Madelyn Peterson – At 92 years old Queen Elizabeth has lived through historical events such as World War II and the Cold War. In these times of war, intricate plans have remained in place to protect the Queen in the event of an invasion on London. These plans to whisk the Queen to a secret location have recently been resurrected and updated; however, not because of war, but because of Brexit. On March 29, 2019 Great Britain is scheduled to exit the European Union in the highly anticipated “Brexit.” However, the political chaos surrounding the exit has caused tension throughout Europe and, in addition to the departure of the Queen, may have many economic implications on both Great Britain and the United States.
Since the announcement of Brexit, the UK economy has been approximately 1.5 to 2.5 percent smaller, and UK citizens and businesses are experiencing financial uncertainty. While this decrease may not seem detrimental, it amounts to a £1,500 loss per year for each UK household. For lower income households that live paycheck to paycheck, this loss could have catastrophic implications. On the business front, this financial uncertainty has led to a decrease in funding for small and medium-sized businesses who are in turn unable to innovate to compete in the marketplace. Even businesses who deal outside of the UK will be subjected to financial hardship. Currently, the UK has a free trade agreement as part of the European Union, but this agreement will be terminated upon the exit from the EU. British producers will be subjected to tariffs that they otherwise did not need to worry about.
In addition to tariffs, the UK will also deal with other implications from the strained relationship with the European Union. Currently, London is the hub of the EU’s financial world, but if the UK exits then another city such as Frankfort or Paris will become the EU’s financial hub. As a result London could lose “10,000 banking jobs and 20,000 roles in financial services, with $2.1 trillion of assets potentially being moved out of the U.K.” Because of these relocations, London will not only lose its place as the EU hub but will also experience far reaching effects such as decreases in real estate, higher inflation, and a decrease in the value of the pound. American banks are taking notice of the possible effects of Brexit and are selecting new headquarters for their EU operations. For example, Bank of America recently selected Dublin as its new EU headquarters and expanded its operations in Paris.
The impact of Brexit will have a further reach on American businesses than just the relocation of offices. Many US companies have utilized the United Kingdom as its foothold in Europe due to the shared language and culture. When the European Union was established these companies were able to easily move their goods and services from their offices in the UK to countries throughout the EU. However, now American employees based in the UK may face obstacles not only with transporting products between the UK and EU but may need additional visas and documents to travel between the countries. In fact, a survey by the American Chamber of Commerce to the EU estimates that the United Kingdom’s departure from the European Union threatens 1.4 million jobs and $593 billion in direct investment from U.S. companies in Britain.
While there is much speculation on the effects Brexit will have on the Queen, the British economy, and American businesses, nothing will be certain until March 29 when the exit is set to take effect. Without an agreement in place between the United Kingdom and the European Union, the business landscape of Europe could look vastly different.
