The Economic Impact of Brexit

In June of 2016, nearly 47 million UK citizens voted in a nationwide referendum to leave the European Union. With a 52% majority vote, the UK opted to be the first Member to leave the world’s largest and only political and economic union, and subsequently restore sovereignty. Prime Minister David Cameron, resigned shortly thereafter.

The decision rattled political leaders, economists, trade experts, and the public worldwide—including those in the UK who voted to stay.

The EU is comprised of 28 countries, including the UK, 19 of which have adopted the euro as their official currency. While there is marked heterogeneity across members in terms of their economic power and size, all countries stand to gain through access to this single market and customs unions. Membership in the Union is founded on four freedoms, which are the free movement of people, capital, goods, and services.

The UK’s decision to leave the EU—known as Brexit—was almost inevitable. Indeed, Brexit marks the end of a tumultuous 40-year marriage between the UK and the EU. With tensions spanning nearly 70 years, starting in 1951 when France, West Germany, Belgium, Italy, Luxembourg, and the Netherlands, known as the “inner 6” signed the treaty of Paris that subsequently established the European Coal and Steel Community (ECSC).

The treaty was intended to promote diplomacy and economic stability throughout western Europe following the second world war. The idea was that the establishment of shared economic interests would preclude warfare among members. Britain was notably left out of this agreement.

Later in 1957, the inner 6 signed the Treaties of Rome, which established the European Economic Community (EEC) and European Atomic Energy Community (Euratom). In 1967 these agreements became collectively known as the European Communities (EC).

Britain tried to join the EEC in 1963, but its attempt was vetoed by French President, Charles de Gaulle. It wasn’t until ten years later that Britain successfully joined the Union in 1973.

Given the UK’s long and tempestuous history with the EU, it’s no surprise that the Brexit negotiations have taken on a similar form. March 29, 2019 has been burned in the brains of all those involved as the day Britain permanently leaves the Union. But before that can happen, delegates on both sides have to reach agreement on a number of major issues across areas like immigration, trade, and security, with every concession is likely to produce clear winners and losers.

Mel Cappe is Professor and Undergraduate Program Coordinator at the University of Toronto’s School of Public Policy and Governance. He is an Officer of the Order of Canada, and has held a number of senior roles in the Canadian federal government, including Clerk of the Privy Council, Secretary to the Cabinet and Head of the Public Service in Ottawa. Most recently Mel served as Canada’s High Commissioner to the United Kingdom. He studied economics at the University of Toronto and Western University, and received honourary doctorates from both. Mel is a sought-after speaker and makes regular appearances on various news outlets and talk shows discussing matters of trade, politics, and Brexit. [Interview at 4.50]

Chad Bown is a Senior Fellow at the Peterson Institute for International Economics in Washington. He previously served as senior economist in the White House on the Council of Economic Advisers and most recently, as a lead economist at the World Bank. He was a professor of economics at Brandeis University for 12 years, and he has also spent a year at the World Trade Organization (WTO) in Geneva. Chad also co-hosts Trade Talks with Soumaya Keynes, a weekly podcast on the economics of international trade policy. You can subscribe on iTunes or most anywhere podcasts are found. [Interview at 13.43]

Peter Morrow is Associate Professor of Economics at the University of Toronto, with a Courtesy Appointment at the Munk School of Global Affairs. Previously, he served as a Visiting Professor at UC Berkeley and Senior Research Associate at the Federal Reserve Bank of Boston. Peter completed his PhD in Economics at the University of Michigan. [Interview at 35.52]

Peter is also an Editorial Advisor and Data Editor for the Canadian Journal of Economics, and a referee for many leading economics journals. He teaches courses in international trade theory and microeconomics at the undergraduate, graduate, and PhD level. His research interests include international trade, applied microeconomics, and development. Peter is an active member of the academic community and has presented his research across the world, including in cities like Paris, Barcelona, and Kyoto. [Interview at 35.58]



Julia Chan, Host, Senior Producer, Technical Producer
Nuri Kim, Host
Ian T. D. Thomson, Executive Producer, Technical Producer

Music Credits
Not Dead 
by Fine Times
Should I Stay or Should I Go 
by The Clash
Children Play Well Together by Caribou
Calculation Theme 
by Metric
Life on Mars? by David Bowie
Should I Stay or Should I Go 
by Air


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