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Brexit leads to uncertainty regarding UK and world economies

Stanley Morales | Pexels

As of Sept. 6, the United Kingdom’s Parliament has failed to come to an agreement with the Prime Minister Boris Johnson. 

Many echoes of impending doom for the national economy and poor immigration are being voiced, while others say it will help spur economic independence from the European Union and help remedy wealth inequality. 

Just like many important decisions, Brexit has its pros and cons. However, it will not only
affect the U.K. and Europe, but also the United States and the entire world. 

Brexit is the proposed withdrawal of the U.K. from the European Union which began in June 2016 after a referendum. 

The European Union is one of the world’s largest trade agreement blocs after the North American Trade Agreement and Asia-Pacific Economic Cooperation. 

Nearly half of all British exports are sold throughout Europe, Bloomberg LP reports showed. Many worse case scenarios about regional, fiscal and social impacts are being analyzed by the University of Oxford. 

Additionally, many people voted for Brexit as it embodies the causes for regaining sovereignty and freedom. 

Economically, Brexit will have both short term and long-term effects on Great Britain’s economy, as business confidence early on will be lower and investment will be seen as much riskier. 

The U.K. is expected to maintain its trend growth rate up to 2030 of 30%, according to the London School of Economics. Some economists speculate that gross domestic products growth will be
stunted by 6%. 

A loss of 6% would result in 24% growth instead of 30% growth and cause the economy to be smaller indefinitely due to unemployment and lower production. 

Some groups in the U.K., notably farmers and universities that succeed in obtaining research grants from EU programs, would potentially lose steeply from Brexit. 

Despite this, the nation’s economy will grow moderately and will no longer have payments to make for being a member of the trading bloc.

 Based on the 2014 data most often quoted, the saving would be around 280 million euros per week or 14.56 billion euros annually. Many want a sovereign government that is not subject to EU laws or ordinances coming from unelected officials in Brussels.

Socially, the argument for immigration is exaggerated and not fully accurate by those who are for the Brexit. Migration into cities like London, Manchester has had
both positive and negative effects as the service sector continues to grow. 

Indeed, there are actually more migrant workers than the indigenous people which was expounded as being a proponent for cheap labor. 

Yet, there is no statistical support for the proposition that the inflow of EU migrants has resulted in lower wage levels. 

However, many migrants from some origins do remit some of their income to their home countries and this can be regarded as a loss for the U.K. economy. 

In some local areas, migration undoubtedly puts pressure on public services and housing. Natives are being forced out of what was once their homes. This
similar to what is happening around the world, even in places like San Francisco.

Forecasts are uncertain, and in addition to the normal uncertainties inherent in long-term economic modelling, there are additional ones about future policy. 

It is not known yet how other nations will change their trading relations with the U.K. For
example, both the U.K. and the U.S. governments have hinted their intentions to negotiate a speedy trade deal. But even leaving aside the political difficulties, it is likely
that any benefits will be relatively small. 

The EU accounts for around half of U.K. trade, more than three times as much as the United States. 
Brexit will not be a quick resolution. 

In fact, it may take a few more years to come to an agreement but whatever the decision may be, it will be one with great magnitude. 

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