SCHOLAR: BREXIT AND ITS EFFECTS ON THE EU

Brexit is the term utilized to recognize that Britain is leaving the EU.  Britain is one of the current 28 countries that form the European Union.  The European Union is governed by three principle concepts, supranationalism, intergovernmentalism and multi-level governance.  The first concept, supranationalism means that the EU law supersedes laws made domestically.   Intergovernmentalism on the other hand refers to the consideration of national interest.  Lastly, multi-level governance is the term that is used to denote that power is territorially dispersed.  The parting of Britain has many consequences on the EU.  Analyst are predicting that EU budget will experience a collapse.  This event threatens the integrity of this coalition.   Moreover, the EU will have to find a replacement for the UK contributions.  Analyst are speculating that Germany’s contributions could drastically increase.  And lastly they are predicting that the economy of the EU will be in crisis.  Nevertheless, one thing is certain, Britain has voted to leave the EU and this will cause a new deal to emerge in the face of an EU with diminished integrity.   

The UK government paid £13 billion to the EU budget in 2018. In this same time period the EU spending on the UK was projected to be £4 billion. Every year the UK receives a rebate of approximately £4 billion. Therefore, for 2018 the UK is liable for £17 billion in contributions.   That is a sizable sum and the EU has to find a replacement to the UK’s contribution.  Analyst are predicting that the EU budget will collapse without the aid of the UK contribution.  The European Commission will slash the budget by 16 per cent and which could halt the aid provided to some of Europe’s expectant countries.  Currently, Spain’s receives €37billion (£33bn) and Italy receives €43bn in aid from the EU.  Moreover, aid to Greece, Portugal and Eastern European countries could also be at risk.  There are many questions on what should be done and who should pay more.

Larger countries such as Germany and France are being looked at as potential contributors to be able to fulfil the deficit that the Brexit deal would leave behind.  Looking at Germany, their net payment into the EU is at 13.4 billion euros in 2018.  This could rise as the deficit left by the Brexit deal could be substantial.  Analyst estimate that Germany’s contribution could rise from 15 billion euros in 2020 to 33 billion euros in 2027.  This rise in contributions could make these wealthier countries rethink the concept of the EU.  It could make them question its very existence.  Perhaps some would even consider following the UK’s lead.  This is a threat to the integrity of the EU and if not addressed it could dismantle the EU. 

The EU will have to balance its budget in order to keep countries as members.  In this, the EU will struggle with leveraging the wealth countries against those that are not so wealth or requiring aid.  Currently the EU has an economic community.  People are allowed to trade goods and services without additional tax.  People are also free to move and reside within continental Europe.  Migration has been a subject matter that Britain has be rather stringent on.   After Brexit, Europe will have to find a way to migrate its citizens out of the UK.  These people will have to find other countries to reside in.  This will disrupt their daily living up to and including their means or employment. 

According to projections the EU’s growth is 2.3 percent in 2018 to and will be just 1 percent in 2019.  Brussels is expecting that the worst is yet to come.  Britain is expected to continue growing at a stable pace.  On the contrary the EU is expected to experience in 2020, subdued growth and muted inflation.  Analyst are saying that France and Spain are to experience recovery while it is expected that Italy will continue to struggle.  Muted growth is forecasted for Germany.  The IMF issued an urgent warning stating that the Eurozone's economy is experiencing weakness and is in slump.  They urge Europe’s leaders to prepare for a financial crisis.  Although there are these negative projections, through careful planning, the EU could evidently regain lost ground through good economic management.  However, the bloated bureaucracy and wastage of money has to stop.  An example of such unnecessary waste is the two capitals and the migration between them between switch off.

Regardless of the many conflicting information on the impact of Britain’s leave from the EU one thing is certain, the EU will have an impaired integrity.  This event could trigger many other European nations to part or it can cause a more united Europe.  Once Britain is out of the picture, it is certain that Germany will take the head role.  The highest contributors to the EU budget are Germany, France and the UK.  Germany provides 20.78%, France on the other hand 15.58 % and the UK at 11.88%.  Whatever trajectory Europe follows, it becomes evident that they will have less bargaining power against massive countries as China and the USA.  The EU is comprised of approximately 747 million people.  This can be compared to China’s 1.433 billion and America’s 329 millions.  With the loss of Britain, the EU will have less people.  This is significant because the British are amongst the highest paid in the EU.  The EU will loose this buying power.  Whichever deal that is negotiated, it remains apparent that the EU will be less capable than in its past.