Much has already been articulated on Britain’s Exit (Brexit) of the European Union (EU), but the economic reverberations and possible outlining dynamic of such an eye-opening move are still being felt globally and will either reach their lowest point or exacerbate further depending on the outcome of the two years’ negotiations between the United Kingdom (UK) and the EU on the former’s exit. This leaves much room for speculation as to how the economic ramifications will unfold globally, and hence it warrants, at least, a cursory examination.
Already, the pound has plunged against the Asian dollar by over 10 per cent and is faring far worse against the yen. In fact, the value of the pound is currently at US.32, the lowest it has been in 30 years. This has left the global market from an investment perspective, highly volatile and uncertain – two conditions that discourage investors from wanting to spend. Economists have argued, however, that this will not impact the global economy as much as it would Britain.
Their contention is premised on the fact that Britain accounts for just 3.9 per cent of the world’s output; it is, therefore, not big enough to make an impacting dent, much like the way America or China can. Britain, on the other hand, is expected to slow in growth and might possibly face a recession as the country has been benefiting tremendously from the EU, with approximately 48 per cent of all its exports going to Europe, with lower tariffs and advantageous market access.
Clearly, Britain’s decision to exit the EU was not done from a rationally thinking perspective.
Looking at the economic ramifications from the perspective of the Caribbean Community (Caricom), things will get worse before they get better.
According to Vice Chancellor of the University of the West Indies (UWI), Sir Hilary Beckles “from trade relations to immigration, tourism to financial relations, and cultural engagements to foreign policy, there will be a significant redefinition and reshaping of Caricom-United Kingdom engagements”.
He also said: “It’s a moment for Caricom to come closer together rather than drift apart. The Region should not be seen as mirroring this mentality of cultural and political insularity, but should reaffirm the importance of regionalism within the global context for the future.”
Indeed, this is the direction that Caricom should take. However, with Jamaica already calling for a referendum to determine if they should leave Caricom, things are not looking too progressive on the regionalism front.
There is also the newness factor that has not yet been accounted for. Brexit has set a precedent, in that this phenomenon has never occurred before and consequently, there is no reference point as to how the situation will unfold and the impact that such a move would entail, beyond theoretical speculations. This in itself should be a deterrent or, at the very least, serve as an observational timeframe from which countries can gauge the historical implications.
Aside from that, the Caribbean Community has more pressing concerns to deal with as it pertains to the Brexit. Fundamentally, what is the status of the trade agreements that Caribbean countries have with the EU via Britain? Once Britain leaves at the end of the scheduled two years of negotiations, these countries will have no trade agreements with the EU or Britain, since, according to political scholars, Britain divested all of its trade “authority” to the EU. The breakup will invariably mean that agreements will have to start anew.
It is, therefore, imperative that Caribbean countries continue to push for regional integration, since we are still yet to define ourselves as global players on the world stage. The only way that this could be achieved is if the concerns of the Caribbean countries are articulated as a single bloc.
Reverting back to “isolated” individual states will diminish the Caribbean’s bargaining prowess, leaving the fragmented economies vulnerable. Imaging having to enter into trade agreements as small states with nothing collective to offer, all in a competitively globalised neo-liberalist construct that favours the larger developed countries.
