On June 23, Britain voted to leave the European Union. This came as a shock to many countries, and created harsh divide within the state, between the “leave” and “remain” factions. On a morning met with celebrating and protesting, there have also been many other repercussions, including the resignation of Prime Minister David Cameron and a crash in the global stock market.
What is “Brexit”?
“Brexit” is the informal name for the Referendum of the United Kingdom’s Membership to the European Union, which merges “Britain” and “exit”. United Kingdom citizens voted to leave the European Union on June 23, 2016. The European Union is a 28-member state between western Eurasian countries that cooperates on politics and economics.
What is the history behind Brexit?
Anti-EU tensions have been stirring in Britain in recent years. In fact, many political analysts have referred to Britain’s membership as “awkward” since the beginning. Britain has rejected many practices observed by other E.U. nations, such as a written constitution, and use of the Euro as currency. These rejections, as pointed out by the Wall Street Journal, are a defining part of Britain’s nationhood.
A Washington Post article explains t-hat a few years ago, the idea of Britain leaving the E.U. seemed highly unlikely. However, an increase in migrants have fueled economic discussions regarding the costs of staying in the E.U.. In the last few years, Britain made demands of the E.U. in order to stay. These demands – which were met with resistance from E.U. state leaders – included cutting welfare programs for work migrants from E.U. states. In mid-February, E.U. negotiations in Brussels looked positive, as many state leaders agreed to certain draft negotiations made by Britain. However, in late February, E.U. leaders clashed over what financial freedoms countries that do not use the euro (including Britain) should have.
What were the arguments to leave?
Those who advocate for an independent Britain are primarily focusing on financial reasons, including membership fees, immigration costs, and trade.
One of the main leave campaign arguments is that that if Britain left, £350 million could be saved per week, and used to fund other programs (such as the National Health Service) Leave advocates argue that Britain pays more in membership fees that it receives – according to BBC, Britain paid £17.8 billion last year to be a member.
Another main argument leave has also focused on the immigration issue. Currently, the U.K. is at over 300,000 immigrants annually, above their target of under 100,000. 184,000 of those immigrants come from E.U. states, due to the fact that citizens of E.U. states can live and work in any other state. Many claim that because of this E.U. rule, they are losing their jobs to migrants. Leave argues that because of this, they cannot control immigration effectively, causing public services to be under strain. Rumors that Turkey will join the E.U. have dominated many debates, as leave campaigners argue that this will undoubtedly add more immigrants. Lastly, the influx in Syrian refugees has fueled the debate – many leave campaigners state that there will be even more migrants if the UK remains in the E.U.
Even though 45% of the UK’s trade is conducted with the E.U., the E.U. controls all foreign trade. Leave argues that Britain would be able to advocate for themselves, and therefore potentially earn more money. They also argue that trade with the E.U. would still occur, because more is imported from the E.U. than exported to the E.U. from Britain, meaning that E.U. states would still want economic ties to Britain.
What were the arguments to remain?
Remain advocate’s main facts serve as rebuttals for leave arguments. The remain campaign argues that the benefits of membership far outweigh the costs to the E.U..
Remain argues that the money spent on membership to the E.U. gives them easy access to trade with E.U. countries, and that they easily earn back the £17.8 billion through rebates and other services. Additionally, remain argues that other countries spend more per person than Britain does. Also, remain argues that Britain is far safer in the European Union, when it comes to defending themselves against potential terrorist attacks, and increasing threats from Russia.
Also, remain argues that if Britain were to leave, they would still have to abide by trade regulations imposed by the E.U. since 45% of their trade is with E.U. countries. However, they would not have any control over these rules, since they are losing their voting power by leaving. Remain also argues that Brexit would cause an economic shock in the stock market, and that it would take everyone – including Britain – time to recover.
Lastly, the remain campaign says that immigrants benefit the economy overall, and pay more in taxes than they take out. They also say that the threat of immigrants are not as large as the leave campaign has projected, that claims of Turkey joining the E.U. are false.
What are the facts?
Last year, Britain did paid £17.8 billion for membership to the European Union, however received multiple discounts. Immediately, there was a £5 billion rebate, bringing the number down to £13 billion. Then, the U.K. received £4.5 billion in funds from the E.U., making their actual cost for membership £8.5 billion. For perspective, according to the government website, the 2016-2017 annual projected budget is £772 billion. 8.5 would be 1.1% of this budget. The European Union fees fall in the “other” category in the budget, and membership is just 17.3% of the expected £49 billion for this category.
It is also true that Britain would still have to trade with the E.U. to continue to have an income, as well as abide by any rules that are set by the E.U.. Additionally, there was a large economic shock after Brexit, and both the pound and euro went down in value.
Lastly, it is very unlikely that Turkey will join the E.U., as many journalists and political leaders admit.
What were the results?
The referendum turnout was 71.8%, and leave won 52% to 48%. June 23 is being informally dubbed as Britain’s “Independence Day”. Britain has made history as the first state to ever leave the European Union.
What are consequences of Brexit?
Prime Minister David Cameron has resigned, saying that he believes the country needs “fresh leadership” as it heads in a new direction. Additionally, Scotland officials – whose citizens voted 68% to 32% to remain in the E.U. – have announced that they are looking into independence from the U.K.. Northern Ireland also had similar results, indicating that the U.K. will soon see a rise in internal disruption.
How does this affect the United States?
Brexit has caused a complete crash in the global stock market. At 8:30 AM on June 24, the U.S. stock market opened with a 535 point decline, due to a sharp increase in people selling stocks at a lower value than normal in order to get money out of a destabilized region. This chaos in Britain’s economy affected countries all around the world. Brexit has caused an estimated $420 billion drop in the US stock market. This is the first 500 point decline in almost a year, and, while it is likely to go back up in the next few weeks, it has affected many Americans who play the stocks with their 401(k)s.