In 2016, the UK voted to leave the European Union (EU) and officially left the trading bloc on Jan. 31 2020. In order to “allow enough time to agree to the terms of the new trade deal” both sides agreed to keep many things the same until Dec. 31 2020, according to BBC.
According to a research case study by the University of Essex, this removal can be attributed to many things including varying attitudes towards the EU, the recession of 2008, and the collapse of power in the Middle East. In the past decade, many UK residents believed that the EU wasn’t delivering on what they wanted, such as a prosperous economy, overall protection, and efficient public services and began feeling excluded and withdrawn from it. Professor Paul Whiteley of the University of Essex also believes that Britain’s failure to recover from the worst recession “colored the whole backdrop of the referendum” and left people feeling isolated. Furthermore, the collapse in power in the Middle East created new waves of immigration that were aided by the EU and its openness. Coupled with Britain’s already skyrocketing foreign born population many Brits were dissatisfied with the UK’s arrangement with the EU.
The UK and the EU spent the entirety of 2020 negotiating the logistics of this departure down to specific species of fish that can be caught under the newly imposed legislation, and compromises were made on both ends to ensure equitability. By way of example, the New York Times reported that both sides devised a system “by which either could raise a complaint if it had evidence that one had changed regulation in a way that put other people’s businesses at a disadvantage.”
As for Northern Ireland, which is part of the UK, and has the country’s only land border with the EU, it was given a special set of guidelines and will continue to abide by many of the same European rules allowing commercial vehicles to commute freely. Still, the new regulations and fine print have become a nuisance for business with many of them opting to limit the distribution of their goods to Northern Ireland altogether.
How will all of this impact the U.S. economy? Well nobody can be certain because it is largely contingent on the dollar impact which constantly fluctuates. However, Matt Loyd, chief investment strategist at Advisors Assets Management affirms that “if the dollar surges on [Brexit] for any period of time” it will create trouble for U.S manufacturing and trade.
Brexit is still a work in progress and it is likely that more changes will be made going forward to accommodate unforeseen challenges as they arise.
Article by Kennedy Nieves of Winston Churchill High School
Photo Courtesy of Creative Commons