By Katie Ellington, News Editor
The United Kingdom is the second largest economy in the European Union and a net contributor to the EU’s budget. But that may change in June.
Citizens of Great Britain, Ireland, Malta and Cyprus as well as Commonwealth citizens and some British nationals (those who have lived oversees for less than 15 years), will be able to vote on whether UK will remain an EU member in a referendum on June 23, according to USA TODAY. Although the referendum was a promise Prime Minister David Cameron made during his 2015 re-election campaign, Cameron himself does not support the move to leave the EU.
“Having that seat at the table in the EU – just as being a member of NATO – is a vital way that we project our values and our power and our influence in the world,” Cameron said on the Andrea Marr Show Sunday morning.
Cameron addressed parliamentarians Monday to announce a deal struck with European leaders last week that he hopes will influence voters to remain in the Union. This deal will grant the UK a “special status” if it chooses to continue membership. CNN reported that while the bloc would keep its powerful position in the world market, this special status would keep it from being “part of a European super-state.”
According to CNN, Cameron cites concern about “Russian aggression and Islamic terrorism” as well as potential risks to the UK’s economy. USA TODAY reported that the British pound’s value declined sharply Wednesday (its value after a 0.9 percent decrease is $1.3887 USD, which is a nine year low) and implied the reason was “continuing fears about Britain’s membership.”
An article in the Guardian stated that the International Monetary Fund gave a similar warning, stating that uncertainty caused by the change could but a stop the economy’s stable growth.
Joseph Quinlan, the head of market & thematic strategy for Bank of America, Global Wealth & Investment Management, said a Brexit could also jeopardize the finances of the United States’ global profits.
“A Brexit would squeeze the affiliate earnings of numerous U.S. multinationals strategically ensconced in the United Kingdom, and force many companies to rethink their overall EU strategies,” Quinlan told MarketWatch.
J.P. Morgan, on the other hand, views the situation differently. According to a team of equity strategists led by Mislav Matejka said lower stock prices and hesitant investors could mean a big financial payoff for those willing to take the risk.
“UK is a high-yielding, liquid market that typically does well in a challenging global backdrop and in a falling bond yield regime,” they added.
While Cameron and his supporters say that leaving the EU means only trouble for Britain, London Mayor and fellow conservative Boris Johnson disagrees. He stands with the “Vote Leave” campaign, which argues leaving will save the country money, slow migration and eliminate pesky regulations.
CNN Money reported that Britain contributed £8.5 billion ($12 billion) more than it received to the EU last year. The EU’s migration policies allow EU migrants to have “unrestricted access to Britain shores and jobs.” Currently, 3 million EU nations live in the UK
A study by think tank Open Europe found that the EU’s regulations cost the UK about £33.3 billion ($47 billion) a year; however the UK would still have to follow EU regulations in order to continue unrestricted trade with member nations. Trade with EU nations contributes 45 percent of British exports and 53 percent of imports as well as 3.4 million British jobs.
If the UK does choose to leave the Union, it will be the first nation to do so since the EU’s formation in 1950.