Today is a monumental day in the history of the European Union and the UK with the triggering of Article 50. While nobody quite knows what this will mean for the UK and the European Union in the short, medium and longer term, it is a major shift away from the trend of recent years. The US and the European Union have always had a very shaky relationship and this is unlikely to get any better as the UK moves to trade directly with overseas partners.
We have already seen the UK government approaching their US counterparts about a direct trade deal although it is unclear at this moment in time how long this would take to conclude. However, trade deals with the EU take significantly longer as shown by the Canadian deal which has taken nearly a decade to conclude.
US economic dominance
The US has been a major economic powerhouse for many years now although the emergence of China, India and to a lesser extent the European Union had reduced this influence. The European Union was supposed be a major powerhouse to counteract US dominance but in reality the European Union is going backwards. True, the UK is the only country so far to leave the European Union but there are major problems with Greece, Italy, Spain and the French economy is struggling.
When you also take into account the varied strength of the euro and the massive divergences on economic performance right across the Eurozone there are difficulties ahead. Many experts believe that the UK will not be the last country to leave the European Union although in reality EU officials are doing as much as they can to keep it all together. Whether this is possible in the medium to longer term is highly debatable.
US/UK relationship
While the press make much of the so-called special US/UK relationship it is debatable as to how deep this actually relationship goes. What is clear is that the UK is much closer to its US counterpart that it is to the European Union despite years of being at the top table of the EU. Many expect the US government to conclude a fairly quick trade agreement with the UK which will further cement the US economy’s position in the worldwide league table. It will also place more pressure on the European Union to perform and deliver an economy which was promised when the undemocratic move to closer ties was pushed through without any input from the European public.
There is also talk that the London financial centre will see its reputation diminished in light of Brexit but this is a market which has been around for hundreds of years, many more years than the European Union itself. It may be difficult in the short to medium term, competitors within the European Union will likely emerge but London has been a major worldwide market for many years.
Impact on the US economy
The expected direct trade deal with the UK will obviously help the US economy but in reality it is the strengthening of the US economies worldwide reputation which is perhaps more important than trade in terms of dollars. The US will never agree with the European Union because they are so at odds about the terms and conditions of any trade deal. In reality the US, China, India and the European Union are battling it out for worldwide dominance. At the moment the US is in pole position and a forthcoming deal with the UK can only strengthen this.