By Campaign Agent Johnny Wordsworth
Although we may have triggered Article 50 and be in the process of leaving the EU, what does the somewhat uncertain future look like for the EU without the UK?
Regardless of the Brexit shock, the economic situation in the EEA and Eurozone has shown a steady improvement over the past few months. This growth is heavily derived from the accommodating monetary policy of the EU area, low oil prices and the weaker Euro. Unfortunately for the UK, growth has stagnated, and is scraping behind the EU with GDP growth of 0.3% from April to June 2017 – compared to a large 2.2% for the Eurozone during the same period.
Despite the confident forecasts and current growth for the EU, there are several issues that could likely destabilise the EU’s growth. The EU’s strict policies on accommodating trade deals has clouded this positive outlook since the hampering of EU-Canada Free Trade Agreement (CETA) and the unlikely future of the Transatlantic Trade and Investment Partnership (TTIP). The Belgian region of Wallonia held up the CETA process whereby they repeatedly put off negotiations, slowing the process dramatically. The inhibition of such deals will only lower economic confidence and growth for the EEA and Eurozone.
Ultimately, it is not the inhibition of these deals that is the major issue, it is the precedent that Wallonia and other parliaments may set for future deals such as TTIP. CETA would make Europe €11.8 billion a year richer by one estimate, so it is unfortunate to see such economic gains inhibited by domestic policies that may only benefit certain groups.
With so many potential vetoes for CETA it is hard to imagine the Transatlantic Trade and Investment Partnership being passed, and as for Britain’s prospects after Brexit, Cecilia Malmstrom the EU’s Trade commissioner says: “if we can’t make a deal with Canada, I’m not sure we can make one with the UK.”
Fears of a hard Brexit, populist election wins and an escalating trade war caused by Trump’s attempts to shield the US market could well hinder economic expectations in Europe for the years ahead.
Ultimately, the foremost uncertainty for the EU is Brexit. It looks like Theresa May will be facilitating a ‘Hard Brexit’, which will take its toll on the UK and the EU. The arrangement would prioritise giving Britain full control over its borders, making new trade deals, and regaining parliamentary sovereignty. Brexit could leave us as a global trading nation, but subject us to trading with tariffs with the EU. It could also act as a blockade against free flows of currency from EU nations to the EU’s ex-largest financial capital, London.
In the short-run the EU looks economically sound – only time will tell whether Brexit and other trade implications may alter this in the future.
Sources and Further Reading
Image: MPD01605 @ Flickr