By Sofia Bosch
On September 18th, 2019, a USC Retired Faculty & Staff Associations (RFA) Distinguished Lecture entitled “The Impact of the UK Leaving the EU – on the UK, the EU and the International Economy” was given by Lord John Eatwell.
Lord John Eatwell is the President of Queens’ College Cambridge and has taught Economics and Finance at Cambridge since the early 1970s. He is also a faculty member of the USC Dornsife, where he teaches a graduate course in the Department of Economics on Classical Economic Theory and Its Critics, and an undergraduate course in the School of International Relations on Global Economy 2020.
Lord Eatwell’s lecture was particularly interesting — he broke down what would happen in the case of no deal, how the UK will struggle without the EU’s “scale,” the general issues with the status of the EU v. the UK, and how the EU will be impacted.
There will be various hurdles for the UK in the case of no deal, especially in the first six months. Lord Eatwell touched on the deep connection of UK economic and political life to Europe via EU agencies and mentioned examples of issue areas such as the EU’s aviation agency controlling air travel, 65% of trucks not having paperwork which will hold them up at the border, petroleum pricing out, and significant shortages in medicines in the UK.
Lord Eatwell also stated that the EU is “the largest trade union in the world and has expanded to 550 million individuals,” making it a “grave mistake” for the UK to leave the EU. He credits scale for multiple “EU success stories” such as remarkable environmental improvements, the EU being large enough to take on the development of new monopolies, and standardized financial regulation.
He predicts that in the next 20 years, the UK will have a 15% smaller economy than it would’ve had, had it stayed in the EU. The scale will directly impact the UK economy as UK trade with the EU is 50%, whereas, only 5% of trade in the EU is with the UK. A no-deal asymmetrically affects the UK more than the EU.
For the status of the EU and the UK, he predicts certain things are inevitable. For example, a 2021 Scottish independence referendum is already underway. He sees a high likelihood that Scotland could leave which would be a disaster for the UK. Given that the Good Friday Agreement was built on the fact that both the UK and Ireland were a part of the EU, the situation along the Ireland border is also tense. Lord Eatwell hinted at the possibility of Ireland’s reunification.
Additionally, leaving the EU will have a drastic impact on Brits in other parts of the EU and vice-versa. He stated that EU migrants leaving is problematic as the success of high tech/finance has relied heavily on non-British talent (ex: Deep Mind) and British horticulture requires EU labor. In the long term, he believes these factors will cause the UK to “very much lose its position in the world.”
Finally, for the impact on the EU. Since the beginning of the 19th century, Lord Eatwell argues that the UK has balanced France and Germany. Without the UK, he worries that little will get done and that there will be more political discord than before. He also finds this problematic for the future of the EU being able to align with the US to rethink international trade and stand up to new powers like China.