Will the EU be significantly weakened by Brexit or will it actually profit from it?

The Impact on Europe's Economic Bond

All economies in Europe are interconnected. When a major player like the UK weakens, it affects the economic landscape across the continent. However, the core issue is not Brexit per se, but the UK becoming poorer as a knock-on effect on its primary trade partners. Countries within the European Union all resent the economic downturn of their neighbors, as this reduces wealth circulating through trade routes. For instance, the economic struggles of Turkey are already impacting Mediterranean economies, reducing wealth and trade. Similarly, the UK's own economic decline will only exacerbate the situation with France, Portugal, Spain, Ireland, Germany, Holland, and Belgium, as they will have less money to trade with.

Strengthening the EU as an Organizational Entity

Organically, the European Union (EU) stands to gain several advantages from Brexit. Firstly, the technocrats and bureaucrats in Brussels will no longer be preoccupied with the UK. Instead, they can focus on creating a more structured and potentially federal state, which could align closer to the will of the member nations. Although the long-term implications of such a move are uncertain, it marks a significant shift in the dynamics between the EU and its member states.

The loss of the UK's financial contribution, though substantial, is not critical to the EU. The UK is the third largest contributor, supplying around 8% of the EU budget. This shift may prompt minor adjustments, such as smaller countries like Ireland and Spain contributing more. However, the most significant impact is the pressure for reform, particularly in areas such as the Common Agricultural Policy (CAP). The UK, known for its vocal opposition to certain measures, will no longer hinder progress in this area. This could lead to more effective policies and potentially even increased popularity and trust in the EU.

The EU Profits from Brexit

Several direct benefits accrue to the EU from Brexit. For one, the UK's financial contribution is material but not insurmountable, and the capital can be reallocated to support EU projects. The EU can also use this opportunity to implement necessary reforms, which were often blocked by the UK. For example, the UK's veto on the EU-India Free Trade Agreement (FTA) was a major obstacle, as India sought looser visa regulations and protection for Scotch. Now that the UK has left, the EU can quickly negotiate and finalize agreements, such as the EU-India FTA. Additionally, as the UK leaves the Single Market and cancels Free Trade Agreements (FTAs) with countries like Japan, South Korea, and the Commonwealth, EU competitors will gain access to these markets, potentially leading to more business opportunities.

Reallocating Economic and Human Capital

The reallocation of agencies and operations from the UK to the EU is another significant benefit. Pharms are shifting operations to Amsterdam to follow the European Medicines Agency (EMA), and many businesses are relocating to the EU, leading to a significant boost in the region's economic power. This is a clear example of how Brexit can benefit the EU economically, even if it causes short-term turbulence for British businesses.

Conclusion

In conclusion, the impact of Brexit on the EU's economy is multifaceted. While there are potential challenges, the economic realignment offers several advantages for the EU organizationally and economically. The EU can now focus on creating a more unified state, implement necessary reforms, and capitalize on new trade opportunities. As the EU continues to adapt and evolve, the long-term benefits of Brexit may outweigh the immediate shortfalls.