The High Cost of Brexit

Why the UK will Eventually Rejoin the EU.

Niels Jensen subtitled this piece, “Why the UK will Eventually Rejoin the EU.” It is not clear the EU wants the UK back, but he still thinks the 2016 Brexit referendum was “the biggest economic own goal ever.”

Key Points:

• Of the many reasons people favored Brexit, immigration was high on the list. But now the UK has even higher immigration, mostly from non-EU countries.
• Brexit also cost the UK favorable trade terms with seven of its ten largest trading partners.
• The UK has since landed new trade agreements only with Canada, Australia and New Zealand, gaining nothing it didn’t already have through the EU.
• A resulting lost of economic momentum has placed UK living standards well below those of the EU and US.
• The EU has many shortcomings, but Jensen believes the economic advantages of being in the free trade zone outweigh those frustrations.

Bottom Line: In Jensen’s view this is all so obvious the UK will eventually seek to re-enter the EU, but he thinks reaching consensus will take 10-15 more years. That’s an eternity in today’s politics. We can’t be sure the EU will still be there in anything like its current form. Meanwhile, the UK will have to make the best of its current position.

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