Brexodus

Boris Johnson won big during the recent election and has said that he will force Brexit with or without a deal. While much is still unclear, it seems to me that Britain will likely set in motion a series of events that will be beneficial for mainland Europe.

My guess is that after leaving the EU, Britain will become less economically competitive due to trade frictions. The first impact will be slowed migration of Europe’s best and brightest to Britain, something we already see. This initial change will eventually lead to a much more dramatic shift.

In the coming years, talent will stop leaving Europe for London. The reduced out-migration will result in a faster buildup of expertise on the mainland relative to Britain. Eventually, more financial services will be carried out in either Paris and Frankfurt than in London.

At some point, educated labor in Britain will find that their economic prospects are better in Europe than in Britain. The relative economic prospects will result in a migration south across the English Channel, a “Brexodus”.[1]

I suspect that this will likely be an irreversible tipping point. The build-up of expertise on the mainland will set in motion a flow of talent from Britain to the mainland that will establish new relative positions with Europe at the core and Britain at the periphery. Out-migration of locally educated talent will make it nearly impossible for Britain to remain competitive. The final steady-state will be a virtuous cycle for Europe and a vicious cycle for Britain.

Even if Britain rejoins the EU at a later date, they will not be able to regain their previous status. The relative positions and migration patterns will be too entrenched.

While this is unlikely what the English had in mind when they voted, I suspect that this will be the final result.[2]

[1] I love the term Brexodus. However, I don’t know where I first encountered it for proper citation.

[2] Northern Ireland, Scotland and Wales have been mostly opposed and will likely divorce the English themselves. The breakup of the U.K. will worsen things for England.

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