The European Union is a continually evolving political institution that brings together a number of European nations coming from widely different socio-economic, political and cultural backgrounds. Based on the Maastricht Treaty, the EU was formalized in 1993with the hopes of achieving both political and economic integration. Since 2008, the EU has tried and failed to manage the world financial crisis by sharing important decision-making powers with the European Council, the European Commission, the European Central Bank and the European Parliament (Fletcher 2009). That being said, the EU has been doing its best to maintain a cap on further financial ruin by insisting on regional trade integration in order to provide its members with sustainable economic development (Peebles 2005). In addition, the EU has insisted on increasing trade within its borders, and the numbers demonstrate a six-fold increase between 1958 and 1970 (Peebles 2005). By 1994, the EU had become the trade center of Central and Eastern Europe thanks to its economic reforms and focus on integration policies.
That being said, a number of recent events like Brexit have changed the ball game. According to research published by Dinghra et al. (2012), the Brexit decision is a bad one because it A) lowers trade between Britain and the rest of Europe, making goods and services more expensive, forcing the cost of living upwards and B) causes EU countries to lose income whereas non-EU countries will benefit from smaller income gains. As these researchers successfully argue, trade is vital to the EU because reduced trade results in lowered productivity, which means less jobs on the market and a greater potential for another financial crisis or recession like the one the world experienced in 2008.
In conducting my research, I learnt that the current welfare of the EU is intrinsically connected to strong trade relations within the EU states and with the rest of the world. It will be hard to surmise whether the EU will gain long-term benefits if countries like Britain leave the EU for nationalistic reasons.
- Dinghra, S. et al. (2012). The consequences of Brexit for UK trade and living standards. The London School of Economics and Political Science.
- Fletcher, T. (2009). The European Union: From impotence to opportunity? In Hart P. & Tindall K. (Eds.), Framing the Global Economic Downturn: Crisis rhetoric and the politics of recessions (pp. 181-200). ANU Press. Retrieved from http://www.jstor.org/stable/j.ctt24hf3m.11
- Peebles, D. (2005). From a Forum to a Community. In Pacific Regional Order (pp. 81-101). ANU Press. Retrieved from http://www.jstor.org/stable/j.ctt2jbk4c.12