Brexit: A Success Story or Still In Progress?

What is Brexit?

The term Brexit was founded by a British lawyer known as Peter Wilding. The term was formed by combining the words “British” and “exit”, thus forming Brexit. Brexit is a term that refers to the official departure of the United Kingdom (UK) from the European Union (EU), as a result of the majority voting on leaving the EU during the June 2016 referendum, hence ending their 47 years of membership in the EU (Business Standard, 2012).

Why did the UK Join the EU in the first place?

After the end of the second world war, the extremely high costs of the war had caused major economic uncertainty among most European countries. The major European countries agreed that there should be some sort of economic integration among them, not only as a measure to pull them out of their economic slumps, but to also tie themselves together economically, thus eliminating any incentives for regional conflicts. As a result, the European Coal and Steel Community was formed by the first six founding members: Belgium, France, Italy, Luxembourg, The Netherlands, and West Germany.

At the time, the UK did not feel it was necessary to join the EU, as it was seen that they were already economically and politically stable and felt that they did not require aid from the rest of Europe. However, years after the formation of the European Economic Community (EEC), the UK experienced a long-lived economic recession which eventually provoked its entry into the EEC. The UK officially became a member of the EEC on the 1st of January 1973.

What led to the departure of the UK from the EU?

The main goal that the UK aimed to achieve by joining the EU was to promote sustainable economic growth and political stability through integration with the other countries in the region, all whilst still maintaining political and economic independence. Ultimately, the UK did not achieve its goals by joining the EU, due to the UK rendering the EU as a force that was either unable to assist in achieving most of its goals, or in some cases preventing the UK government from taking action on such matters (Clarke, H. and Goodwin). Since its goals were not met throughout its time in the EU, the UK opted for its departure from the EU on the 23rd of June 2016.

What Now?

Currently, the UK lies in a slow recovery process, in which it is attempting to recover from both the effects of the global pandemic and the significant decrease in trade caused by Brexit. The combined effects of both issues could be highlighted through its trade intensity index, which is the percentage of exports and imports divided by GDP. In 2019 the UK’s trade intensity index was 63.39%, while in 2020 its trade intensity index decreased to 55.09% (World Bank, 2021). The 8.3% decrease in trade as a percentage of the UK’s GDP is evident from the food shortages that took place across the UK in 2020. Although the decrease in the trade intensity index has seemed to hurt the UK’s economy, this effect was offset by the UK’s utilization of the transition period (January 31st till December 31st 2020), by re-establishing free trade agreements with countries that it previously traded with under the EU’s FTAs (Edgington, T. ,2019A). The UK has also formed new free trade agreements (Edgington, T. ,2019b) that were not rolled over from the EU such as:

• UK-New Zealand Free Trade Agreement (October 2021)

• UK- EU Trade and Cooperation Agreement (January 2021)

• UK-Japan Comprehensive Economic Partnership Agreement (January 2021)

These newly-formed free trade agreements are forecasted to stabilize and increase trade between the UK and other countries in the upcoming years.

Success or Still In Progress?

The UK remains at a recovery stage in which it attempts to rework some of the previous free trade agreements with other countries, while also creating new connections and exploring new economic benefits that might have not been simple under the EU’s ruling. On the other hand, the UK was placed in a very difficult situation by exiting the EU in the midst of the Covid-19 pandemic. Brexit is said to have compounded the challenge of the economic recovery from the effects of the pandemic. Overall, the UK’s decision to leave the EU has helped the UK become more economically and politically region-independent. While the road to recovery may seem difficult, the UK targets to ease this by increasing trade with other nations, mainly through new bilateral and multilateral free trade agreements.

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About The Author

Yazan Al Bishtawi

Yazan is an undergraduate student majoring in Economics and International Economics at the University of Nottingham Malaysia Campus. By becoming a research contributor in NES 2021-2022, he aims to enhance his skills in the analysis, interpretation, and synthesis of research articles in economics and politics. Yazan hopes to pursue further academic education by undertaking postgraduate studies relating to one of the sub-disciplines of economics.

References

Business Standard (2012). What is Brexit, What is European Union, Brexit Pros and Cons, Brexit News. [online] Business Standard. Available at: https://www.business-standard.com/about/what-is-brexit. [Accessed 10 Nov. 2021].

Clarke, H. and Goodwin, M. (n.d.). Insight: Why Britain really voted to leave the European Union | University of Essex. [online] www.essex.ac.uk. Available at: https://www.essex.ac.uk/research/showcase/why-britain-really-voted-to-leave-the-european-union. [Accessed 10 Nov. 2021].

Edgington, T. (2019). Brexit: What is the transition period? BBC News. [online] 20 Dec. Available at: https://www.bbc.com/news/uk-politics-50838994. [Accessed 10 Nov. 2021].

Edgington, T. (2019b). Brexit: What trade deals has the UK done so far? BBC News. [online] 13 Aug. Available at: https://www.bbc.com/news/uk-47213842 [Accessed 10 Nov. 2021].

World Bank (2021). Trade (% of GDP) - United Kingdom | Data. [online] data.worldbank.org. Available at: https://data.worldbank.org/indicator/NE.TRD.GNFS.ZS?locations=GB [Accessed 10 Nov. 2021].