Why I'm Bullish on Britain
In the two weeks since we woke up to the news of Brexit, I am hearing a lot of negative perceptions from my American business colleagues on the referendum and the future of the UK. Certainly Brexit brings many negative impacts for the UK, Europe, and the global economy. However, as an American working in London for the past four years, I see a lot of reason for optimism in Britain's future.
A major world economy. First, the UK remains at least the sixth largest economy in the world (fluctuating with the value of the pound). While some of this is due to Europe, a large amount is generated by the drive and resourcefulness of the British people and culture. This will continue into the future, and the UK will remain a force that cannot be ignored in the world marketplace.
A great place for business. Second, the UK is one of the most (if not the most) progressive capitalistic economies in Europe. Those companies who found it difficult to function under some of the other European countries' business and labour laws previously will find them no better in the post-Brexit world. The UK will remain one of the best places for American firms to do business, and newly-announced tax cuts for business will only improve the attractiveness of the UK. Those firms who can take advantage of the recent fall in the pound will find it a bargain to invest in the UK now.
Removing uncertainty as the UK now controls its future. Third, uncertainty is bad for business, and Brexit has created some uncertainty. However, the UK exiting the EU has also removed some important uncertainty about business policies in the future. Over the past decade, the increasing size of the EU saw the UK's ability to shape the EU's policy and future dissolve. The UK had fewer votes in the European Parliament than Poland and Romania combined, and if Turkey had joined, the UK would have had fewer votes than Turkey alone. So although the UK contributed greatly to the financial strength of Europe, it had little influence over its policies and direction. This was emphasized in 2014, when for the first time the EC President was chosen entirely in line with the vote of the Parliament rather than a unanimous decision of the Council. The UK strongly opposed Jean-Claude Juncker's election, but was outvoted 26-2.
Ironically, Britain may have more influence on the EU outside of the union. As the UK forges its own direction, Europe will need to follow in order to remain competitive in the world marketplace. Inside of the EU, Britain was forced to accept whatever policies the other countries of Europe wanted, often funded by the strength of the UK economy. Outside, the UK can direct its own policies, and Europe will also need to adopt strong economic policies to mitigate for the loss of the UK's financial contributions and to maintain a thriving business presence.
A value-added immigration policy. Fourth, despite a few recent xenophobic incidents that have made the news, I believe the UK will continue to embrace immigrants in areas where this has made the country stronger. According to the 2011 Census, 36% of London was foreign-born, and only 12% was European. The immigrant population (myself among them) who have adopted the UK's culture of hard work and social contribution will likely continue to be a key part of Britain's future.
Trade. And finally, the UK will likely negotiate strong trade agreements with Europe. Europe has more to gain in exporting to the UK than the UK has in Europe. Since the balance of power is in favour of the UK, it is likely to be able to negotiate strong trade agreements. Just as important, the UK, a major player as the world's sixth largest economy, can now move forward with negotiating trade agreements with other major economies, without being fettered by 27 other disparate views.
All is not rosy with Brexit. The UK and Europe will have a significant job ahead in negotiating agreements that will benefit the economy and security of the UK and Europe as a whole. Germany in particular has lost a major partner in the funding and direction of Europe. The transaction costs of exiting the EU will be high, and significant resources will be expended that generate nothing to build the economy. The peace that a friendly trading union helped cement will need to be shored up through other mechanisms. There will be important economic impacts in the UK, Europe, and the global economy and world leaders will need to work to mitigate these effects.
However, knowing the strength of the UK, its people, its culture, and its business, I see an incredible amount to be optimistic about in the future. That's why I'm bullish on Britain.
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