On June 23rd, 2016, the United Kingdom shocked the world with its referendum result on the Brexit (British exit). The UK’s decision to leave the European Union (EU) was an extremely close call with 52% of British public voting to leave and 48% voting to remain. By leaving, the UK is no longer a member of the EU, or of the political and economic partnership that has been in place since World War II. Furthermore, the UK is neither bound to a “single market” which allows the free movement of goods and people across member states, nor to the EU’s set of rules and policies. Prior to the Brexit, the EU was widely criticized across European countries as a complex and bureaucratic system that robs sovereignty from individual states and lengthens decision making processes. The United Kingdom Independence Party (UKIP) was able to capitalize on such sentiments and growing frustrations about the current immigration policies to launch an ultimately successful campaign for Britain’s leave. In the aftershock of this unprecedented event, the world is left to reflect on the Brexit’s social and economic implications.
Brexit has various consequences. First, David Cameron stepped down as Britain’s Prime Minister (PM). Secondly, the vote set in motion the formal legal process of withdrawing from the EU which will give the UK two years to negotiate its terms. Other unforeseen consequences include the possibility of Scotland filing for independence, and Northern Ireland for reunification.
The economic impact of the Brexit is concerning as well. The future of Britain’s economy depends heavily on whether Britain will retain its access to the EU’s single market (the largest trading bloc in the world with 500 million people) for free trade and other financial services. The immediate outcome has been devastating to Britain’s economy as the British pound tumbled to thirty-year lows and credit ratings stumbled. In response, some experts argue that these short-term effects will wear off by 2030, and Britain will be better off. Others argue that the Brexit will lead to Britain’s permanently stunted growth and possible recession.
What many have failed to recognize is the immense effect that the Brexit has had on the African continent. Reports reveal that Africa’s largest economies are likely to suffer. For example, South Africa’s rand has plunged during early morning trading (by 6:23 am in Johannesburg), becoming the worst performing currency after the British pound. According to Quartz, the rand has fallen more than 7%, “its steepest single day decline since the 2008 financial crisis.” Meanwhile, Brexit is poorly-timed news for the Nigerian government that is trying to fix an economy on the brink of a recession. Additionally, Kenya is expected to lose 4 billion shillings (approximately €35 million) a month if a trade deal between the East African community and EU is stalled due to the Brexit.
While the Brexit’s effect on the economies of smaller African countries’ is yet unclear, the uncertain markets and future of trade relations between the UK and Africa do not bode well for all.
By: Sally Chung
Editorial Intern (Summer 2016)
photo credit: Jena Kanji