Brexit is going to influence both the parties; UK and EU. Not only the UK will face several consequences related to its economy and politics but the other EU member states will also experience changes related to their economies. Mostly, Brexit is seen negatively as it is going to hurt the economies in many ways including trade, businesses, etc in states other than the UK. Undoing 46 years of economic integration is not going to be easy because economic activities in the UK, as well as other 27 EU member states, are at stake.
The UK, among the 27 largest trading partners, accounts for 13% of trading of goods and services. Many EU-27 states are linked to the UK through supply trade chains. The raised barriers to trade, capital flow and labour mobility are not going to affect the output of UK only but the consequences will hit remaining EU members in ways discussed below:
- Due to strong bilateral capital flows between the UK and EU-27, trade shares a total size of 52% of the GDP and Brexit is going to make a huge change to this percentage.
- The undoing of integration is going to hurt the employment and income rates in the EU as people will lose their jobs.
- UK leaving EU means UK will no more trade with EU states without tariffs. EU’s real output will be lowered by 0.8% and employment by 0.3%.
- Trade will be affected hugely because of tariffs. Prices of imports from the UK will rise and the cost of exports will also be high.