The fiscal and rhetorical cinders and smoke that remain in the air over the British Isles in the Brexit battle’s wake provide a cautionary tale for Canada.
Aside from the damage done to trade agreements with the U.K. and the European Union (EU), the Brexit referendum vote to remove Britain from the EU threatens to derail free trade deals elsewhere. It will also pump up global protectionist sentiment. That’s not going to help restart stalled local economies. Oxford Economics new forecasts already warn that world growth could drop below 2% in 2016.
Brexit’s impact on the Canada and European Union Comprehensive Economic and Trade Agreement, for example, could be significant for Canada because the U.K. will no longer be covered by the agreement, which currently includes 28 countries with a combined $20 trillion GDP. Britain’s anti-trade-bloc vote also throws the Trans-Pacific Partnership (TPP) into doubt. That again puts billions of dollars in trade potential and expansion at risk for all 12 of the deal’s partners.
For Canada, the TPP’s increase in exports has been estimated at $16 billion and its contribution to the country’s GDP projected at close to $10 billion. For B.C.’s Asia-Pacific advantage, that adds up to another major economic opportunity for future prosperity that’s now in peril.
It remains to be seen whether the split from the EU will ultimately benefit England, but early returns show the upcoming departure from what is the world’s largest trading bloc to be a significant blow to the country’s economy and its standing among the world’s major powers.
Britain is already well into Brexit remorse. In the bleak morning after, a reported three million U.K. voters signed an online petition calling for a referendum re-vote. But that toothpaste is already out of the tube on that side of the Atlantic.
On this side, Brexit underscores the negative repercussions of placing nationalist emotion above economic fundamentals and opting to shrink rather than expand a country’s trade, business and international horizons.
