Shatha Khalil *
There are political and economic indications of France’s exit from the European Union, the first is the rise of conservatives in the French society, and this will be proved in the upcoming French elections, while the second, lies in the financial burden to provide assistance to the countries of the Union exhausted economically, and the burden of refugees, and the dismantling the link of French currency to the euro, as a prelude to exit from the European Union .
Great Britain is free and loose , the empire that the sun never sets, so the British see themselves from the perspective of their deep-rooted history , they don’t like to be melt in the European crucible that threatens to wipe out their identity and heritage, and the inhabitants of the island who sought over time to protect their land from the external invasion, and the protection of their hand labor from foreign competition , do not look with the satisfaction to the flow of foreign labor to their factories, and institutions under the protection of the law.
After the accession of the 43 – year – old between Britain and the European Union, from 1 January 1973 to 24 – June 2016, it has been officially seceded from the European Union, as Britain entered a new stage in its political, economic and social history, this is the stage of Brexit .
Britain is one of the main pillars of the European Union, and the fifth world economy, the financial center of Europe, and owner of the largest share of European direct investment.
Britain got many privileges, which is within the Union, in the economic sphere , British goods were marked of its easy transportation within the Union, and the ease of movement of airlines within it also , and there are more than half a million British people working in the institutions of the Union countries, and to keep its currency of pound sterling, and not to deal with currency of European euro, and with all these privileges , but the desire for secession exists.
And the British – European relations were marked before separation of the state of ” the lack of mutual satisfaction”, based on a long history of lack of confidence, lack of harmony in the orientations and visions between Britain and European countries, especially with the two great nations in the EU: Germany and France, as Britain was not enthusiastic in any day to the process of European integration.
It was for this separation economic effects on the British party and the party of the European, Britain lost all the privileges of full membership in the freedom of entry of goods, commodities and services without tariffs to the largest market in the world, the single European market, which includes 500 million people, with the size of GDP up to 18 trillion euro and lost subordination to trade agreements with 53 countries, as it was linked to trade agreements with the European Union, as well as Canada, Singapore , South Korea and Mexico, and will be forced to negotiate bilaterally with each country to get the same trade privileges .
On the other hand , Britain negotiate to reach a common European market for marketing its services industries , while the manufacturers in the EU are enjoying automatically with rights that are almost unlimited to sell what it want to sell whatever in Britain under international rules established by the WTO. ”
And Britain will need a partnership agreement with the countries of EU similar to the agreements that have been negotiated with Switzerland and Norway, the only two major economic entities outside the European Union.
And from the perspective of the European Union, the terms of any agreement with Britain must be no less stringent than those contained in the company’s existing agreements.
The granting of Britain easier conditions would be imposed immediately similar concessions to Switzerland and Norway.
If Britain got, on any special privilege, that will tempt other members of the lack of enthusiasm to threaten to leave the European Union and the demand to renegotiate and get the same privilege.
In fact, many people in Scotland who are defending their independence would argue in order to remain a member of the European Union, a popular refrain expected to lead to a vote in favor of secession from the United Kingdom, and take with it many service jobs in London to Edinburgh.
The measures taken by the United Kingdom, to reduce the negative impact of separation are the building and strengthening trade relations with India, to proceed with the investment in diversified economies, and build relationships with partners and our allies across the world. ”
With the activation of the Brexit , many European cities are competing to attract companies and jobs from London which currently it represents the main financial position of Europe, and the numerous banking institutions announced their intention to leave London as soon as Britain out of the European Union.
Britain seeks to preserve its institutions, open to the business, talent, trade and opening up to the outside. ”
Cities are competing like Paris, Frankfurt, Dublin and Luxembourg to attract financial activities located in the financial district in London as soon as the withdrawal of Britain from the European Union.
A study conducted by the «Cologne Institute for Economic Research» confirmed that the German city of Frankfurt is the most likely to succeed London as a financial heart for the largest economy in Europe (Germany) and and the headquarters of the European Central Bank.
The separation has reflected on wages in the United Kingdom, after the exit from the European Union, the rise at the lowest pace, raising fears about the prospects of increasing pressure on families to coincide with the rising inflation, to the highest driven by the decline of the pound sterling, the National Bureau of Statistics said consumer prices have increased by 2.3% in the month of March 2017.
Bureau of Statistics data showed that food prices rose at an annual rate of 1.2% and the unemployment rate rose by 4.7%, to coincide with the rise in the average of weekly income except for bonuses by 2.2%.
Despite the remarkable progress in the offering of job opportunities since the global financial crisis, wage growth in the UK remained weak over the past years.
The British National Bureau of Statistics announced the growth rate of the gross domestic product (GDP) of 1.8% during the year 2016, compared to 2.2% in 2015.
The Statistics Bureau’s report pointed out, that Britain’s economy grew by 0.7% in the fourth quarter of 2016, with continued strong consumer spending, and the growth of consumer industries, against a decline in business investment by about 0.9%.
Britain registered the largest deficit in the balance of current transactions in 2016, equivalent to 5.2% of the economic output of the country; and this deficit led to the increase the flows of the dividends and payments of debt to foreign investors over the similar flows that come to the country, in addition to the large trade deficit.
For the British currency, it lost more than 10% of its value, while European markets of stocks, bonds and stock exchanges saw a state of chaos, especially the London Stock Exchange after separation.
Forecasts ranged between wide migration of capital and the reluctance to invest in real estate and services sector which is booming in London, and the possibility of transmission of the financial capital of the European Union, from London to Paris or Frankfurt, where the European Central Bank headquarters, as well as the rush of global rating agencies to review the sovereign credit rating of Britain.
The most important influence on the British economy, it seems if we know that the European Union, which is Britain’s first trading partner where the United Kingdom’s exports to it in 2015 accounted for 44% of its total exports, noting that the trade balance between the two parties tend to the interests of the European Union, it does not seem that there is the interest of it to give up about it, even after separation.
And Britain ‘s exit from the European Union will be reflected on the transfer of British nationals within the European Union, as there are about 1.26 million British nationals are living in European countries, including Spain (381 thousand) and Ireland (253 thousand) and France (172 thousand) and Germany (96.9 thousand), Italy (72.23 alpha), and the negative effects on them are the decline of the level of their income, increase the unemployment, and inflation of prices due to the increase of consumption.
As the membership of the European Union was to enable the British citizen to move freely and work within the European Union without the need for a special permit, but now, he’ll need a visa to visit it, as well as incurring additional financial burdens to travel.
Moreover, there are doubts and questions about the fate of many British employees working in European institutions, especially in Brussels.
Britain’s exit may lead to the complexity of the relationship with its neighbors, noting that Spain may also close its borders in Gibraltar area, which covers an area of 6 kilometers, and Conjoined to the province of Andalusia, where 33 thousand British are living, and in the north, could lead to the establishment of borders between the North Ireland and the Republic of Ireland which is reflected negatively on the movement of individuals.
There are always growing questions about the future of the United Kingdom and its ability to remain a unified state after the voices demanding to re – raise the issue of the independence of Scotland; as the advocates of its independence are seeking to remain it a member of the European Union.
This orientation came through the Prime Minister of Scotland, Nicolas Strzin, who felt that the organization of a new referendum on the independence of Scotland is very likely, because they do not want Scotsmen to become outside the European Union against their will, as a majority of them voted in favor of staying in it.
These consequences will pay Britain to look for alternatives to exercise its influence in the international arena, particularly in the North Atlantic alliance and the seven major industrial countries.
Although Britain has a prestige in the international arena politically, and the world consider it a strong voice within the European Union, the withdrawal could lead to the following:
– Britain is no longer a global superpower , as before, but it remains a powerful influential country in culture, economy and military areas , the European Union will be weaker and smaller than without Britain, and the political balance would be fundamentally disturbed that was guaranteed by the presence with Germany and France within the Union, but there is another certain issue to make the withdrawal of Britain a foreboding danger to all EU countries, especially the EU which is facing the euro crisis and the crisis of Greece and its debt, and migration issues and the Displaced persons and refugees.
– Britain is the largest provider of financial services in the European Union, as many World banks and banking institutions runs part of its business from Britain to ensure that what is known as «passport rights» ie to establish offices in London , allowing them access to the whole European market, but after the withdrawal of Britain from the Union , these institutions and banks will have to set up branches in other European countries; which leads to a decline of 50% in financial services providing from London to the European Union, any loss of 10 billion pounds a year.
Despite the negative effects of separation, but the British observers are optimistic, the Capital Economics Research Center said that the deficit in merchandise trade is declined in December 2016 to 10.9 billion pounds from 11.6 billion in November.
And Scott Bowman, an economist at the center, based in Britain, said that the data confirm that the economy has become “more balanced.”
He added that the data of “economic activities today added to other evidence to suggest that the economy has maintained a considerable amount of momentum at the end of 2016, which means that GDP growth has become more balanced.”
– The British economy recorded a growth rate of 0.6% in the last three months of last year, according to the Bureau of Statistics in a preliminary estimate last month, despite the impact of the process of country’s exit from the European Union.
– Britain confirms that the top priority in the industries will be for aviation , air transport, automotive industry, clothing, medicines, and sectors of intermediate priority include chemicals, electronics, furniture, aquarium fish , while the low priority including the environmental , medical, oil and gas, construction, steel and water services, and emphasizes the increase of the size of work which needs to be done to help these sectors during the Brexit phase.
Today, France is considering secession following the example of Britain, as the National Front “French far- right”, put forwarded the idea of the general orientations of their electoral platform for the next presidency, by the exit of France from the euro zone and from the European Union following the example of Britain.
Unit Economic Studies
Translated by: Mudhaffar al-Kusairi
Rawabet Center for Research and Strategic Studies