Great Britain will vote on whether or not it should retain its place in the European Union Thursday, in a democratic process that has been labelled the “Brexit vote.”
Polls show voters to be pretty evenly split on whether the country should remain or withdraw from the E.U. The vote has been predicted to have a profound impact on many aspects of society, including the economy, immigration, and the country’s refugee policy.
Supporters of the Brexit say that the U.K. puts more into the E.U. than it gets out. The country’s leading economic historian, Nick Crafts, however, conducted a detailed assessment arguing that the U.K.’s involvement in Europe has been beneficial. “[T]he EU directly raised UK prosperity by about 10 per cent, largely due to increased competition and better access to the single European market,” the Financial Times reported on Crafts’ findings.
A prominent economic hurdle post-Brexit would be rewriting trade deals that currently are defined by E.U. law. The main groups of economists who have published studies in the campaign use different models and different data but speak with more unanimity on this subject than on any other. Erecting trade barriers with the EU would hit prosperity, which is not easily replaced by greater free trade elsewhere. Leaving the bloc would afford the country little additional regulatory freedom and there could be long-term consequences from the short-term upheaval of Brexit. Economists overwhelmingly think leaving the EU is bad for the UK economy.
Exiting the European Union would not only bode poorly for Britain, but could have a serious impact on the rest of the world too — including the United States. “The decision carries hefty consequences for American businesses, which employ more than a million people in Britain,” the Washington Post reported. “The United States is the largest single investor in Britain, and many firms consider it the gateway to free trade with the 28 nations that make up the E.U. A Brexit would jeopardize their access to those markets, potentially reducing revenue and forcing some firms to consider relocating their European operations elsewhere.”
A main drive for many Brits voting leave is concerns over immigration, and right wing parties like the UKIP have tried to rile up concerns over the resettlement of refugees. Much like in the United States, immigrants are often blamed for economic woes in Britain. But as this graph from the FT shows, “There is no indication that immigration reduces wages.”
Thursday’s vote will prove to be significant one way or the other. The vote may not be the end of the world as we know it, despite the portrayals of some jockeying for the Remain side, but it also appears there is little proof that exiting would bring the U.K. any immediate major benefits.
“With clear and easily specified economic risks in the short and medium- term, Brexit does not easily pass any cost-benefit analysis,” the FT reported. “But supporters of the EU should be wary of making overconfident claims, since trade is only one driver of growth and prosperity.”