It’s the summer of 2019, three years after the UK stunned the world by voting to leave the EU. The UK has regained its economic and financial footing, as well as its national confidence. A smaller, and more unified, EU now functions more coherently.
But the road has been bumpy and, as a result, the global economy came close to recession, financial instability, and more isolationist policies.
Meanwhile, the global standing, and influence, of both the EU and the UK are much-reduced.
In the months after the referendum, the UK suffered a series of political traumas. All attempts to bypass the referendum’s verdict failed.
The Conservatives and Labour went through messy leadership contests, but still received a major rebuke from voters in the general election that followed.
A new ‘national coalition’ somehow managed to come together and negotiated a new Association Agreement with the EU, which maintained most free trade of goods and services.
Britain’s economy took a hit. Weaker business investment and subdued consumption tipped the country into recession, despite an interest-rate cut by the Bank of England. The EU experienced its own spasms.
But very few countries followed the UK out of the EU, and the biggest ones stayed.
The referendum sparked three years of intense internal reflection in every European nation. The rest of the global economy and financial markets also were affected.
As hard as they tried, they could not avoid negative spillover from the instability in Europe.
It was only thanks to more enlightened political leadership in the US, and systemically important emerging countries, that the world economy, as a whole, was able to avoid recession.
We are still living in messy 2016, however, and this scenario, for 2019, is but one of the two major possibilities for the global economy.
The other outcome, which is equally probable, would be even worse political dysfunction, inequality of income, wealth, and opportunity. A lot is at stake.
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