Expert Q&A: What is the “Brexit” and does it matter?
The “Brexit” — an upcoming United Kingdom referendum vote on whether to leave or remain in the European Union — could prove costly for Great Britain and may affect its trade and diplomatic relations, including with the United States. The latest poll shows British citizens are evenly split on the issue.
Following today’s tragic death of Jo Cox, a member of Parliament for the Labour Party, both sides suspended their rallying campaigns.
The United Kingdom will vote on Thursday, June 23. The country joined the EU in 1973 and has had a complicated relationship with the governing body — from arguing Eurozone costs to a 27-year battle with “chocolate purist countries.” Both sides of the table argue there are significant cost savings associated with their position.
Below, USC experts share their thoughts and impressions about the referendum and its possible effects.
Contact: Gretchen Meier at (213) 740-6973 or gmeier@usc.edu
Why do some voters want to leave in the first place?
“Contrary to what the leave supporters are claiming, a decision by the United Kingdom to leave the European Union might not have much of an effect on reducing the fairly limited pressure that the UK is currently experiencing from asylum seekers and non-EU migrants. A “leave vote” might actually result in the UK experiencing growing pressure from asylum seekers and non-EU economic migrants because other EU states would no longer be obligated under EU law to cooperate with the UK on migration.”
Niels Frenzen is an expert in refugee and asylum law with the USC Gould School of Law.
Contact: (213) 842-2526 or nfrenzen@law.usc.edu
How will global businesses respond to an exit?
“No country has left before — there is no benchmark in terms of what can happen. In terms of winners and losers, the companies that have opted to locate their headquarters in Britain may reconsider and relocate to another country to participate in a bigger economy. Corporations will not hesitate to make this decision.
“There are a lot of data points that suggest Britain would isolate itself and lose its influence in Europe. There are more disadvantages with exiting the European Union; I do not see distinct benefits. The bottom-line savings will have only a small impact, and there is a strong likelihood the decision to exit will have dark consequences.”
Nick Vyas is director of the Center for Global Supply Chain Management and assistant professor of clinical data sciences and operations at the USC Marshall School of Business.
Contact: nick.vyas@marshall.usc.edu
Will this shake up the financial markets?
“Big financial players (in the U.S.) are moving their money and hedging. It is likely that a bank like Goldman SHoachs will move thousands of workers if there is a Brexit. In addition to the tax ramifications for businesses, cancer research will also move onto the continent. European cities are all waiting to welcome the fleeing businesses, and Scotland will likely leave the United Kingdom, causing more instability.
“The Brexit will be very hard to reverse as it’s all about confidence and stability. All data points to Brexit being purely based on nativist rationales. There is no economic evidence to back its rationale. It’s like a national suicide: Foreign investment is dropping fast. This is madness.”
Jacob Soll is an expert on accounting practices at the USC Dana and David Dornsife College of Letters, Arts and Sciences and the Leventhal School of Accounting.
Contact: soll@usc.edu
Are there implications for the U.S. if Great Britain votes to leave the EU?
“Today’s murder of Jo Cox, a member of Parliament, painfully highlights the tension in the United Kingdom that is evolving in the course of the Brexit debate. The stability of U.S. relationships with the U.K. and with the European Union may very well be at risk here. The outcome of this vote could seriously impact global relationships of some consequence.”
Edwin Smith is an international law expert with the USC Gould School of Law.
Contact: ripsmith@att.net
Is there no turning back?
“Although an extremely important vote faces the British people, my impression is that both sides exaggerate the consequences of failing to adopt their position. If Britain votes to leave the European community, despite all arguments to the contrary, it undoubtedly will be given a second chance to return, and very likely with substantially more power to address its concerns about Pan-European policies. And even if not, its proximity to mainland Europe ensures that it will always be an important trade partner to the European community. However, Britain will incur significant transition costs if it leaves.”
Lawrence Harris is an expert in stock markets, investment, regulation and economic forecasting in the USC Marshall School. Harris is a former chief economist of the Securities and Exchange Commission and author of Trading and Exchanges: Market Microstructure for Practitioners.
Contact: lharris@marshall.usc.edu
[Image: Creative Commons/DaveKellam]
