Britain made history on June 23, 2016 when it voted to leave the European Union (EU). What impact this will have on Britain’s economy, policies, and relations with other European countries is unclear.
Almost immediately after the announcement, the term “Brexit” (British exit) began appearing in news reports—a term that seemed to complicate the fact that few even know what the departure means.
So here is a mini explanation of how Britain got where it is now. The future is something we will just have to wait and see.
The European Union was formed after World War II as a way of unifying the countries. During the war, fighting within Europe hurt the continent, so many citizens felt it was in their best interest to unify, build and share resources. Countries began to integrate, and expand coal and steel industries.
To increase prosperity for all countries, the EU began to break down barriers, and synchronize its trade, immigration and economic policies. Citizens could freely travel, live and work in other countries, similar to how people from different states are free to travel within the U.S.
Almost every Western European country joined the group to merge their economic rules in 1993. The EU has helped foster long periods of economic prosperity, and it has helped keep the region at peace.
Things went along relatively smoothly until 2008, when the global financial crisis hit. . The European Central Bank’s failure to respond effectively led to a recession that was much more severe than it needed to be, economists say. Unemployment rose, and tax revenue fell. Banks needed bailouts, and debt in a number of EU countries soared.
Wealthy countries like the UK feared being tied economically to countries on the brink of bankruptcy, and didn’t want to have to bail out those who were less wealthy.
Another big issue was the EUs lax immigration policies. The new EU made it much easier for citizens of one country to migrate to another. And Britain’s foreign-born population skyrocketed after it joined.
In a survey conducted last year, 45 percent of British citizens said race/immigration was among the top issues in the country. Seventy-seven percent said immigration should be reduced.
Last year, British Prime Minister David Cameron announced a referendum on whether Britain should remain in the EU, which led to the vote last week.
The financial pressures placed on other European nations like France and Spain have increased a desire for autonomy. Both countries are considering a vote on leaving the EU as well. Meanwhile the UK has two years to figure out how to detangle itself from the EU. They want to keep their economic benefits, but the EU may not be willing to concede. It’s not clear yet what the financial ramifications will be on the rest of the world. Trade, immigration, employment and the economy are just a few of the issues that need to be worked out.