only remaining path.
- Quote paper
- Thomas Schaaf (Author), 2016, What is the effect of the Brexit on the economy of the United Kingdom and the European Union?, Munich, GRIN Verlag, https://www.grin.com/document/365529
