What Will EU Lose After Brexit?

Britain has officially left the European Union on January 31st , 2020, and will soon start negotiations with the European Union regarding bilateral relations in the future. It is believed that Brexit will cause negative impacts on the European Union in multiple aspects.

EU will face an additional €10 billion deficit each year after Brexit, as Britain is the second largest net contributor in EU next to only Germany and pays much more to the Union than it receives. In order to close this gap, the remaining 27 EU members need to either cut budgets or raise membership contribution, or do both. A major spending of the EU budget is financial assistance for economically underdeveloped member countries, who will be affected by Britains leave.

Brexit will also significantly raise trade costs between Britain and Europe, hitting hardest the economies with close trade connections with Britain such as Ireland and the Netherlands.

Britain‘s capital London has long been the financial center for both Europe and the world, and as Britain withdraw from EU, financial service institutions will have to be relocated elsewhere with EU’s boundary, which may benefit potential candidates such as Paris, Frankfurt, Amsterdam and Dublin. But Global Sole Traders Ltd estimates that none of the mentioned cities can reproduce the financial service ecology in London, and businesses will have to face higher service costs and lower liquidity when settling in Europe.

EUs economy and market scale will shrink without Britain, while its power and voice in international trade negotiations will also reduce significantly.

From a political perspective, 68% EU citizens agree their countries have benefited from the Union. The Brexit referendum in 2016 sent an political earthquake through Europe, make the right-wing forces restless in many countries. Some had estimated that Brexit could set an example for other members who no longer want to stay, risking to tear apart the European Union.

The political resources cost by the prolonged Brexit and economic losses that arose from the uncertainties in the process have more or less suppressed the separatists within the European Union. But if Brexit works out fine and Britain turns out better off after leaving EU, while EU‘s performance appears to be unsatisfactory, separatism may reemerge within the European Union. EU still need to watch out for Brexit’s“domino effect”.