What was the real reason people voted for Brexit and what were the implications?
On June 23, 2016, a 52% to 48% decision by Britain to leave the European Union changed the course of global history, with many stakeholders living in a meltdown in regards to unemployment, falling stock prices, terrorism, and many socioeconomic issues. However, six months after the decision, we can see that Brexit may not have been such a bad decision after all.
With popular google search results ranging from “What is the EU” to “What will happen if we leave the EU” from Britain hours after the referendum, it is clear that Brexit was an unknowledgeable decision. However, the ones who did vote knowledgeably had their own reasons to do so. According to labour-market economists Brian Bell and Stephen Machin, countries who voted to leave had their weakest wage growth since 1997. For them, Brexit would mean greater opportunities and higher potential for economic growth. Other studies show that Brexit was a decision fueled by nonacceptance to social issues such as feminism and environmentalism that are taking place in Britain with it being part of the EU. Perhaps a major reason for citizens all over Britain is the rare opportunity to restore the country’s sovereignty, although undemocratic to Eurosceptics.
“This is a once in a lifetime opportunity to get back the independence and self-governance of this nation” – Nigel Farage (British politician)
However, even with these reasons, the entire country, as well as the rest of the world, was shocked to see the post-effects from the decision, such as creating a negative ripple effect on the global economy. The pound reached a 31-year low since 1985, The Euro falling sharply against the dollar, and Sterling falling 10% since 1985, causing people to rush to “safe” currencies such as the Yen and the Swiss Franc. Many citizens found this to be surprising, even though some voted in favor of the leave. The gratitude of the shock was most likely because people knew there were going to be negative implications, but they did not realize the severity of them, even if some of the problems are short-term.
Although the economic effects of Brexit stunned many people not only in Britain but worldwide, we have to keep in mind that these effects are temporary and are to be expected when a country as powerful as Britain leaves such an agreement. Six months later the referendum, we can take notice of many of the positive effects of Brexit, now that we have entered the New Year.
United Kingdom ends the year as the fastest-growing G7 economy
According to the IMF, initial predictions of a post-Brexit recession and stock-market crash have been relaxed. Banks such as Credit Suisse and Morgan Stanley have revised their growth expectations for Britain, with Credit Suisse changing their predictions for growth contraction from 1% to 0.5% to an increase of 1% to 1.9%.
Positive outlook for British stocks
Two weeks after the Brexit vote, the FTSE 100 had been the best-performing stock market in the world, with it rising to an 11-month high. Although the pound plummeted against the dollar post-Brexit, it is good news for investors who invest in dollar-based UK companies, because it is more worthwhile to do so; they are essentially getting ‘more bang for their buck.’ Rising oil prices are also a treat for investors, and is a good surprise for those risk-averse investors who expected the plummeting oil prices during the early hours of Brexit to be long-term. With the weak Pound, companies can now export goods at a cheaper price, which will give them a competitive edge over other countries. Not only do I think this is this beneficial for industries in the UK, but might encourage job growth and induce customers to spend more and stimulate the economy.
Britain being able to control its own destiny
Being the fifth strongest economy in the World, it is clear that Britain is a key player on the world’s stage. With Brexit, millions of dollars will be saved each year that would have otherwise gone to the EU; this money can be used for the betterment of society and improve education, healthcare, infrastructure, and stimulate the economy. Moreover, Britain now has the freedom to decide its own trade policies, set its own laws and taxes, which eliminates many disagreements about how to run its country when it was a part of the EU.
While the Brexit vote has certainly led to a number of complications, I believe that Britain is strong enough to conquer them and the decision will help in the long-term. This is a start for Britain to gain back its sovereignty, once and for all.
Read more: “BREXIT: End of the West?”