Edited by Annette Bongardt, Leila S. Talani and Francisco Torres
Chapter 9: Brexit adds to Europes need for economic rebalancing and technological impetus
Brexit adds to the context of Europe’s economic fragmentation, in which the UK’s macro-financial imbalances had already grown. As most European economies have been facing slow growth and sluggish productivity since the global financial crisis, the additional challenge from Brexit might lead the UK to increase its reliance on offshore finance and fiscal/regulatory competition. Meanwhile, this strategy risks aggravating the economic imbalances and inequalities that exacerbated social malaise in the run-up to the Brexit vote. In addition to monetary instability, non-cooperative policies and insufficient coordination have already been a key feature of economic life in the EU and the Eurozone over the past two decades, and might rise further after the UK’s departure. More cohesion is needed, not only to address the consequences of Brexit and preserve ties, but also for the EU and the Eurozone to rebalance their model away from their short-term focus on current-account surpluses and depressed labour costs. While a frustrating trade-off has emerged between employment and productivity across European economies, the ongoing industrial revolution offers opportunities to steer the EU and the UK towards a more efficient and inclusive growth model.
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