What is Brexit?
Brexit is a short form for the agitation of Britain to be secluded from the European Union. It is a compound word coined from the words “Britain” and “Exit”. In a June 23, 2016, a historical event took place in Europe. The Britain voted for a British exit from the European Union. The voting comprised of those that were of the age to vote whether Britain will leave the European Union or not.
According to Opinium Research LLP, a market research consultancy, 64% of eligible people aged 18-24 voted, whereas 90% of eligible individuals over 65 voted. Those who supported the act of seclusion from the EU won by 51.9% against those who voted for non-seclusion 48.1%.
Why did Britain leave the European Union?
Most of the reasons why people decided to vote to leave the European Union were immigration and sovereignty.
Majority of the Britain that voted for Brexit did this on the basis of reclaiming control of their borders. They want control over the influx of people into their territory. There has been an increase in the immigration level into Britain over the past 10 years.
From the Brexit advocates perspective, these have left a significant negative impact on the economy and society of UK. It was envisaged that the impact will be maximized in the next coming years. The Brexit proponents believed and made it the center of their agitation that they will not be able to control these impacts staying under the aegis of EU, Hence, the reason why they deemed it necessary to leave the Union, to become autonomous to control their borders and immigration.
Nearly half of Brexit supporters held the concept that the UK should have the power to make their decisions independently without the interference of the European Union.
Consequences of Brexit
The effect of the exit of Britain from the European Union poses multifarious consequences on the economy of UK. Different sectors of the United Kingdom economy that solely depends on low-skilled workers to make production will feel the adverse effect of the Brexit. This is because the majority of the low-skilled workers in Britain are from neighboring countries under the European Union. With the reclamation of the border and the control of influx of immigrants, it might cause a shortage of low-skilled workers in the Britain. This will also depend on the policy the UK will come up with the European Union.
There is a consequential lower wage growth, inflation, and high interest rates. The value of the pound plunged on the night of the referendum decision. Pound made a big-time fall against Dollar. These led to an increase of cost of importation which in-turn, led to inflation. Inflation has been on the increase since Britain’s exit from the European Union. This has been signified by the increase in the price of goods in the UK than it was prior to Brexit. According to ONS, inflation hit 2.9% higher last month than prior Brexit. Lower wage growth has made it difficult for households to meet up with the impact of inflation. Prices of goods and services have soared since June 2016 yet the there has been no significant rise in wages.
Business investments in the UK have also been affected by the uncertainties surrounding the Brexit. According to the bank of England, the level of business investment will decrease further by 25% in 2019 against the 0.9% decrease it witnessed in late 2016. These will hamper productivity growth.
Other countries that are a signatory to the European will want to follow to follow the footsteps of UK. Countries like France, Italy, and Netherland where eurosceptics will be emboldened by the British referendum and will start making moves to exit the European Union.