Monday 27 June 2016

Who will suffer more after "Brexit", the UK or the EU?

"Brexit" will affect both sides after it actually happens, which I believe it will happen without a second referendum. Although the details of the process of Brexit are not clear currently as the article is not triggered yet, there are several things that are clear. The immigration law will be changed that the leave side politicians imply there is going to be a cut in the number of migrant labours, especially the EU migrant labours. The trade deals will be adjusted, but the details are not clear. Britain want the previous trade deal or even a more generous one; however, many people are afraid that Germany will react revengefully to the Brexit. The multinational firms will adjust their business depending on the new trade deals, which could determine the future UK unemployment rate. Of course, there are many other changes in the UK laws and etc. As they have less influence on the UK and Europe economies, I only want to focus on the effects of the coming new immigration law and trade deals. Currently the UK has its historically low unemployment rate while some EU member countries like Greece have very high unemployment rates. After Brexit, the UK unemployment may rise, but the European unemployment rates may rise as well. The EU migrant labours may be forced to leave Britain, then the employable population on the European continent will rise. Of course, there will be new jobs created on the continent after "Brexit"; however, the new jobs are more concentrated in the countries like France and Germany, which have already had low unemployment rates, other than the countries with high unemployment rates. Therefore, the countries with high unemployment rates will not benefit from Brexit, but may suffer a rise in the unemployment rates. In addition, without the financial support from Britain, Germany and France may have greater financial pressures and become tougher when negotiating about the aids to the EU member countries that have financial difficulties. Finally, the new trade deals will make huge differences on both sides. A revengeful trade deal is a disaster for both sides. Britain has a trade deficit with the rest of the EU, when high tariffs are applied on both sides, both sides will have higher costs of exporting and importing and their products will lose competitiveness in the other market and we may experience an increase in living costs as the imports become expensive. Britain may be able to make trade deals with countries in other places of the world due to its geographical advantages. Some inland EU countries may lose Britain as an important trade partner. Overall, the biggest problem facing Britain seems to be the new trade deal after the article is triggered; however, some poorer EU countries may suffer more than Britain as their unemployment rates may rise, their financial difficulties may become worse and they could lose Britain as an important trade partner.

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