IMPACT OF BREXIT ON EUROPEAN UNION.
ABSTRACT
The purpose of this article is to assess how Brexit will impact the European Union.
The term Brexit refers to United Kingdom withdrawing from European Union. A referendum was held on 23 June 2016 in which 51.9% electorate decided in favor of United Kingdom leaving European Union (EU). Future of EU will be a product of many centrifugal and centripetal factors, such as the position of UK within EU in relation to other member-states, the capacity of UK to influence their foreign policy and the outcome of negotiations.
Composition of the European Parliament
The composition of European Parliament changed following Brexit, signaling balance of power. The UK was allotted 73 in 751 Parliamentary seats. Post-Brexit, 27 seats were redistributed to other nations, and 46 reserved for potential future enlargements, reducing the number to 705.
European Parliament will tilt towards the right as the center-right European People’s Party and far-right identity and Democracy will gain seats post-Brexit assembly. The Socialists & Democrats, liberal Renew Europe, and Greens will lose a total of 24 seats. ( European Parliament Reserve Service).
THIS MAY LEAD TO A EUROPEAN PARLIAMENT focusing on supporting European Single Market, stringent immigration and asylum policies, enlargement of EU, enhancement of European Neighbourhood Policy, improvements in the regulatory framework and tax-reforms, and strengthening EU energy policy.
The UK accounted for 12.5% of EU population, 14.8% of the economy, and is home to more than 2.5 million EU citizens. (Ham 2016) UK’s contribution to EU budget in 2016, after accounting for its rebate, was Euro.19.4 billion. Unless the budget is reduced, Germany will be the potential provider of finance, with it’s share estimated at about Euro 2.5 billion. European Union lost approximately 66 million population post-Brexit.
Brexit also implies a significant impact in the free trade agreement, customs union, and in the internal market ( based on four fundamental freedoms of movement of goods, services, capital, and labor). The effects could be notably higher on the manufacturing sector and certain countries/regions such as Northern Ireland, Republic of Ireland, Norway, Netherlands, France, and Germany.
Value of Euro
The value of the Euro against Brexit has fluctuated since the Brexit. Other factors such as President Trump’s tax cut and eurozone inflation also played a decisive role. After February 3, 2020, the Euro exchange rate vis-a-vis the US dollars and Pounds seems to be recovering, gaining a boost. Under this scenario, the European Central Bank may ease the monetary policy to improve the economy and bolster the confidence of EU member states.
UK’s Departure has implications for EU’s common security and defense policy
UK was arguably EU’s strongest defence power, representing 25% of defence spending in EU. After Brexit, EU will lose access to UK’s international network of intelligence and security links. To cushion the impact, the European Council has put defence cooperation as a major project in it’s policies moving forward with European defence fund and activating permanent structured cooperation.
Setting out immigration policies post-Brexit is challenging process for the union. Most of the Eastern European member-states have approximately 1.2 million workers in UK according to 2016 statistics. There is a possibility of a decline in EU nations living in the UK and vice-versa after exit which can lead to loss of skills, talents, and low-profit margins after job cuts.
Domino effect of Brexit and rise of Euroscepticisim
Brexit gives a push for holding a similar referendum in other EU-states, Eg- France national party, Dutch right-wing populist felt a need for similar action. (Miller&Lang,2016).
To conclude, the departure of UK brings a dynamic shift in the European Union.
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