The Implication Of The European Union Brexit?

The European Union represents an “economic and political partnership between 28 European countries” (European Union, 2015). The EU is characterised as a single market where the movements of goods, services and labour are free between countries. However, the issue of the PIIGs (Portugal, Ireland, Italy and Greece) destabilised and challenged this union. As it created financial contagion within the economies, and lead to Britain and other members contributing to bailout funds for these debt ridden economies. This has consequently lead to the creation of the term ‘Brexit’, which is associated with the notion of Britain potentially withdrawing from the European Union (EU) (Oliver, 2015). Since the 2015 general election this term has been very prevalent in the media, due to the rising support from the British public to withdraw Britain’s membership from the EU. This was largely reflected in the 2015 general election vote, in which UKIP votes represented 12.5% (BBC News, 2015) of the UKs vote share. This has since prompted David Cameron to commit to an in-out referendum in 2017 on Britain’s membership. Therefore, this essay will evaluate the …show more content…
Predominately looking at what theory implies will occur in the economy, as well as, combining that with empirical and statistical evidence. What this essay has not considered until this point is that these are not normal times. The UK economy is currently experience “weak growth and low inflation” (),in the last quarter of 2015 inflation was actually negative. Furthermore, interest rates in the economy are at historical lows of 0.5%. The UK economy is currently considered as being in a liquidity trap, in which interest rates have become an inefficient tool in influencing inflation. Since, we have seen the Bank of England engaging in quantitative easing. This paints a picture of an economy in need of