Brexit and Its Economic Effects on Economy of UK and Europe

BREXIT AND ITS ECONOMIC EFFECTS ON ECONOMY OF U.K. AND EUROPE

ABSTRACT

Brexit was a name derived after the British exited from the E.U., an economic union created by European countries where the U.K. was one of the member countries since 1973. On June 23rd in 2016, everything changed after the U.K. decided to exit European Union. The exit was that citizens decided that the advantages of trading freely were not enough to offset the cost of free movement. According to votes cast, 17.4 million people voted in favor of leaving the union compared to 16.1 million who voted for Britain to continue its membership in the union. Therefore, Brexit happened because working-class citizens of England were old, and they feared that citizens of those developing countries in the union could take their jobs. Another reason is that the European union fees frustrated small businesses. Others felt that departing from the E.U. would create some job opportunities, while some thought the U.K. offered extra to the union than it obtained.

INTRODUCTION

Brexit's most significant impact was the damage it caused to the economy's growth in the U.K. This is because of the uncertainties that surrounded the outcome. The economy slowed as many of the businesses located in the U.K. transferred their headquarters to countries in the European Union. The impact mostly was on growth and jobs. These uncertainties made the Growth rate fall from 2.5% in 2015 to 1.0% in 2019. The estimation made by the U.K. government is that the growth rate slowed down up to 6.7 percent for more than 15 years. On currency, the British sterling pound was reduced from 1.48 on the referendum to 1.36 on the following day. This helped in the exportation of products but increased the prices of importation. The effect on jobs is that young workers from Britain were mainly affected by Brexit. For example, in Germany by 2030, it was projected that there would be a shortage of 3 million skilled workers, but these opportunities will not be there for U.K. workers after Brexit. Moreover, employers in the U.K. were having a hard time finding new employees because, after Brexit, the E.U. member countries employees left the U.K., where their figures reduced by 95 percent.

The membership of the U.K. in the E.U. contributed to their economic prosperity. Uncertainties concerning the referendum results began to weaken the growth and development of the economy in the U.K. A British exit would have a significant destructive impact on the U.K. economy and affect the rest of the (Organization For Economic Cooperation and Development (OECD). Therefore, Brexit caused taxation on the GDP, imposition of the tax, and rising cost could not have occurred if the U.K. remained in the union. If the U.K. continued its membership, the effect would be conveyed through ways that would change with time. Soon the U.K. economy would be stroke by a tight financial state and low confidence after exiting from the European Union with trade b