What the Brexit Deal Means for Business, Markets and the Economy

What the Brexit deal means for business, markets and the economy (www.cnn.com, November 2018)

An analysis

        Two years ago, when the United Kingdom held a referendum for a British exit from the European Union, or Brexit, no one thought it was going to go through. Same as no one thought a certain loud-mouthed real estate tycoon would become president, in a way. What most people chose to ignore in both cases is how many older and less-educated voters decided to go out and vote, creating two historic situations that no one thought would ever happen, yet here we are. But before we go into what Brexit is, let’s talk about the European Union.

The EU was born after World War II, and the reason behind its founding, was basically to stop the continent from tearing itself apart yet again. However, it has since evolved into an economic union of 28 countries whose citizens could trade and move freely across borders. Things are obviously not perfect, the EU is large and extremely bureaucratic, but the UK leaving it is a hugely destabilizing decision. Many countries, including the United States, China, Japan, India and even the EU itself were against Brexit. More so, there was also the matter of the damage the UK would do to its economy by leaving the EU. Reports from multiple organizations have all predicted that leaving would have negative effects on the British GDP. So, considering that Brexit was so widely considered a bad idea, who was behind it? Nigel Farage, leader of the UKIP, a political party known for its anti-immigration views, and one of his main selling points was that the Brexit would prevent both EU citizens from taking British people’s jobs, and non-EU citizens from sneaking in to commit terrorist acts. Sound familiar? Can we think of any other country that might have the same ideology? The irony, however, is that leaving the EU does not mean it can do that. In order to close the borders, the UK would have to cut itself from the EU completely, which means no more single market and no more trade deals (Last Week Tonight with John Oliver, HBO, 2016).

        Through all this controversy and skepticism, Brexit passed. People voted for the historical decision of the UK to leave the EU. It was a close call, with 52% of people voting for it, but it was decisive nonetheless. The UK is due to leave the EU on March 29, 2019. So, the closer we get to this ominous date, the more important it is to take a closer look at different aspects regarding this separation, and how it will affect business, markets and the economy itself.

        The United Kingdom did however take a step towards making a Brexit deal with the EU. Businesses in the UK and the EU are preparing themselves for a very chaotic Brexit. They are being cautious regarding a plausible scenario where the UK leaving will lead to new trade barriers (CNN.com, November 2018).  The deal in question would feature a transition period for businesses in which most trading rules remain the same, which would be beneficial, because no one is exactly sure of the magnitude of the consequences of Brexit. A transition period would help businesses settle into the new status quo, and also help them better and more steadily adjust to the new rules and regulations.