Britain Exit Costs and Benefits

The European Union of Nations was established with the intention of enhancing the political climate and economy of its member states. Members enjoy cheap tariffs and unfettered trade with other nations. Individual members are allowed to travel to and work in any of the nations that make up the Union. As a result, a state can hire the most qualified and skilled individuals for a certain position. Notably, any state thinking about leaving the Union must abide by the exit requirements, which are established in Article 50 of the Lisbon Treaty.  However, the citizens of Britain voted for exit from the union due to various circumstances facing the country (Petley 2014). The membership fee is considerably higher than the benefits the state accrued. Also, there was an increase in the number of immigrants which resulted in insecurity due to terrorism. Despite that Britain considers an exit from EU, economists analysts depict that the country will suffer from an economic decline and the country’s exports are deemed to decrease in future (Minford and Gupta 2015). On the other side, Britain is expecting some benefits from the withdrawal such as trade independence and control of immigration. Therefore, this paper will analyze the costs as well as the benefits of Britain leaving the European Union.

Besides, Britain economy depends on trade activities across and outside the country. On the same note, EU is ranked among the unions in the world that has a significant share in GDP implying that the member countries enjoy a lot of economic advantages. Significantly, EU supports free trade which results in an increase of country’s Gross Domestic Product (GDP). Arguably, the exit of Britain from the Union will lead to the weakening of the economy. For instance, Britain GDP could be probably lower by 2.3% in 2030 (Katie et al. 2015). According to research carried out by the National Institute of Economic and Social Research in 2004, an exit of Britain from EU would cause a decline in her GDP by 2.25% due to little foreign investment (Katie et al. 2015).. Also, basing the argument on analysis by Center for Economic Performance (CEP), withdrawal of Britain from the union would cause a significant fall in incomes estimated to fall between 6.4% and 9.5% of the country’s GDP (Katie et al. 2015). Additionally, the economy will decline due to the weakening of pound. A report by The Bank of England Monetary Policy Committee shows that Britain withdrawal from the union would weaken pound which has a significant impact on the nation's economy. Despite that, it’s an advantage for the exporters, and there is an adverse impact on the price of imports as well as tourists.

On the same note, European Union supports a free trade among the member states in which Britain is not an exceptional. EU operates as a single market with fewer tariffs imposed on exports and imports among the countries. As a matter of fact, EU is currently planning for a trade deal with the United States of America with the aim of creating the biggest free trade area in the world. The act will be beneficial to Britain and other EU members. Notably, Britain exports more than fifty percent to EU while 50 percent of Britain's imports come from EU countries. Therefore, withdrawal from the union will cost Britain both in trade activities and exports. Britain exit will cause the end of free trading and increase of the trade tariffs. However, Britain urges that after withdrawal, they can expand their business activities by forming an alliance with the World Trading Organization. According to research carried out by The Independent, World Trading Organization (WTO) regulations would result in negative impact on UK export industries especially in clothing, machinery, plastic production and car manufacturing (Ben 2016).

Based on research carried out by Oxford Economics, it is approximated that the long-term cost effect to Britain economy due to trading under WTO to be between 1.5% and 3.9% of GDP by 2030 (Ben 2016). Also, by 2030, it is estimated that Britain exports would decline by at least 8.8%. Similarly, official statistics from 2015 research indicate that UK exported goods worth 133 billion pounds to the rest of European Union which is almost half of Britain's export products (Ben 2016). Therefore, if Britain withdraws from the European Union, the country is likely to suffer from a limited trading zone which implies that Britain will have less access to markets and trading zones globally. However, restrictions and regulations by WTO would negatively affect the trading activities. Notably, tariffs exposed on exports to regulate market standards is estimated to be higher if Britain exits EU. According to John Springford, an economist, the cost of duties is likely to be large, ranging between 2.2 percent and 9 percent of GDP which will be a lot of cost to the manufacturers and exporters, and it may end up reducing the exports (Ben 2016).

Similarly, EU creates employment opportunities for both members and non-members. The union supports free movement of people across the EU boundaries to trade and search new job opportunities. Therefore, employers can choose the best-talented individuals for a particular job specification which results in quality work. From the statistics, immigrants to the UK from EU are more educated than the UK citizens with over 30 percent holding a degree in comparison with 20 percent of Britain nationals. According to Professor Adrian Favell of London school of Economics, withdrawal would deter the best and the brightest individuals from coming to Britain (Caitlin 2016). As a matter of fact, approximately three million job openings in Britain are associated with EU trading activities. According to pro-EU campaigners, if Britain exits the union, the three million jobs could be lost. Also, a withdrawal would lead to labor shortages which set back the economy by deterring the growth of economy hence low GDP (Minford and Gupta 2015). Therefore, Britain exit from the Union would cost them regarding employment which in turn would affect productivity hence the slow development of the economy.

Additionally, an exit from EU would result in investment costs. According to a survey carried out by Ernst and Young on Britain's attractiveness to foreign investors, the country remained at the top on Foreign Direct Investment (FDI). Also, Britain is the largest trading partner in EU occupying approximately 45 percent of exports and half of imports (Katie et al. 2015). Additionally, the membership of Britain in EU makes the country more attractive to foreign investment. Withdrawal will increase the nation's risk in that inward investment could be slow and affect the whole economy due to the uncertainty of income. Indeed, the majority of business people believe that the best option for Britain to maintain its investment is by remaining in EU for the sake of the economy (Peter et al. 2016). The exit of Britain from the European Union would lower the investments hence affecting the GDP and whole economy of the country negatively.

Despite the fact that exit of Britain from EU is deemed to be costly, there are benefits associated with the act. Firstly, the state will save a lot of money on membership fees which are contributed yearly. Precisely, the state will save cost on contributions towards EU budget. The membership fee is estimated to be approximately 11 percent of the nation’s GDP. According to research, it is clear that in the year 2015, Britain paid 13 billion pounds to EU and in return, it received a benefit of 4.5 billion pounds (Caitlin, 2016). However, the benefit received is less than the capital contributed. Notably, between the years 2008 and 2015, Britain contribution to the Union rose each year significantly and ultimately, the country became the third biggest EU budget net payer. Additionally, a study carried out in 2015 revealed that Britain was in the second position in contribution towards EU budget contribution. Indeed, the country paid 12.7 billion euros which are more than the benefits they received from the union. Therefore, exit from the union will save the country on fees contributed towards EU budget.

On the same token, the country will be able to control immigration hence installing security across its borders. EU laws permit the migration of individuals from the member countries and hence Britain cannot monitor the immigration rate. Based on National Statistics, the rate of immigration in Britain is significantly increasing at an alarming rate with a net migration of 184,000 individuals per year (NewStatesman 2016). Additionally, terrorists have found it quickly to enter the EU nations due to open immigration laws. EU supreme courts make it harder for EU countries such as Britain to deport criminals who are violent. Consequently, the immigrants insert a lot of pressure on the existing resources. Studies depict that immigration has resulted in difficulties in service provision in the healthcare system as well as housing problems. Additionally, uncontrolled immigration has increased terrorist movement into the country which threatens the security of the citizens. Therefore, the exit of Britain from EU will enable the state to control immigration hence enhance security across its borders.

Similarly, the country will be able to create more job opportunities for the Britain citizens. For instance, the European Union working directives are too arduous and less competitive in the worldwide marketplace. According to former Marks and Spencer chief executive, Stuart Rose, wages might arise if Britain leaves the union which is useful to workers (Alex and Brian 2017). The campaigners for Brexit argue that British jobs need to be offered to the citizens first before other people are rewarded employment opportunities. Therefore, less regulation could create more jobs as well as control on migration could increase wages in workplaces. For instance, Britain wants to get out of EU to protect the rights of her citizens by legally instituting regulations for workers in the pace of the global labor market. Therefore, by regulating immigration, more jobs will be created for Britain citizens hence significant benefits for the citizens.

Furthermore, Britain will be able to monitor their trading activities hence build a stable and sovereign nation. Initially, EU regulates and controls all trading activities across the boundaries of their members. For instance, Britain pays a lot of money to EU based on tariffs imposed on exports such as in clothing production and fishing industry. According to statistics, Britain households lose potentially 933 pounds per year to cater for customs duties (Caitlin 2016). To restore and control trading activities, Britain needs to exit EU. However, Britain will make agreements with other nations and from an international trade market. Indeed, Britain will be able to increase trading activities with the fastest growing and established export markets globally. As a matter of fact, the economy of Britain has been stagnant since the country joined EU. EU forms a single market with qualified trading members. Therefore, Britain needs to exit EU and rediscover its role as a great nation in the world and a global trade union.

Conclusion

In brief, the withdrawal of Britain from the European Union will cost the country much as well as it will result in benefits. For instance, EU is a large organization that enables countries to increase their sales by exporting more. Therefore, Britain will not be able to make as many exports as before (Minford and Gupta 2015). Notably, EU members employ individuals all over the countries which enable people to seek employment across the member countries. However, if Britain withdraws, job opportunities will be decreased. On the other side, the exit of Britain from EU will save the country from much costs and fees contributed towards the union. Notably, Britain adds a considerable amount of money towards EU budgets, and in return the benefits are small. Therefore, the amount that could have been spending contributing to EU will be devoted for the citizens and hence improve the economy. Also, Britain will be able to control immigration across its borders hence reduce the cases of terrorism (Caitlin 2016). Finally, Britain will be able to monitor their trading activities and form an alliance with other countries in the world.



References

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