Brexit Impact On "Emerging Markets"

Britain’s exit from the E.U. could disrupt world trade and jeopardise the process of pulling the global economy out of recession.

- C.P. Chandresekhar

Britain has voted to leave the European Union (E.U.). The managers of global capitalism now have their hands full addressing the fallout of Brexit even as their efforts to manage the aftershocks of the crisis of 2008 remain unsuccessful. It does not help that Brexit immediately affects the E.U., where the legacy of the earlier crisis has been the worst. In fact, the churning within the E.U. is partly the result of the persisting crisis in parts of the region. And it is there that the next crisis is likely to unfold first.

But as recent history has repeatedly made clear, in a globally integrated world no crisis remains confined to one region. If Britain’s departure from the E.U. worsens the crisis in Europe, it will also, to different degrees, affect the rest of the world, including the so-called “emerging markets” such as India. That could worsen the depressed conditions confronting the current world economy. So, preventing Brexit from precipitating another crisis that could convert the Great Recession into a Great Depression is the task before these managers. The problem is, they know neither what Brexit will do nor what needs to be done, whatever adverse effect it may have. Moreover, governments across the globe are weighed down by “stimulus fatigue”, or the burden of stimulating a recovery while remaining committed to a neoliberal fiscal and monetary policy framework. They are ill-prepared to deal with one more potential obstacle to that recovery.