Question

The European Union has had a "bumpy road" since its beginnings. Recently, for example, several European Union countries have been on the verge of collapse. The other countries have served as "rescuers", providing funds to keep the ailing countries afloat. The most recent development, Brexit, has left many wondering for the future of the European Union. Could other countries start leaving the EU? What could be the global economic effects of the EU disintegrating?

Answer 1

Whether other countries will leave European Union or nor depends much on the global atmosphere and the stability of the EU . According to the Brexit Secretary no other country is likely to follow Britain . The argument provided is that Britain has a very unique set of goals and is quite different from the rest of the members , so the departure of Britain would not encourage others to follow the cue . But a domino effect still exists . The leaving of Britain certainly leaves behind some cracks in EU . But this can only lead to further disintegration of EU if the people and political parties in other countries support such disintegration .

Firstly EU provides a free market for flow of goods and services within itself . If EU no more exists then this large market will fall . Countries will then be free to impose their own trade restrictions which would be worse for global trade . Currently there is one single currency -the Euro which will be replaced by currencies of individual countries . Countries with stronger currencies (relatively) will have lower inflation but their exports would be damaged . Countries with weaker currencies (relatively) would have higher exports but will have to cope with higher inflation . Employment , exchange rate all will face difficult times if such a disintegration occurs .