British voters shocked the world and sent ripples through the global economy with their 52% to 48% decision to leave the European Union on June 23, amid vociferous concern regarding immigration, terrorism and joblessness. And while the so-called Brexit conflates a variety of interconnected socioeconomic issues into a complex topic capable of sparking heated emotions, it’s difficult to tell whether Britain’s impending departure is actually a good or bad move.
On the one hand, from a people’s-choice perspective, it clearly showed the power of the vote in a democratic society. But when you consider that Google searches for “what happens if we leave the EU” rose by 250% after the polls had closed, it doesn’t seem to be the most informed decision in the world. And looking at just the dollars and cents of the equation, Great Britain is expected to save roughly $9.7 billion per year as a result of leaving the EU, which is less than one-third of the market value lost by the Royal Bank of Scotland and Lloyds Banking Group – 84% and 43% owned by British taxpayers, respectively – since the results were tallied.
With that being said, we’re still in the early stages of the transition, as Great Britain won’t completely sever ties from the European Union until at least December 2018. So in the interest of obtaining a better understanding of what the world can expect as Brexit comes to fruition and thereafter, we asked a panel of leading experts in global economics and public policy a single question that is simultaneously simple and immensely complex: Is Brexit good or bad?
You can check out their responses – including nine votes against Brexit and one in favor of it – below. And don’t hesitate to share your take on the issue in the Comments section at the end of the page!
Why Brexit Is Bad
- "Brexit is a bad idea because it takes British policymakers out of the regulatory conversation – both within the EU and across the North Atlantic. … The political constitution of the United Kingdom is ill-suited to making difficult trade-offs and British governments have a bad track record for building competitive industries at the expense of local autonomy. The UK also has a better alternative in the form of EU membership. Rejecting that alternative was a mistake."- Erik Jones // Director of European and Eurasian Studies at the Johns Hopkins University School of Advanced International Studies (SAIS)
- "Brexit is potentially dangerous for the UK, though the extent of the damage will depend on the negotiations occurring over the next six months. The principal problem is that it is not clear what 'Brexit' means. ... The difficulty is that there is a clear negative meaning – ending UK membership of the European Union and repealing the legislation under which the UK originally joined the European Economic Community. But, alas, the positive content of Brexit, what will replace the EU, is opaque."- Harold James // Professor, Woodrow Wilson School of Public and International Affairs, Princeton University
- "As much as the historian in me hates answering straightforward questions like this without adding a multitude of qualifiers, this is one which allows a direct response. Brexit was not a good idea, and not primarily because of its economic or financial impact. The simple fact is that the European Union, with all its faults and problems, is one of the most creative and hopeful ideas for keeping nations and peoples from killing each other to emerge out of the bloody 20th century."- Thomas Schwartz // Professor of History and Political Science, Vanderbilt University
Ask the Experts
Why Brexit Is Good
Only one of the experts we consulted fell in the pro-Brexit camp. You can find his comments in full below. And if you also believe there’s a case to be made in favor of the move, be sure to let us know with a comment.
Sandeep Mazumder // Associate Professor and Associate Chair of Economics at Wake Forest University
When Brexit occurred the morning after June 23rd 2016, I along with most other economists was taken by surprise since I was fully expecting a "remain" decision. From an economic standpoint, the UK is quite likely to suffer in the short-run. We have already seen that the immediate effect of Brexit was a negative one, as seen by investor reactions in markets. For instance, the closing value of FTSE 100 index was approximately 3 percent lower the day after Brexit, while the British pound depreciated by a massive 8 percent against the dollar immediately after Brexit. This represented the weakest value of the pound since the mid-1980s.
On top of this, the UK is likely to see less trade and foreign direct investment with other members of the EU over the next months and years, which will certainly cause economic hardship in Britain. Without doubt, the likelihood of a UK recession at some point over the next year to two years is much higher today than it was on June 22nd 2016, largely due to the high degree of uncertainty that now exists – both across investors and consumers.
That being said, I do not think it is all doom and gloom. We have already seen stock markets in the UK recover fairly well. The FTSE 100 index fell by a couple hundred points to 6,138 right after Brexit, but as of July 28th 2016 the index has rebounded to 6,721.
Looking beyond the stock market, if London is able to retain its place as the financial center of Europe, then that may enable Britain to preserve a great deal of business. They were able to remain the financial center of Europe even without adopting the euro as their own currency while so many other countries in the EU did, so it is not impossible to see London continuing this role in the future as well.
And thinking even longer term – one sharp criticism of the EU is how hopelessly bureaucratic and sometimes even undemocratic it can be – and if the UK is able find tangible ways to enact good economic policies without EU bureaucracy, then there is a lot of reason to believe that the UK may actually benefit from Brexit in the long term. This of course is highly dependent on what trade negotiations are conducted with the EU once Article 50 has been enacted. In particular, future UK economic prosperity could result if they are able to embark upon trade negotiations with non-EU countries, such as the United States.
Overall, I would conclude that the UK may benefit from Brexit.
Image: Christopher Ames / iStock.