The Opportunity Cost of the Brexit Drama

Media Coverage | January 03, 2019

The clock is ticking toward March 29, 2019. On that date, the United Kingdom is scheduled to leave the European Union. Typical of the nebulousness since the "Leave" vote back on June 23, 2016, it remains unclear how this will happen—or even whether it will take place at all.

In the first quarter of 2019, there are three options for the United Kingdom: crash out of the European Union, stay in the European Union or accept a negotiated withdrawal agreement. All of them will certainly use up most of the energy of the British leadership. And that will be unfortunate for the rest of us, because the United Kingdom will likely be preoccupied at a time when the world sorely needs Britain's engagement.

If, 100 days from now, there is no agreement, then the United Kingdom will simply crash out of the European Union. The specific and unique problems this would cause are increasingly coming into focus: the highway to Dover packed with trucks requiring customs clearance, while perishable goods spoil and contract obligations aren't met; shortages of medicines or industrial components; confusion about the landing rights of foreign carriers in the United Kingdom and British carriers in Europe. The list goes on and on. It is pure denial to think that such very real scenarios wouldn't affect the strength of the pound or produce massive knock-on socio-economic effects that would be felt for weeks and months afterward. To this, one should add the eventual political ramifications: Expect more jockeying and changes in government personnel or the prospect that Scotland moves quickly to separate from England and seeks to rejoin the European Union.

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