By Kasanya Chavula
One of the biggest trending stories of 2018 has been the imminent break away from the European Union by the United Kingdom. This has led to many questions being asked and the British Prime Minister, Theresa May having to defend her Position of Brexit.
1973 was the year that the U.K joined the European Union and this was during the same period of the 1973-1975 economic recessions. Where or not the recession was a contributing factor to U.K joining the E.U that is a topic for another day. What remains for now is why now, and what is the motivating factor and how will the U.K favour against the major world economies, more especially the growing Chinese and Indian Economies.
One may look at the growth of the Asian economies and the decline in the economic power of the European Union as the biggest factor leading to Brexit. But if that were so, will a single economy thrive against, the giant Chinese economy?
As it stands there is a trade war that is ongoing between the two largest economies, U.S.A and China, this remains to be seen if the U.K intends to join in as a solo economy or they will merge with the U.S.A in order to crash the Chinese economy. This however though speculative is for us to see as the future unfolds, what is for now is how will the U.K foster the break away and what does it mean for the many citizens that work outside of the U.K.
Under the E.U, member countries could not go to war against member states and trade was unilateral and bilateral but under the break away what privileges shall the U.K enjoy and what are the disadvantages of breaking away.
One point that has been raised is the fact that the U.K joined the E.U in 1973 and this was when the 1973-1975 recessions occurred and as a result of joining the E.U, the ratio of trade to economic output increased from 48% to 67%. This seemed at the time a fair bargain but when situations change so the hard choice of change has to take place. At present 45% of the U.Ks exports go to other EU member countries and at the same time, the U.K over the years has benefited less from the alliance and many people feel that the U.K would thrive if they took back control of the boarders. This is reflected by the growing influence of the Chinese and Indian economies and the third world countries that are now developing at a faster rate. The economic policies of the EU have failed to benefit already powerful economies and this remains to be seen if the other major economies like France and Germany will remain of will break away.
The fact that the British Economy is not a young but an old economy and has been around for a very long time means they can weather the storm of being alone until the European Union can put in place strong economic policies that will see them compete and regain the markets that the Asian markets have now taken. And seeing that the British Economy is a major player in the world economy, how the Brexit will affect the emerging economies remains to be seen. If they will also choose to invest heavily in the third world countries is another thing that we shall see. But the biggest factor to consider is that the U.K has been in the E.U for over 40 years, so how will the breakaway affect them? And if they have considered the facts does that mean the advantages out-weight the disadvantages? Will they include a buy in clause should the British economy go down in flames.
Currently we can see that the global markets are not responding favorably, if these are the early signs then the Brexit should be called off. As history has shown us, it only takes one mistake to bring down an empire and the British economy hangs on the hinges of that.
These are uncertain times that we are headed for and not even the British government can give us a resolute response especially that the world is only just recovering from the 2008 recession. So the economic implications on the U.K, Asia, America and African economies remains to be seen all we can do is plan and hope for the best.