Idiosyncratic Issues of Membership

It has been pertinently suspected if the European Union will have a Draghi moment with the Brexit vote looming in the horizon for the island and continent. Traders globally have to be cautious, as it is not clearly known to what extent would be the effect of Britain leaving the EU on global markets.

The island nation has found the EU membership to be expensive in terms of membership fees, rising migration from EU countries and lack of benefits in terms of trade barriers. Britain claims that migrants put pressure on the islands resources, jobs and minimum wages. Leaving EU will raise wages and standard of living for the low-income workers.

Scotland claims that as the majority of its exports go to the rest of UK they would prefer to remain thereby further asserting their independence and identity as a nation. This could have a detrimental effect on UK as a holistic entity.

British exporters would not benefit from an exit as about a half of the nation’s exports are to the EU and exporters benefits from EU trading alliances with other countries of the globe. The point seems to be to renegotiate freedom in trade relations such that UK traders are not bound by the strict EU trade regulations. Whether the EU nations will be generous enough to deregulate trading practices for another EU partner only time will tell.

Once Britain, the leader of the liberal section of the EU all of whom want free market trading leaves EU nations led by Germany and Franceare expected to increase trade protectionism to safeguard their individual economies.

Pundits have put forth that leaving EU would hurt Britain’s status as the commercial hub of Europe. In addition, investments inbound to UK may decline in anticipation of the results of the Brexit vote. Car manufacturers fearing that an exit will place trade duties on exports to Europe may cut back on manufacturing. Barclays has contended that if EU does not renegotiate UK’s membership then an exit is imminent and one that would cause negative implosions in the EU belly causing it to ultimately collapse and disintegrate. Harsh words but true as EU does have regulatory issues with many of its members.

The British PM, David Cameron has promised to renegotiate the EU membership but if the polls for Brexit are positive then an exit from the EU will happen in all probability and the EU will lose one of its most haloed members.

 

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