One of the major events of 2016 was Britain’s surprise decision to exit the European Union. Signaling major changes in the British economy, Brexit had immediate consequences for the political and economic stability of the region. However, as the process of Brexit will take quite some time to complete, it is important to examine what economic impacts Brexit will entail in the long-term.
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The term “Brexit” was coined to illustrate Britain’s decision to leave the European Union following the national referendum. The complexity of this decision immediately affected the economic and political situation in the United Kingdom. Following the United Kingdom’s decision to quit, the country faced an economic upset; in particular, the stock market fell significantly, causing uncertainty and pessimism among investors.
The pound sterling fell to a record low, and unemployment increased (Allen and Monaghan par. 2; Allen par. 2). Political changes included the announcement of the resign of Prime Minister David Cameron following the success of the Leave campaign. The general uncertainty regarding the process of Brexit resulted in pessimism among investors.
Because the process of Brexit will take a long time to complete, further implications have to be considered in the long-term. One of the reasons Britain was inclined to leave were immigration concerns; however, it is still not clear to what extent the freedom of movement will be limited (Bernanke par. 3). Limiting freedom of movement will mean leaving the single market, which will cost the UK businesses over £40 billion in lost revenue (Finch par. 1). The loss of passport rights will mean higher unemployment in the long term, and the economic uncertainty will translate into lower GDP.
Big-5 Institutions Changes as a Result of the Lisbon Treaty
|Name of the Institution||Major Changes|
|European Council||An official position of the President of the European Council was established. The Council became a formal institution responsible for appointing the European Commission.|
|Council of Ministers||Qualified majority voting was introduced in 45 policy areas.|
|European Commission||Posts of the European Commissioner for External Relations and the Council’s High Representative for the Common Foreign and Security Policy were combined. The treaty also reduced the number of commissioners.|
|The European Parliament||The European Parliament acquired a broader set of powers, making it a bicameral legislature with the Council of Ministers.|
|Court of Justice||Court system was reorganized into three courts: Court of Justice, the General Court, and the Civil Service Tribunal. The name of the institution was changed to the Court of Justice.|
The European Parliament
The European Parliament is a parliamentary institution which has the legislative power in the European Union. The Parliament evolved, progressively increasing its power. Upon its creation, the Parliament only had consultative powers, while currently, the Parliament shares wide budgetary and supervisory powers with the European Council (Hix and Hoyland 172). The empowerment of the Parliament is the result of a series of reforms that happened in the last 50 years.
The most recent reform happened as a result of the Lisbon Treaty, which established a unified budgetary procedure and made the Parliament a bicameral legislature with the Council of Ministers (Jansen and Hecke 160). The driving force behind the empowerment of the Parliament is the increasing integration of European countries which are members of the European Union. Increasing integration dictated the need to increase the scrutiny of European Union legislation (Hix and Hoyland 173).
Jansen, Thomas, and Steven Van Hecke. At Europe’s Service: The Origins and Evolution of the European People’s Party, Dordrecht, Netherlands: Springer Science and Business Media, 2011. Print.
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Allen, Katie. Boom or gloom? The economic verdict on Brexit … so far. 2016. Web.
Allen, Katie, and Angela Monaghan. Brexit fallout – the economic impact in six key charts. 2016. Web.
Finch, Gavin. Brexit: Leaving the single market could cost UK £40bn per year and 70,000 jobs, report warns. 2016. Web.
Hix, Simon, and Bjorn Hoyland. ”Empowerment of the European Parliament.” Annual Review of Political Science. 16 (2013): 171-189. Web.
Bernanke B. Economic implications of Brexit. 2016. Web.