A great deal has been said about the impact of Brexit on Great Britain. But we very rarely hear about what the impact on the European Union would be. It is as if the EU could live happily without Britain, if anything actually better.
Brexit will provide opportunities for individual countries. Malta shall be no exception to this. The larger countries such as France and Germany may be hoping for a bonanza, that is a significant shift of businesses from the UK, more notably London, to their countries. They could well be making one miscalculation – not fully understanding why these businesses were located in the UK in the first place.
They can also be making another miscalculation. They do not recognise the number of times the opposition to the UK of certain proposals has saved the EU from itself. They may also not be recognising the extent to which the presence of the UK at the decision-making table has ensured more cost-effectiveness and less bureaucracy. Whether the lesson has been learnt or not is still to be seen.
The first consideration to make is the currency issue. The UK had opted out of the eurozone. That made the group of member states that did not adopt the euro relatively strong because of the recognition of the pound sterling as an international currency. With Brexit, such member states will no longer have the UK with them, and so the euro group may push for certain changes, that so far had remained opposed. Post-Brexit, the eurozone would have more power to drive economic and financial policy in the EU regardless of the views of the member states that have not adopted the euro.
This does not necessarily mean more integration within the eurozone, especially since countries such as Italy are likely to oppose further integration. Moreover if Germany does not wish to continue bailing out individual countries, it may also oppose further integration within the eurozone.
The European Commission may end up being less committed on the issue of climate change, post-Brexit
Another consideration is energy. The EU has been pushing the agenda of a common energy policy. This was not much to the liking of the UK, which had opposed the efforts of the European Commission to improve security of energy supply by intervening in the national energy markets. This is one of the tenets of a common energy policy. Without the UK, the EU might adopt a more centralised system of energy market regulation.
Moreover, the UK has been more ambitious than other EU member states on the issue of climate change. So the European Commission may end up being less committed on the issue of climate change, post-Brexit.
Brexit could actually make the eurosceptic parties across the EU stronger. If this were to happen (for example in France and Italy), then one can expect a move towards less integration. The UK position had also had a significant impact in making sure that the budget spent on the common agricultural policy be reduced and that spent on research and innovation be increased. Would there be a reversal of this position, post-Brexit?
The UK had consistently pushed for more liberalisation, both internally, as well as externally. It was a big supporter for the removal of barriers to the trade in services. Would Brexit slow down this process and make the EU less liberal from an economic viewpoint? Would there also be a slowdown in the conclusion of agreements with third countries on free trade and would there be an increase in protectionism?
Another consideration to make is the position that the EU will adopt with regard to macroeconomic policy in the Union. The German position has always been very clear – aim for a balanced budget. The UK, although being in favour of fiscal prudence, was not as orthodox as Germany was. Will Brexit increase the influence of Germany on macroeconomic policy in Europe?
The outgoing German Finance Minister, Wolfgang Schauble, had said that Brexit would create instability that would be a poison to both the UK economy and the European economy. The extent to which this will actually happen, especially in the EU, remains to be seen. Then there is also the impact on Malta, which we need to take into account.
Thinking that Brexit will be a walk in the park for the EU, and only the UK has something to lose from Brexit and the EU can only gain from Brexit would be very short-sighted.