Implication Of Brexit On Global Economy

Brexit is a short word for British Exit, that is British withdrawal from the European Union (EU). Brexit process started with a public vote called a referendum. This referendum was held on Thursday 23 June 2016 when voters were asked whether the UK should leave or remain in the European Union. 52% of the voters went for British exit, while 48% voted otherwise.

Brexit was due to take place on 29 March 2019 but there was agreement to delay the process due to unfinalized deal on how Brexit will take place.

More focus has been on the impact of Brexit on the United Kingdom (UK). Experts predicted that the UK economy would suffer an immediate and significant fall if adequate preparation is not in place following the referendum. Economist referred to this as a “sudden stop” – that is, abrupt, catastrophic dysfunction in a key sector of the economy.

There are also indications that companies with UK-based operations have started their Brexit plans which include shifting investments out of the UK and likelihood of relocation of jobs out of UK.  The Brexit process thus displays the risks associated with economic and political fragmentation, and provides a preview of what awaits an increasingly fractured global economy. Such risks as less efficient economic interactions between UK and EU and the rest of the world at large, and more complicated cross-border financial flows.

The links that exit among UK, EU and the rest of the world is a major concern on how Brexit will affect the global economy.