Friday, June 24, 2016

German Headquarter

On June 23, 2016, a small majority of voters in the United Kingdom ("U.K.") expressed their preference to quit membership of the European Union.  Much has been, and will be, written elsewhere about various consequences of this decision for the U.K..  I would like to highlight an important implication for the post-Brexit European Union ("E.U.").

Using 2014 GDP figures, the U.K. economy makes up 17.6% of the total GDP of the E.U., while Germany accounts for a larger, yet comparable, 20.7%.  Removing the U.K. from the E.U., the economy of Germany would contribute more than 25% of total E.U. GDP, and be almost 40% larger than the next largest national economy, that of France.  Time will tell what effects such a large imbalance of economic power will have on the governance and stability of the E.U..  With the U.K. gone, it will be much more difficult to view the E.U. as club of equals.