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Zi Jian (Tommy) Zhu

IMS 3310.HON
26 September 2016

Impact of Brexit

As the poorest major European nation, Britain joined the European Union in 1973, which

greatly improved its economy. In 2015, the average person in Britain was richer than the average

German, Italian, and French person (Giles). Britain exiting European Union will not be the

beginning of the end of the European Union, but will instead hurt Britain more. Historical data

on trade and currency trends suggests that Britain will be hurt more compared to the European

Union.

As the largest economy in the world, the European Union offers many benefits for its

members. One of the biggest advantages of the EU is that its members are able to engage in free

trade. Britains top trading partners are the United States and the EU, with more than 50 percent

of its exports going to EU countries (EU Membership). With Britain leaving, although new trade

agreements will be negotiated, any negotiation will not lead to better terms than the free trade

they once had with each other (Allen, Oltermann, Borger, and Nelsen). Because trade with other

members of the EU is such a large contributor to Britains economy, restricting this trade will

hinder the economic growth of Britain in the years to come. On the other hand, the European

Unions top trading members consists of United States, China, and members within the EU, so

any changes in trade with Britain will not have a significant impact on the EUs economy.

Germany is the main export destination and source of import within members of EU, not Britain

(Bourgeais and Gambini).

Although the majority of trade in the EU involves the Euro, Britain is one of the few

countries that has its own separate currency. This is good because if anything does happen to the
Zi Jian (Tommy) Zhu
IMS 3310.HON
26 September 2016

Euro or the Pound, it would not affect the other directly. Currency of a country has a direct

relationship between importing and exporting with another country. After Britains citizens voted

to leave the European Union, the currency exchange rate decreased significantly among the

United States, the European Union, and China, its biggest trade partners. The exchange rate

between the Pound and Euro decreased from 1.3091 on the day of the Brexit referendum to

1.15-1.20 in the past two months. The Euro to Dollar exchange rate also fluctuated within the

usual range before Brexit (Exchange Rates UK). Since weaker currency results in an increase

in exports and decrease in imports, other countries will take advantage of the exchange rate

because they can purchase more products and services, but Britain will import less foreign

products because of its reduced purchasing power.

As Stated by Feng ZhongPingi, the EU is seen as a major power in the world. If the UK

left, it would hurt the UK much more than the EU (Allen, Oltermann, Borger, and Nelsen).

International investors do not see Brexit as a wise decision for Britain and are hesitant to invest

in Britain with its weakened currency. In contrast, the European Unions presence in a variety of

foreign markets means that it will be largely unaffected by Britains decision, and will continue

to remain a strong international power.


Zi Jian (Tommy) Zhu
IMS 3310.HON
26 September 2016

Works Cited

Allen, Katie, Philip Oltermann, Julian Borger, and Arthur Neslen. "Brexit What Would

Happen If Britain Left the EU?" The Guardian. Guardian News and Media, 14 May

2015. Web. 25 Sept. 2016.

Bourgeais, Vincent, and Gilberto Gambini. "EU's Top Trading Partners in 2014: The United

States for Exports, China for Imports." EuroStat. N.p., 27 Mar. 2015. Web. 25 Sept. 2016.

"British Pound (GBP) to Euro (EUR) Exchange Rate History." British Pound (GBP) to Euro

(EUR) Exchange Rate History. N.p., n.d. Web. 26 Sept. 2016.

"EU Membership: Reasons For And Against Leaving." Sky News. N.p., 22 May 2015. Web. 25

Sept. 2016.

Giles, Chris. "What Are the Economic Consequences of Brexit? - FT.com." Financial Times.

N.p., n.d. Web. 25 Sept. 2016.


i Fen ZhongPing is the assistant president of the China Institutes of Contemporary International
Relations