Brexit Would Cost Britain Billions

Milton Ezrati

Economics, Europe

Leaving the EU would create huge economic shocks.

As the British public prepares to vote in a referendum on whether to stay in the European Union, it is hardly thinking about the complex economic consequences. Instead, matters of sovereignty and culture seem to hold pride of place in their collective mind. Whatever their focus, however, their decision will have huge economic consequences—for prices, for jobs and for matters of trade, in Europe generally but mostly in the United Kingdom. The probabilities suggest that “Brexit” is a bad economic idea. Certainly, that is the conclusion reached by more than three-quarters of the hundred-plus economists polled recently by the Financial Times.

When British proponents of exit do talk about economics, they make their economic case primarily in terms of EU rules and expenses. They argue that Britain has better uses for the £6 billion ($8.6 billion) a year it transfers on balance to the EU. They argue, too, that stifling regulations imposed by EU rule makers have stymied the dynamism, innovation and growth potential of the British economy. They may have a point, but if so, it is a minor one. Trade is the pivotal issue for this economy. Almost 60 percent of its production revolves around imports and exports. Prosperity after exit depends entirely on how quickly the UK can renegotiate favorable trade arrangements with the separate members of the union as well as other countries, among them the United States, Canada, Australia, India, Japan and China. Here, matters look troubling at best.