The European Union is a historic compromise that’s gradually gotten stronger over its half-century existence.
Until 2016. That’s when British citizens, by a very narrow margin, voted to leave the European Union.
It’s hard to come up with Brexit’s price tag for the British. The administrative costs alone of the separation will be about $60 billion. But that’s nothing compared to the longer-term effect.
Much depends on the terms of the divorce.
A “hard exit” that doesn’t preserve U.K. access to Europe’s single market would mean the loss of hundreds of thousands of jobs as European businesses and financial institutions relocate to the continent. Also at risk is all the outside investment that’s flowed to the U.K. because of its connection to the European Union. U.S. business alone brought in $600 billion in 2015.
A “soft exit,” meanwhile, may preserve privileged access to the EU market, but only if the U.K. permits the free movement of people — exactly what motivated many British to push the reject button in the first place. Even this compromise may not save the British economy from weaker growth, higher unemployment and more debt.
Brexit might also cost Britain its very unity. Scotland, which overwhelmingly backed continued EU membership, has already indicated that it will push for another referendum on independence from the U.K.
In this lose-lose proposition, however, the EU might suffer the greater consequences.