The recent Brexit vote has brought about a number if tensions associated with membership in the European Union and a common European economic area. It has also put into serious question the European Project started in the post-World War II era. Please argue for or against Britain being a member of the European Union. Be sure to cover five broad areas of disagreement economics (Benefits/ Costs), political (Benefits/ Costs), Labor market (who wins? Who lose), social (costs/ benefits), and issue ofan identify?
Britain a second-largest economy after Germany is a member of the European Union, has taken up a historic decision to reshape the nation’s place in the world. But now Britain has held a referendum whether “Britain should exit Union Membership or not” which is known as “Brexit Vote”. Britain voting was the worst backward step for Europe since the end of Second World War II; it has created hideous conflict among 10 millions of military and civilian casualties and left the continent in ruins. The United States experienced the horror of war but Europe had extremely positive effects during Second World War creating unity of all time. This Brexit opinion poll was put to the voters to decide whether the Britain should remain a member of a European Union or Leave the European Union on 23rd June 2016.Though the vote changes nothing, it may kick-off certain complex and political fraught negotiation between Britain and 27 members of the European Union in their future dealing.More than 17.4 million Britons participated in the vote to break the ties with the European Union however 16.1 million Britons voted to remain as per the report. Stunning vote results have created a shock and confusion around the globe markets making the country leave from the bloc for the first time. The final results revealed that 17,410,742 which is around 51.9 percent voters agreed that “It is good for Britain to leave the European Union” while around 48.1 percent 16,141,241 voted to remain. The final results have clattered the continent and astound the political establishment throughout the West.The potential disruption to trade and discontent with the political establishment, conservatives could be the factors behind the vote to leave the Europe Union.Scottish Government commenced the Second Independence referendum in Scotland - Based upon this result most of the electoral districts voted to remain. So, it is sensible to choose the option to “Remain” and put forward my vote for “Britain should still remain as a member of European Union” as the loss of Britain could put them under pressure and bring aimmenseknock-backon the creditability with respect to the migrant crisis, unemployment, and slow growth. These are five broad that could benefit by voting “Remain”;
Financial damage will not occur and US market will not drop down by more than 3 percent and do not turn UK’s economy and position into worsened and will be retained at the current position. Eventually, Euro will never reach the depth since 1985 but the result to “Leave” may lead British pound to drop to its lowest level and the investors could flee to the American dollar and yen.United Kingdom will not lose its “AAA” sovereign credit rating and the nation will not be downgraded to “AA” by the credit rating agency but the vote to leave the European Union could send the global markets on a wild descent and make the Investors take back their money from the stock markets considering the riskier corners. Also, British stocks could drop by 3.2 percent where European shares could drop by 8.6 percent bringing up full financial crisis if Britain’s is taken out from the European Union. Correspondingly, anxiety will be created in the global economy among the investors if Britain is selected to leave EU. Countries like China will slowly significantly have little faith in the data provided by Communist Party Government and Brazil one of the emerging markets will be full-blown by the crisis. European and its common market with 500 million people will be plunged into turmoil.UK economy by comparing the recession could knock up to 6 percent off on UK GDP which is expected to have loss of 2.2 percent from its total GDP by 2030, a report published by Think-tank Open Europe. Sterling fell may be around the lowest level of $1.3120 since 1985, also the euro could remain falling to the low around $1.0910 equally the World Stock measured by MSCI index could find $2.8 trillion wiped off from the world stocks after the vote result to Leave.
Political
The result to “Leave” might plunge the countries into a political crisis as the yield on British government bond could fall below 1.0 percent for the first time during the European trading hours. Financial markets will start to drop out considering the damage that may arise due to results and Bank of England may increase interest rates to break out the drop fall in the pound.Investment of money done by investors with United States Treasuries considering it as the safest places will pull back their investments with fear. The expectation of inward investment is highly predicted to run-down due to the uncertainty of the outcome and consequences. Huge political transition cost may occur on how to solve the British exist and discerning of the other countries that think of leaving – said by founder and executive chairman of the (FIIR) French Institute of International Relations – Thierry del Montbrial and Economist and political analyst will look-out the campaign as a device of the potency of anti-immigrant sentiments.Vote to “Leave” could split the ruling Conservative party, and deep opposition within divisions.
Labor Market
British job depends on upon the various factors such as Trade, immigration, and investment, It is suggested by Pro-EU campaigners that three million jobs could be lost if Britain leaves the European Union by the report published by Full Fact.Shortage of labor on other-hand could hold back the economy, reducing the potential growth. Former of Marks & Spencer, a Chief Executive – Stuart rose and prominent pro-EU campaigner conceded that Britain leave will increase the wage which is good for workers and could be less for their employers.If trade and investment fall down then these factors would be one of the reasons for the loss of the job. Equally, the drop in immigration would also lead to creating more jobs for the people who remained.The exit could prompt pulling up the commitment towards free movement of capital, goods, services and labor and prominent multinational banks such as JP Morgan chase, Citigroup to transfer their operations and shift a significant number of jobs from Britain to other competing financial centers in EU.BMW’s car-makers may end their production in the UK as the vehicles may no longer be exported at tax-free to Europe. This could be a reminder to UK employees at Rolls-Royce.Farage insisted that immigration could be stopped intensely, leaving EU as the only way to “regain control of borders”.
Social
The credit rating of the British Banks will be downgraded to “Negative” by Moody’s as per the report published by Sky News report; also citing source indicated that vote to leave the European Union found to be high when compared to remain.The vote result could indicate that major democracies are at risk which can get easily influenced by a majority of political movements.Withdrawing from the European Union will mean to pull out 508 million residents including 65 million people of Britain from the world’s largest trading zone.Britain’s legal system incorporates a large body of regulation for Britain’s economy from product safety to digital privacy.
Issue of Identity
British get benefits from the trade between the European Union and other world powers. Also, European Union currently negotiating to create world biggest free trade area with the US which will be equally beneficial to British business, but Britain will lose these negotiating power by leaving EU.Norway has the access to single market and Nigel Farage, leader believes that Britain could follow the Norway market which is not bound by EU law on areas with Home Affairs, Agriculture, and Justice but other come up with argue that “amicable divorce” would not be possible.Leaving EU will allow Britain them to be a truly independent nation but have a connection to the rest of the world.The European Union is an increasingly important pillar of security, but then if Britain leave may open the door for a terrorist to attack. Considering the above economic, political crisis we strongly suggest to consider voting for “Remain British” even though the voting for “Leave” may have a higher probability that the new president of the United States Donald J. Trump could ride pledges to block Muslim immigrant and create a hedge along the Mexican border.
Italy, Spain and some of the smaller economies of Southern European (eg., Greece, Portugal) have historically organized their economics in ways that are distinct from some of their Northern European neighbors. Please describe how these economic function, including their major bases of strength and some of their weaknesses and the way business, is conducted within these countries?
South European known as Mediterranean Europe is the southern half of the landmass of Europe including countries - Italy, Spain, Southern France, Greece, and Portugal. Northern European countries at the center of national economy policy focused on an economic development with the price, money, and wage since 1999. Until 2008, the performance of German economic was considered substandard. Even though the country’s export was well with their domestic demand the private consumption led them to poor economic growth. On the other hand, Southern Europe was interested to catch-up the richer countries in the northern part of the region. This policy resulted in faster cost development and structural reforms in southern European countries. During these periods, the countries unit labor cost increased by 2 to 3 percentage quicker per annum when compared to Northern Europe. The difference in costs level became significant as the catching-up policy was not followed for a single year but continued for year after year even more than ten years. Today, it was 20-30 percent expensive to produce similar goods in southern when compared with northern parts. This improvement has been reflected in growing surpluses and deficits of goods and services in foreign trade. Spain and Portugal’s economy has been recorded as the highest growth rate against the global financial crisis in 2008. EU showed a growth rate of 2-3 percent in most of the countries increasing the overall economic development. Unemployment and politics were underlying due to this growth. Southern European countries went from relatively poor to rich, from being agricultural to industrialized countries, from autarky to economic international, from dictatorship to democracy. Conversely, the fearful financial markets provided loans to Southern Europe countries which were similar to at the rate of interest in Northern Europe countries. Until 2007, the rate of interest paid by Greece’s debtor was half a percentage higher than the rate of German loan. In reconsideration, it is said that the fearful financial markets were least incompetent in their judgment on country risks and the balance of payment was fundamentally untenable. An imbalance started grew from 1999 until 2008 in the Southern European countries like Spain, Italy and Northern European countries like Germany. Due to their influence over dynamics of the markets, technologies, entrepreneurial opportunities hasraised a worse situation and made them run a deficit at the balance of payment in a deep recession, which made them more dependent on foreign borrowings. This foreign indebtedness started to grow year by year where countries like Greece, Portugal has already started to demand financial help from (EFSF) European Financial Stability Facility. These loans carried out a high rate of interest for about 5 – 6 percent p.a. and bringing hard conditions among public finances. Germany economic growth rate was below when compared to Italy in the year 1999, but in 2008 Southern European Countries with a high rate of interest and largest balance of payments shortfall hardest hit by the financial crisis. They ran a balanced budget on average every year during the financial crisis period. Germany economic growth rate has increased tremendously against Italy.This budget deficit has made them depend on foreign borrowings and made them stand with a desperate financial problem when the international capital markets dried up in the wake of the Lehman Brothers collapse. As these countries had a highest private foreign debt and weakest private banks the interest rates soared.The National government also became a debt burden by itself by supporting the financial sector on public finances. Later, unemployment grew out of the public debt. The unemployment rate increased from 8.3% in late 2007 to 20.1% in later 2010 specific to Spain country. As a result, these Southern European countries found debt squeeze by both Public debts and foreign debts.
These countries with large current account debit were vulnerable and quickly became apparent. Weakness behind these Southern European countries that had prolonged the economic depression period are - Financial sector excess lending seems to be dominant and Instabilities of the private sector real investment. They had no ability to devalue money which has dreaded the market to the liquidity crisis and push their bond yields. Other study revealed that high favorable expectations to bring growth in future income will sustain the increase in external debt and bring up imbalances in the economy.They should have changeable degree based growth in the national economy on domestic demand especially, on Building sectors that collapsed when interest rate began to rise and credit was controlled. They should have begun an austerity measure to reduce the budget deficit and reduce high bond yields.The impact of privatization and the income generated by this process has headed to the economic crisis as states gradually lost its dominant role in determining the ownership. Due to the fears about the loss of public control which was raised by the politicians, trade unionist and businessmen has made the government complete the privatization of the firms in the public hands. With the consequence of rushing a foreign debt, South European Countries run through shortfalls on their current account throughout the entire time but their external debt has grown year by year. These dynamicsprepared the economic growth of southern Europe countries to be at low rates in the future years and decades.
These social, economic and political transformations that took place during these periods has completely changed the Southern European countries rule of the game and made them to go backward when compared to the Northern European countries but later in few decades there were able to catch up with the rest of the advanced world. Southern European countries are represented as an example of turning out the economic crisis into an opportunity. Familiar strategy - Diversification through vertical integration was adopted in the major part of Southern European countries like Italy with the aim of supplying guaranteed raw materials, energy and extend their internalize transaction costs. State-owned companies show up a clear and unambiguous trend and also the countries adopted a wide variety of strategies and structures to overcome the economic crisis. Families willingly adopted varieties of organizational structures. Multi-divisional become popular among the business families as most families adopted a functional or holding form called as ‘M-form’.Economic growth is expected to increase by 2.3 percent in 2015 and additional one million jobs for 2014 and 2015.
Currently, there exists a fear that debt crisis could occur in Greece’s economic could spread to other countries southern Europe in the future. Even though other parts of southern European countries like Spain, Italy are taking up the significant steps to keep themselves away from the risks being harmed by Greece crisis. Various underlying weaknesses are keeping their economies at risk of a new downturn. Major policy change and dramatic involvement are required in the southern economic competitive. The unemployment of Spain still stands at 23.7% and Greece depression has made them face the long severe loss of economic competitiveness. This uncertainty surroundings situation in Greece has created the negative impact on the confidence levels of business and investors. Over the longer-term southern European countries are uncertain to face major difficulties in their economy. Primarily, the demographic situation in southern Europe is worst among the world as the birth rates are getting lowest. The secondary could be excluding few sectors their economic situation of southern Europe countries has started to become less competitive than other areas of the world. This is preventing the investors to invest more in the region. Finally, each country in southern Europe has created over-dependent and poor long-term growth prospects by exporting goods and services predominantly to other European markets. Another imperative appropriate factor that affected big business opportunities and challenges are the swift transition from a system based on bank-led financing to stock exchange which played an important role in financing business expansion. The expectation is that it could even face a situation as of Italy where today’s economic output is less when compared to 1999. Later, this will lead to declining their living standards and results in falling behind other developed economies in terms of per capita income level.
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