Europe can use the uncertainty as an opportunity and turn the situation to its advantage. Image: REUTERS/Francois Lenoir
I was saddened by the UK decision to leave the European Union, as I deeply believe in the benefits of unification. But Brexit can be an opportunity for Europe.
Competition for top spot in the world economy is fierce, and Western economies risk losing relevance. In this race, size increasingly matters. Without the UK, the EU will still be the world’s second-largest economic bloc, with a GDP of $13.4 trillion. Breaking away from this union, and its 444 million often highly skilled citizens, represents a risk. By 2050, the European economy is projected to make up only 9% of the world economy. This puts the clout of any individual country – even that of relatively big players like the UK – into perspective.
The negotiations over Brexit will be an uncertain period for the UK. For example, it is unclear whether Britain will still benefit from EU programmes to stimulate investment after it leaves. The European Investment Fund committed €2.5 billion to 144 UK venture funds for the period 2011-15, representing 37% of all venture funding raised in the UK.
Europe can use this uncertainty as an opportunity and turn the situation to its advantage.
First, many companies and banks will want to stay in the EU – to tap into Europe’s talent pool, access the EU market without import duties, and use the EU "passport" for financial services. Locations such as Frankfurt, Paris, Dublin, Amsterdam and Luxembourg stand to gain, and some London-based companies are scoping out these cities already. If a few companies decide to relocate, an entire ecosystem of lawyers, consultants and other service providers could follow.
Promotion agencies for European cities and chamber of commerce chiefs should promote the benefits of Europe. In particular, they should visit fast-growing markets in Asia, the Middle East and Latin America. Local and national policies should support these efforts to encourage the leaders of tomorrow to base their operations in the EU.
Second, Brexit should be the trigger to start thinking about smarter integration. The UK never was enamoured with the euro or many other integration plans, such as the Schengen agreement, banking union, and taxation harmonization. With its departure, such initiatives can be implemented more quickly and better.
Smarter integration means the EU needs to be strengthened where collaboration offers clear benefits – in areas such as immigration, defence and the single currency. On the other hand, it means that competences must be handed back to local authorities when there are no clear benefits to implementing them at the European level. Such competences often concern tangible issues and can attract much negative media attention. Addressing such cases effectively will give citizens a greater sense of democratic control.
Last but not least, the benefits of the single market must be explained in plain terms, and focus on regulation with direct benefits for the people. Successful implementation of such initiatives should boost popular support for the EU. A good example is the abolition of roaming costs. Other easy wins would be the equal treatment of companies such as Netflix, Airbnb and Uber.
Such highly visible steps would create a deeper common market, directly benefit EU citizens, and allow companies to prosper.
Don't miss any update on this topic
Create a free account and access your personalized content collection with our latest publications and analyses.
License and Republishing
The views expressed in this article are those of the author alone and not the World Economic Forum.