Withdrawal of the United Kingdom from the EU may have drastic economic consequences, asa vote to leave the European Union could cause a stock market crash and sudden fall in house prices. Procedure for leaving the EU states that any member may choose to withdraw from the EU accord with its own legitimate requirements, but in such case it is possible that British economy would contract in two successive quarters, which is the meaning of an economic recession.
Hidden Cost of Brexit
A study paper presented to the British government projected a number of other possibilities to EU membership which would continue to permit access with the European center market. Were the United Kingdom electorate to leave the European Union, its succeeding relationship with the continuing members could take a number of forms and practices. Though the EU is eager to conduct broad meetings with non EU members before its cooperative bodies and committees make final decision, It is also worth observing that some regulative comes from numerous international organizations with non-EU countries. These include EFTA – European Free Trade Association, EEA -European Economic Area or accepting Swiss departmentalized agreements.Were the United Kingdom to join the EEA as a member of EFTA, it would also have to sign up to interior market regulation and get some without being able to vote. Various UK organizations have specified that they are pro EU oriented in order to preserve cooperation with Vodafone, BT or Shell.
A Panic Among Investors
As we already know, Iceland decided to keep such status, removing their application for European Union membership in April 2015.The EFTA and EU member does not cover Customs Union,Common Foreign and Security Policy,Common Agriculture and Fisheries Policies,Judicial and Police Co-operation in Criminal Matters,indirect Taxation and Common Trade Policy, leaving members free to set their own policies in these areas.A possible panic among investors would produce shock waves all over the economy and long term growth would be severely depressed.
Another Side of the Coin
Some reports expanded analysis of what a withdrawal could mean for the other side – European Union? It is foremost economic issue as The Guardian and The Financial Times stated recently in comment on Brexit and Euro finance. Some analytic says that a withdrawal could push the European Union towards exacerbate existing divisions, protectionism, or release inner forces leading to the EU’s end. One thing is sure – Brexit has the power to essentially change the European integration and EU.Some European economists are declaring that the EU should free itself of its most uncooperative member, an act that will lead the EU to brighter future.
IMF vs Brexit
The Brexit campaign accused international organizations of being constantly incorrect about UK economy.They are saying that IMF should not interfere in the inner debates.According to IMF the hidden cost of Brexit will be mostly in huge drops in house prices and equity, a unexpected stop of investment, inflows into important sectors such as finance or real estate and increased borrowing costs for businesses and households. This could greatly impact.