What is Brexit?
The European Union, founded in 1950 with just six members became the European Economic Community in 1957, grew into the European Community (EC) and changed to the European Union (EU) in November 1993. It is a group of 28 countries that work as a united economic and political body. Out of the 28, 19 countries have commenced the use of the Euro as their official currency. However, the U.K. government decided to leave the Union on 23 June 2016 giving rise to Brexit – The exit of Britain from the EU.
In 2013, David Cameron, former Prime Minister, committed that he would let the voters decide the fate of the U.K in the EU if he won the elections, which he did. More than half of the voters chose to leave the Union. The public had voted, and the future was decided. Britain to move out of the group.
Britain’s exit – A downfall for the U.K.?
The British Exit led to the sudden fall of the British pound to its lowest level against the dollar. David Cameron, a non-supporter of Brexit resigned, and Theresa May, the PM, stepped down from the position of the party leader. Theresa proposed deals which got voted down thrice. Under May’s deal, the U.K would have attained a 21-month alteration period providing it time to negotiate. The rejection of May’s suggestions ultimately resulted in a standstill situation for the U.K.
Also, the exodus of Britain from the European Union will adversely influence the country’s economy. The major loss will occur in the GDP for the U.K. market, which would itself lead to notable setbacks like unemployment. Declined GDP will eventually result in scarcity of jobs.
For now, Brexit deadline has extended to 31 October. Britain can leave the EU either with a deal or without any.
Deal or No-deal Brexit
A no-deal or Hard exit from the EU – A no-deal exit of Britain will signify the immediate withdrawal of the U.K. from the Union on 31 October 2019. No agreements and discussions will take place about the current and future relationship between the two. If the politicians fail to reach a decision, the country will move out without any deal.
Hard exit effect
The no-deal Brexit can be defined as ruinous for the U.K. and its economy. If a hard Brexit prevails, Britain’s economy will deflate by almost 8% in a single year. In the absence of a deal, the trade would be set by the rules of the World Trade Organisation, which would lead to increased tariffs on imports. Besides, Border-checks for goods could be re-established, advanced call charges in EU countries, the requirement of exclusive driving license to drive in European Union countries, and more.
A deal or Soft Brexit – An exit with a deal implies a negotiation between the U.K and the EU. Britain may remain in close affiliation with the Union and retain some of the single markets. An agreed exit can reduce agitation in trade, supply chains, and businesses.
Does the recession accompany Hard Brexit?
The risks along the no-deal Brexit are baleful and might have already driven the U.K towards recession. The contraction of the economy in just three months marks the very-first negative quartern in seven years. As per the economic experts, two consecutive fourth (quarters) of financial reduction is said to be a recession. In terms of reports, the pound shall drop by 25%, and the government might need to borrow an enormous amount per year from the next year. To be specific, the no-deal Brexit would turn the Britain economy upside down.
Bitcoin and Brexit
A no-deal exit of the U.K. is becoming more apparent as the authorities have not yet reached an agreement to extend to the Union. Though the hard exit will befall a calamity on the nation, it would undoubtedly surge the values of cryptocurrencies. Bitcoin, currently on the rising, is assumed to possess record heights following the no-deal exit of Britain from the EU.
June 2016 – As soon as the U.K. voted to leave out from the EU, the pound slumped down against the dollar. Unlike the fiat money, the price of Bitcoin hiked up to $750 from $600-$630 range, indicating the profits to the crypto world.
January 2017 – Theresa May listed her 12 priorities for the Brexit discussions. A small growth appeared in the GBP; however, the increase in bitcoin valuation was massive at about $200-$250.
December 2017 – The negotiation progressed. The GBP hiked around 8% whereas Bitcoin painted a fluctuating graph.
November 2018 – Draft composed by May was rejected. Bitcoin soared firmly.
The imminent outlook of divorcing the EU has currently downturned the value of the pound, Euro, and the U.S. dollar. Investors displeased from the real monetary situations will use the digital currency more to ensure and boost their investments. Bitcoin’s reliability as the digital gold allows it to advance into a safe-haven asset in times of disaster and the U.K.’s Brexit might confirm it.
Global Impact of Brexit
The U.K. might part ways with the European Council but not Europe as a whole. The country will stay sound with its relations to France, and other constituent countries. But the worldwide context is no more gracious. Regardless, Britain’s international honesty has suffered a hit. The U.K. has placed itself in fathomless unsafe circumstances with no choices. Britain was a member of the Union for 40 years, and a sudden walk away did leave a mark.
On the other hand, Brexit is expected to affect the world in four regions – Britain’s vision, Britain’s connections with the EU, the European Union’s role around the globe and mainly, the stability of the pluralistic arrangements we value.