A look at Brexit and its impact on Cleveland and the US

Nathan Lesch, Director of Print

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Over three years have passed since the United Kingdom voted to leave the European Union, a move commonly called Brexit, and still no terms with the EU have been agreed upon.

“If Theresa May didn’t take any actions to stop Brexit, I find it unlikely that Boris Johnson will.  That doesn’t mean stranger things can’t happen, but movements to override the Brexit vote and the preferences of the Prime Minister (PM) would have to overcome a lot,” noted Justin Buchler, an associate professor at Case Western Reserve University who specializes in elections and democracy.

Although there has long been tension between the U.K. and the EU, the road to Brexit began in 2013 when the then-PM David Cameron proposed a statewide referendum on EU participation. Though the actual referendum didn’t occur until June 2016, Cameron believed U.K. citizens would overwhelmingly vote to remain in the EU. 

Both the outcome and the process of the referendum were contentious. Citizens had to choose between voting to leave or voting to stay. These limited options have been highly criticized due to their lack of complexity. 52 percent of voters supported leaving the EU. 

No country has ever left the EU, which makes the process of leaving difficult for the U.K. It is currently less than two months away from the U.K.’s deadline to leave, and as of print, there has been no plan agreed upon by both the U.K. and the EU.

Immediately following the vote to leave the EU, Prime Minister Cameron resigned. Theresa May, another member of the Conservative Party, was chosen to take his place. May worked extensively on a deal that would keep current trade regulations between the U.K. and the EU in the short-term, but remove most of them over time. Her plan was considered a hard Brexit, meaning that the U.K. would not remain closely linked with the EU.

May presented her plan to Parliament three times, and it was defeated handily each time. Eventually, May began working with the Labour Party to create a softer Brexit where the U.K. would remain linked to the EU. These talks ended before a suitable plan could be drafted.

Originally, the U.K. was slated to leave the EU on Mar. 29, 2019, two years after May triggered Article 50, the protocol for leaving the EU. However, no deal was able to be made by that time. EU leaders have allowed several extensions to the U.K.’s leaving date.

Boris Johnson, who succeeded May as prime minister after May stepped down this past June, promised the public that Brexit would be achieved by the Oct. 31 deadline. As time runs out and no deal is made, uncertainties surrounding Brexit mount.

The U.K. and the EU are no closer to determining the terms of the U.K. leaving. Because the U.K. has been unable to create a hard or soft Brexit plan, a no-deal Brexit becomes increasingly possible.

According to Buchler, “A no-deal Brexit can’t be ruled out, since Johnson would accept it and no specific deal proposed by May got through, but making predictions on this is a mug’s game.”

A no-deal Brexit would involve the U.K. leaving the EU without agreeing to any terms. The U.K. would simply drop out of all EU policies and programs.

Without knowing how the U.K. will leave the EU, it’s impossible to determine the exact effect leaving will have on the United States. Buchler identifies the potential economic impacts as being consequential to the U.S.

“Any economic impact on the U.K. or EU countries therefore affects [the U.S.] based on the way in which they wind up trading with us,” said Buchler. “However, I wouldn’t expect the effect to be large, since as a proportion of GDP, our trade with either the U.K. or the EU isn’t that large.”

Fortunately, because of the lack of a large-scale economic impact, Buchler does not believe Brexit will significantly impact U.S. politics.

Globally, Buchler also believes it is impossible to determine the amount of economic damage Brexit will cause until the terms—or lack thereof—of leaving are determined.

Regarding Cleveland specifically, Buchler believes that because Cleveland is not significantly influenced by trade between the U.K. and the EU, Cleveland will not be dramatically affected. However, Buchler does warn that Cleveland could be affected if the consequences of Brexit are much larger than they appear now. Buchler used the 2008 financial collapse to explain how this effect could occur.

“The global economy was tanked in 2007 and 2008 by the collapse of a housing bubble, but that was connected to far more than just housing, including the derivatives market and speculation,” said Buchler. “So, the effect of the housing bubble collapse turned out bigger than one might have expected, and it is worth keeping that in mind, but Cleveland is not especially dependent on the U.K.-EU trade connection.”