Brexit Grexit and Italexit: What is happening to Europe? Bankist.ru

The Brexit fear that came true

There was a huge international and global shock of what happened about 7 months ago, when we got the results from the referendum in Britain. No one could possible believed that a nation voted to leave the European Union in such a rush way and many didn’t actually realized the huge costs and impacts of this action.

Huge crowds of people realizing only after, the ‘’disaster’’, wanted to change the results, but this never happened. Instead a huge political and economy crisis spread out quickly and a very crucial question raised among it. ‘’Can Europe Survive??’’

Of course this question depends on many more facts than this but shortly after the referendum, the German parliament published an analysis on the impact of a potential Brexit on the EU and specifically on the economic and political situation of Germany[1]. According to this, Britain is, after the United States and France, the third most important export market for German products. In total Germany exports goods and services to Britain worth about €120 billion annually, which is about 8% of German exports, with Germany achieving a trade surplus with Britain worth €36.3 billion (2014). Should a "hard Brexit" come to pass, the German exports would be subject to WTO customs and tariffs, which would particularly affect German car exports, where duties of about 10% would have to be paid to Britain. In total, 750,000 jobs in Germany depend upon export to Britain, while on the British side about three million jobs depend on export to the EU. The study emphasises however that the predictions on the economic effects of a Brexit are subject to significant uncertainty.

Even though that for now only Brexit official happening after the vote on the Britain parliament to trigger the article 50 there are some even worse case scenarios that follows the news. What news? Grexit and Italexit but let’s have a closer look of them.

The ‘’Exit’’ that hunts Greece for five years

Grexit was introduced as a term back in 2012 when a potential exit from Eurozone and European union was very likely to happen but after all these years it still pop-ups many times mostly as a term of fear in order Greece to get every time more and more painful economical and recessional masseurs in order to pay back the money to the creditors.

Of course, the measures suggestions of the IMF in accordance with the European commission brought up even more problems to this situation.

IMF's projection[2]

The International Monetary Fund (IMF) admitted that its forecast about Greek economy was too optimistic: in 2010 it described Greece's first bailout programme as a holding operation that gave the Eurozone time to build a firewall to protect other vulnerable members, but in 2012 the unemployment rate of Greece became about 25 percent, compared to IMF's projection of about 15 percent. IMF conceded that it underestimated the damage that austerity programs would do to the Greek economy, adding that, in terms of Greece's debt, IMF should have considered a debt restructuring earlier.

After all this years of unstoppable actions of turning the economy over, nothing seems to be changing, actually the things in Greece are getting worse. Is only matter of time the ticking economy bomb to blow off and bring down all the unpleasant consciences.

The new ‘’wannabe’’ Brexit

As European union facing many problems one more is going to be added in the latest list. The full aspects of an italexit begun to spread up far-end political parties have latched on to the idea of leaving the European Union. The sentiment for leaving is often related to a loss of sovereignty when in the EU, high financial contributions to the Union, as well as specific issues that can vary by country, for example immigration and healthcare.  While the majority of academics and mainstream politics tend to argue for the Union to stay intact, the Brexit vote has inspired far-end parties to intensify their efforts to split from the EU.

Italian Politics[3]

At the forefront of Italexit is the Five Star Movement, which was established in 2009. The Five Star Movement is the second most popular party in Italy, behind the Democratic Party, which is led by Prime Minister Matteo Renzi. The Five Star movement was already gaining steam prior to Brexit, as the party experienced success in local elections, electing Virginia Raggi and Chiara Appendino as mayors of Rome and Turin, respectively. While the turnout was relatively low, the vote serves as an indication of the state of Italian politics. The forward motion of the Five Star Movement will likely hinge on the success of Brexit in the United Kingdom.

The European and Global consequences

The immediate consequences of the Brexit vote were not favorable to either the UK or the EU.

Global stock markets plunged. The UK's credit rating was quickly downgraded by the three major credit agencies: Standard and Poor's, Moody's, and Fitch, and the British pound hit its lowest exchange rate since 1985.

Prime Minister David Cameron, who opposed Brexit, announced that he plans to step down from office in mid-July of 2016, and will be succeeded by Theresa May. A trade agreement between the UK and the EU will not be negotiated until the UK files Article 50 to separate from the EU, until then markets are left in uncertainty.

The very same will going to happen in a potential Grexit and Italexit or generally any ‘’exit’’ of another state member of European Union.

The last act

Last thoughts, Europe seems to break down, the unaffordable economy measures that the creditors put in action in order to get the money back is putting to struggle the real economy. Also the unpreparedness of the immigration status seems to add more problems to the agenda. Considering all the above the European union is at a very crucial time which will indicate its future existence or its termination.

 



[1] Andreas Koenig (27 June 2016). "Ökonomische Aspekte eines EU-Austritts des Vereinigten Königreichs (Brexit)" (PDF) (in German). Deutscher Bundestag.

[2] IMF admits mistakes on Greece bailout BBC News, Business,

[3] investopedia