Brexit news 23 June 2016 year shook all world markets. I perfectly remember the famous collapse of the British pound, which occurred due to the unexpected referendum on British membership in the European Union for all politicians, analysts and experts - and all market participants. He is Brexit in English Brexit.
As a result of the 51,9 vote,% of the participants decided that they no longer want to belong to the European Union. So, Britain must become an independent state.
After that, the global consequences were not limited to the collapse of the national currency and stock markets. Acting at that time, Prime Minister David Cameron immediately resigned, and was replaced by the leader of the Conservative Party Theresa May. After she officially sent a letter to Brussels stating that the country was leaving the EU, and the countdown officially began, which was supposed to last 2 of the year. But of course, the process is being delayed, and all because of the difficulties faced by both sides.
After several delays, Boris Johnson had already succeeded in replacing Theresa May, who was already bored with her not always adequate behavior. And he promises that the last postponement, which so far lasts until October 31 of the 2019 of the year, will be truly the last. And he will put an end to it!
What do both sides achieve
First of all, Great Britain wants to maintain trade relations with the European Union, otherwise the country will simply enter into a severe crisis. Well, on the other hand, to get out of the jurisdiction of the European Court and become an independent country, independent of the opinions of others, which only imposes it to the detriment of the country itself, benefiting for itself.
The European Union also does not want to lose Britain as a trading partner. But on the other hand, he wants to maintain a balance between all other countries. And it turns out that the UK will break ahead after the final completion of the Brexit deal and conclude more profitable agreements with other EU countries.
What to prepare for: what may be the options and consequences of the Brexit deal
Over the past almost 40 years, the share of the European Union in Britain's trade turnover has almost doubled from 33% to 60%. And this is guaranteed to inflict a severe blow on the UK economy, after which it will literally have to get on its feet. Losses after the severance of relations with the EU cannot be compensated even by those free trade agreements between other countries that will be concluded in the future.
But even despite such sad consequences, the UK did not change her mind at all to refuse the Brexit deal, and plans to bring it to the end with the maximum benefit for herself. Approximately 6,4 billion pounds has been allocated for this transaction. And it is bearing fruit.
Now many old scenarios have been cut off, and only two main ones remain:
- hard;
- soft.
The main difference between them is how relations will develop between the two most important institutions, which are a kind of foundation of the European economy - the Customs Union and the Single Market.
Before moving on, I’ll briefly explain what it means in simple words.
The Customs Union, as it were, unites the EU countries among themselves, erasing the barriers between them and urging them to act as a whole. But there is a flip side to the coin. Countries cannot do what they themselves want in the conditions of benefit for themselves, that is, to conclude any transactions and agreements on the side.
A single market ensures the free movement of goods and services between EU member states. Indeed, in fact, this is one big country, and therefore there should not be any obstacles.
Well, based on all this, I will explain the difference between Hard and Soft Brexit.
- A tough Brexit implies at the same time an exit from the EU Customs Union, as well as from a single market. It also implies the replacement of free trade agreements. Now, the longer the exit process drags on, the more there are supporters of the fact that as soon as possible to exit without any agreements. But the country cannot so sharply and quickly "divorce" with its largest trading partner. Otherwise, a no less severe crisis will ensue.
- Soft Brexit is no longer so cruel. His supporters still want to keep the EU as a trading partner. But only here there are 3 subgroups among supporters: the first wants membership in the Customs Union, the second in the Single Market, and the third has access to everything. But it is logical that the EU, in turn, for such a right may require completely unfavorable conditions for Britain.
In the meantime, there are active disputes, during which the 2 Prime Minister has already been replaced, the deal is guaranteed to affect the residents of the country. Only in different segments of the population will there be a different effect from the consequences of Brexit.
Moreover, due to such a protracted outcome, the number of supporters of the complete abolition of Brexit is growing. They require a second referendum, as a result of which the Brexit transaction can be completely canceled.
Are there any other scenarios?
The complete absence of any agreements between the UK and the European Union. And this is the worst option you can imagine. Britain will now trade only within the WTO. Yes, the country will be able to set its own tariffs and duties, which it only wants to. But this will be reflected in the GDP indicators, which may fall by 4,9%.
The European Union will also suffer in this regard, but only much less - 0,7%.
Therefore, the British side must necessarily reach at least some kind of agreement. In this case, the loss of GDP may fall to 3%.
But why is this option almost unrealistic?
In this situation, when absolutely no agreements are reached, all trade mechanisms will be torn between the parties.
Where it leads? To complete chaos and disaster:
- it will become difficult for people to leave the country;
- there will be a shortage of food, medicine, etc.
- the British pound will lose even more value in the global currency market;
- disruptions in travel between countries.
And these are just flowers. Due to interruptions and difficulties in transportation, many drugs will be delivered with a damaged shelf life. And there is a shortage of them. What can we say about food that will simply rot on the way.
In addition, British experts from NIESR (National Institute for Economic and Social Research) calculated that after Brexit Britain’s GDP in 10 years would be lower by 3,5% than if the country remained in the EU.
Therefore, the government wants to avoid this option by all efforts! Well, let's see what the new Prime Minister Boris Johnson, who promises a bright future, can achieve.
