Question

Will UK AND EU benefit from Brexit in long term? From an economic point of view, how will trade and economy be affected?

Answer 1

UK will have higher trade costs than the rest of Europe, reducing trade and foreign investments . This will limit the average income of UK incomes, thereby decreasing economic expansion of UK

Below is an illustration.

Explanation:

The UK's exit from the EU marks a step in the change in UK's economic relationship with the EU bloc. UK will thus move away from from close integration and cooperation with its neighbours, but will potentially reopen the opportunity to negotiate trade deals with the non - EU countries.

There are many ways in which Brexit might impact on the ability of UK's economy.

One study reveals that Brexit will boost the economy of UK by 4% in the 15 years time. However, many studies have projected that in the longer term, Brexit is likely to affect the economic growth of UK . Predictively, UK economy will be smaller than it would have been, had UK remained a member of EU. Brexit will increase the and trading barriers between UK and other states, limiting the economic expansion of UK . Economically, a free economy has an increased production than an economy with trading restrictions. Where there is stronger trade and investments between countries, there is faster economic growth.

In conclusion, the pessimistic predictions come after UK's withdrawal from the EU . Brexit will allow reductions in trade, investments and migration on the UK's innovation activity, thereby reducing the productivity growth of UK .