Economic And Political Impact Of Brexit On EU’s Future: Implications For UK And Regional Integration – OpEd

After the dismissal of three British Prime Ministers and two missed deadlines Britian is in chaos, people are coming out to the streets because they are angry, indignant and divided due to Brexit. The conservative government wants to be out of the European Union as fast as possible even with or without a deal and no matter the cost. The supporters of Brexit are looking for new world order, diverse opportunities and reduced immigration policies but the UK parliament had rejected the no-deal scenario of incumbent government.

The battle between those who want to leave right now and those who want to remain is threatening to undermine British democracy. Critics narrated that Brexit is guilty of incendiary rhetoric and what Brexit do will take a knife to them, they believe Brexit created a climate of fear for vulnerable minorities which is considered to punish immigrants and politicians as well. Since three years, the Brexit has become the most discussed issue for the researchers and expert analysts to find that what will be the future of United Kingdom and European Union after Brexit.

There are certain reasons that it became explicitly debatable for the researchers, it is possible that no member state of European union ever left the union before. As we are only a few weeks away from 31^st January, because the UK will leave the union, the UK has not yet agreed on a deal that will determine UK’s future relationship with the EU but in order for the deal to take effect, the deal has to pass through the parliament. However, the deal agreed may suffer a heavy defeat through parliament as we have recently seen the bulk of deals proposed by British Prime MinistersTheresa May and Boris Johnson.

It looks as the UK is heading towards no-deal Brexit on which experts project a very pessimistic scenario for both sides but the upcoming time will unfold the whole story. This research will cover the background and emerging challenges for Brexit, EU and regional integration, this paper will also analyse the political and economic implications of Brexit for the European Union and United Kingdom. As the process of Brexit has already been started and if this political divorce happened then it will not just stop at Britain’s borders, the departure will send ripple effects across the European continent as well.

The negotiations are still going on about the terms and conditions of withdrawal between the European Union and Britain which are mostly considered as uncertain.Actually, the real matter of concern for the continent is that the exit of Britain from the European Union will bring a huge political shift in the region and will also affect the political and economic relationship of UK with the rest of EU’s members.

At the result of Brexit, the UK will be moving far away from regional integration and co-operation with its neighbours but any feasible deal with EU will help them out to either remain in Eurozone or not, it is also possible that UK could implement “Soft Brexit” or “Norway model” potentially it will also open the new avenues to negotiate e-commerce deals and agreements directly with non-EU countries.Currently, the EU and UK parliaments are deciding between a “soft Brexit” which supposes that Britain will remain regulatory aligned with the EU, also remains in the single market and custom Unions or the “hard Brexit” will be followed, which means the complete discord with the EU terms and conditions.  Now, its explicitly impeded that either hard or soft deal will sign and what could be the implications for the future of EU? The Brexit had been very perplexed and became a nightmare for the British people because three Prime Ministers had already been resigned and also missed two Brexit deadlines but now it’s the Boris Johnson newly elected Prime minister turn that how to lead the matter of leaving the EU.

Evaluating the Political and Economic Impact of Brexit on UK and EU 

Being one of most important European members, United Kingdom could influence the EU to get leverage over it. If we discuss the EU impact on UK then it could influence by three factors; accessibility to the European market, economic sanctions, future relations with other European countries, financial assistance and so on. EU could restrict its neighbouring states to do bilateral trade or could give more concession to attract them towards EU. The most important thing is to maintain relations with EU’s states because, in case of any contention, United Kingdom might lose access to major EU market and also could decrease its area of influence in the region, similarly various future agreements could be discorded if Brexit happened.

Another political impact would be the disarrangement of US-UK geostrategic partnership, a withdrawal could enforce USA to prefer deal with EU-27 and it may reshape its foreign policy towards United Kingdom. Due to Brexit, Britain may lose its substantial political position in European domestic and foreign affairs. In addition, the UK nexus with Northern Iceland and Scotland will remain another threat to UK. Nobody is damn clear about UK immigration policies, its trade relations with other states, what will be future of citizens of UK and EU. More specifically, other two members of United Kingdom, Scotland and Northern Ireland have supported profoundly to remain with EU, the voting ratio of both states were 62:38% and 55.8:44.2% respectively. Both countries are demanding to conduct second independence referendum.

If Brexit happened without any deal then it would have terrible impact over public opinion and there could uprising against the British government. According to a public survey, majority of Scottish people decide to get independence from UK and the result was 48:41%, this is another backset to UK integrity. EU has been agreed to include Northern Ireland as a part of EU single market and customs unions but UK rejected this proposal as a breach of Britain constitutional sovereignty.

In 2018 after months of deadlocks, Theresa May decided to agree with EU this proposal but she faced a backlash from her MPs, even their government political partner Democratic Unionist Party (a Eurosceptic political party based in Northern Ireland) rejected it which again created a controversy between Northern Ireland and the Republic of Ireland. EU provided a free access of trade and people travelling in a very soft conditions between these two countries but a general perception is there that after 30 years violence and territorial conflicts, it may possible that a hard border would undermine the Irish people free-movement and it would again trigger a wave of violence to destabilize the European continent. Furthermore, the Britain withdrawal will also have a negative impact over EU and the political divorce will make the relationships more complex and threatened. As per World economic report, UK is considered as one of EU largest trading partner having 13% trade of goods and services, 2017 marked the 450 billion sterling pounds of import-export between both parties. 

Retrospectively, EU is also facing political and economic challenges across the continent, as it’s trying to get recovery from growing unemployment, restoring Eurozone crisis, resolving refugee crisis, tackling rising populist wave, diminishing nationalistic voices within EU member states, increasing Eurosceptic political parties and growing terrorist activities in neighbouring countries are some serious challenges for European Union, which is causing headache for EU administration. EU is also facing serious concerns that Brexit may become the cause to provoke other states to ask demand for independence from EU, that’s the reason EU wants to engage UK with a deal. The increase in EU-skeptic parties by 60% in recent European Union elections instigated the narrative of disintegration, it will also jeopardize the struggle of deepening the roots of EU integration. This is how both the contracting parties are overanxious to find the most feasible solution to avoid any damage in future. The campaign of Brexit also increased the public awareness about EU and its advantages of being a member of European Union, it also has affected the Public opinion significantly.

As for as the security of Europe is concerned, it will definitely have a negative impact on European Union because EU will lose a major nuclear power, member of Security member and advanced military power in North Atlantic Treaty Organization. The conflicts are there between Trump administration and EU, he had informed EU to contribute more for their own security and threatened to halt financial support to NATO, so, the relationship between US-EU could be more worsen as it was better-off earlier. To downsize the reliance of USA, EU established European Defence Agency to enhance European Security strength but the allocated budget is limited to protect the Union from external vulnerabilities.

French President Emmanuel Macron stated that “Europe can no longer rely solely on the United States for its security. We must have to guarantee our own security and sovereignty”. The implications of this divorce depend upon whether both parties will make an agreement or not. Both parties must need to overcome internal hostilities and take an initiative to deepen the EU integration because any break-up will further disintegrate and undermine the sovereignty of European Union. It’s really a crucial challenge for EU sovereignty either to resolve the current withdrawal or be ready for further rupture.The UK withdrawal from EU will have definitely consequential economic impact over both parties in short-term and long-term as well because it’s difficult to decide about trade, financial investment and access of market to UK. After leaving the customs unions and single market, UK will try to engage with the EU under WTO rules and regulations. If any kind of deal has done then UK will access the European Economic Area (EEA), this market works under the EU rules to allow free movement of goods, services, capital and labours, this would benefit UK accessibility to EU market and may avoid any future economic shortfall. In 2017, UK exports to EU were 44% and imports were 53% which is 3.5 times larger than UK-USA trade. So, in case of import-export EU is more important for UK economy. Brexit will reduce the economic relations of UK with its European trade partners. 

Implications of Brexit for the Future of the European Union

The UK referendum brings shocking outcomes not only for itself the UK but rest of the EU region as well. There are few reasons like it would minimize the area of influence of EU and its institutions, the EU could have to face domestic political shift and the outcome of Brexit is extremely dismaying. Most interestingly, the results of referendum explicitly varied across the United Kingdom as the London, Scotland even doesn’t want to leave the EU. Any Future relation of UK with EU could alter the whole constitutional arrangement of UK, Further, regarding the UK intentions to leave the EU, Theresa May had already been invoked the Article 50 on March 29, 2017. Having discussion over Brexit, it is also imperative to highlights the possible implications of Brexit for regional integration. The major concern is not only for UK but it will also affect the European Integration in the form of several crises. The widened uncertainties included migration crisis, financial settlement disputes, borders disputes, Rising populist wave in European region, liberal democratic crisis in certain countries, Eurozone crisis, undermining the EU’s credibility and so on. These challenges will help antagonistic factors to get benefits from this new instable uncertainty and will try to provoke the sentiments of ordinary citizens. For example, these factors might deal to weaken the EU more and more or make it more cohesive. 

There could be two new approaches about European Integration, the centrifugal trajectory which is associated with fragmentation of European Union and another one is centripetal trajectory which mainly focuses on EU cooperation, strengthening the EU structural body, leads to a more stronger and influential regional organization in the world. Until now, UK played very influential role in EU and it was one of first country to promote and reshape the European integration, it has always supported the EU initiatives and even vetoed various agreements proposed by other member states.UK role in Introducing enlargement policy and its impact over security and defence policies always remains crucial and became a core player of EU. It has also promoted the particular form of EU integration and supported a particular Ideological agenda (favour intergovernmental solutions to all institutional reforms). The leadership of Britain always advocated the liberal economic agenda in EU without interference of any party in power. There are two perspectives regarding UK implications for the future of European Union, Eurocentric and Euroskepticism. Euroskeptic argued that EU has never been more divided ever before as it’s in contemporary times, European Integration and solidarity had already been undermined due to organization internal problems. They have proposed populist solutions to all the EU problems.

These kinds of agenda are driven by centrifugal trajectory due to policy differences which are already going on within EU to blame one-another for Eurozone crises. The Brexit could be a nightmare for the survival of EU as every state will strive to implement restrictive policies to stop migrants burden share. Additionally, the collective institution concept and Free-border Schengen framework have been abandoned by different states, which is another damage to EU commitments. Various European countries could agree with UK in areas like Fiscal policies, mutual cooperation, Border issues and immigration which could further create rift within EU. Typically, UK supported Atlanticism which could convince other European countries.Contrarily, Eurocentric bloc might be prepared better while negotiating the Brexit and could assist each other to reshape the solidarity and harmony among the EU-27. A common front could be more unified to deal with any long or short-term problems, the withdrawal of UK could bring new opportunities for EU-27 because it may generate potential for building a more cohesive and vibrant market that would serve the best interest of member states. Now, the UK departure will decide either EU is going to be more integrated or will be fragmented.

*Zakir Ullah is an Independent Researcher, based in Islamabad, Pakistan and holds a graduate degree in international relations and has a keen interest in International Political Economy, Geopolitics, Defence and Strategic Studies and Foreign affairs.