Economic Impact

Brexit, an Underestimated Risk

Britain’s Prime Minister David Cameron leaves Number 10 Downing Street to attend Prime Minister’s Question Time in Parliament
British Prime Minister David Cameron last week laid out his key demands to the E.U.
  • Why it matters

    Why it matters

    If the British voted to leave the European Union, the loss of one of the bloc’s biggest economies and centers of growth would have a greater impact than many now realize.

  • Facts


    • The British people will vote in a referendum on E.U. membership by 2017.
    • Prime Minister David Cameron has said he will campaign to stay in if Britain’s relationship with the E.U. can be renegotiated.
    • Last week he outlined his key demands, which included protection for non-euro-zone members and curbs on E.U. migration.
  • Audio


  • Pdf

The European Union has been exposed to many crucial tests. The latest terrorist attacks in Paris underscored the threat posed by fanatic Islamism from home and abroad, while the refugee crisis puts European solidarity to a serious test. Furthermore, Europe still has a long way to go before overcoming the economic consequences of the euro crisis.

But the greatest threat to the continued existence of the euro zone in the long term stems from a vote that many in continental Europe often view as a curiosity: The referendum on European Union membership to be held in Great Britain, most likely next year. A “Brexit” would not only plunge the E.U. into an identity crisis, but would also be a disaster in economic terms.

Nevertheless, there is growing support for a Brexit in Great Britain. Euroskeptics are gaining ground in the ruling Conservative Party. The populist UK Independence Party, or UKIP, has been successful in beating the drum for limiting immigration from E.U. countries. And although the Labour Party leadership supports E.U. membership, it can no longer completely rely on support from its base, as the election of the left-wing Jeremy Corbyn as the party’s new leader demonstrated.

Even the business community is by no means united in its support for the European Union, as became clear at the annual German-British Economic Königswinter Conference in Brocket Hall near London this weekend. Aside from a few prominent voices from industry and the financial world, small and medium-sized companies, in particular, tend to support Britain going it alone.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.