As the official date of Brexit is drawing near, it seemed appropriate to take a look upon the future of the EU regarding the UK jumping ship. Some pundits have exclaimed the end of the EU others have guessed a weakening, some have suggested a consolidation of the remaining states and others say that the effect will be minuscule if noticeable. Do we have a solid answer for where history is going? Of course not, however we can make informed predictions.
Money makes the world go round, and in the EU that's not different. Britain is the second largest net contributor to the EU's budget and having them pull out means one of three things have to happen. 1. All member nations raise their taxes to pay the missing slice of the pie 2. The EU makes necessary austerity cuts to lessen the financial burden 3. The missing income is supplemented by way of accepting loans. Naturally it is not all black or white, and a plethora of actions can be taken but in general these actions are the most likely.
Raising taxes cross the board would be a simple solution but it would anger one important part of the member states, the rich net contributors. Germany, France, the Netherlands, Sweden, Denmark, Italy and so on would all be upset on the grounds of them having to fit the bill for some other countries benefit. The taxes could also hit hard on the economic aspects in welfare nations. Let's take Sweden as an example, Sweden has a very large tax burden on it's populace, which if raised would hit very hard. If instead of the population fitting the bill the Swedish government decides to up the taxes on businesses that would severely hamper economic growth, which in the EU is rather low.
Biting the hand that feeds might seem like a bad idea, so what about cutting expenses? This only serves to move the problem to another sector of the member states. The net recipients of the EU such as Greece, Poland, Romania, Hungary or the Czech republic would be equally upset if the economical programs promised to them were suddenly cut. Not only would this stymie the trajectories of their economies but it would also lend support to the anti-EU sentiments in nations such as Poland or Hungary. If the EU starts losing members and their internal market starts to shrink it is possible for more countries to take the same path as our beloved Britain.
What about retaining the status quo with the help of some loans? Well this would likely be the worst of all decisions owing to the fact that the debts would start piling and running a deficit economy is no recipe for loan repayment.
One more important aspect of all of this is how the UK fares after leaving. If Britain sees a sudden crash and a new depression ensues, not that many nations would seek to emulate that, but if it is the other way around and, after a slight dip, the economy starts booming the consequences could spell the ultimate downfall of the EU as richer members with stagnant growth all seek to flee the sinking Union.
The future for both Britain and the European Union look shaky and seeing as no crystal ball has been proven to work, only time will tell what the future has in store for us.
