Stephen Hawking, the famed physicist and Cambridge University professor, is staunchly against last year's Brexit decision. Now, as prime minister Theresa May plans to trigger Article 50 of the Treaty of Lisbon later this month--which outlines how an EU member can leave the bloc--Hawking warns that Britain could lose it's place as a global innovation hub.
"By remaining in the E.U., we would have given ourselves more influence in the world, and we would provide future opportunities for young people," said Hawking in a recent interview with Piers Morgan on Good Morning Britain. "But leaving Europe threatens Britain's status as the world leader in science and innovation."
It also limits the U.K.'s economic heft. Globalization, in Hawking's view, isn't merely for social benefit; it also leads to more advantageous trade deals, which in turn supports the local economy. "If we pay ourselves more than is justified by our productivity, our exports won't compete," he warned. "This will lead to a fall in the value of the pound, which in turn will cause inflation and imbalance. A few people will get mega-rich, as is often the case, but the majority would be poorer."
Certainly, Hawking is not an economic genius. However, he has a point, as shown through a recent report from the Resolution Foundation. The British think tank predicts that rising inflation and welfare cuts will lead to record-high income inequality in Britain by 2020.
May, for her part, has argued that the U.K. government can negotiate leaving terms that will benefit the nation's businesses, insisting: "no deal is better than a bad deal." Still, it's unclear what such trade deals would look like. Currently, E.U. member states benefit from having access to a single market, which removes most barriers to free trade.
Many British businesses have benefited from the arrangement, analysts say. "Quite a lot of U.K. startups have relied on being able to import freely from continental Europe," noted Geoffrey Heal, a professor of social enterprise at Columbia Business School, in a recent interview with Inc. And at least one report, from Britain's Institute of Fiscal Studies, says that losing membership to the single market will curb the country's economic growth potentially for years into the future.
Still, others argue that fears over Brexit may be overblown. "The drop [in the pound] will actually help workers in industries that directly compete with imports," argues Dean Baker, co-director of the non-partisan Center for Economic and Policy Research. "The net effect of Brexit is likely to be negative, but it will not be the disaster some are predicting."
It might even be beneficial. Last year, the group Economists for Free Trade (previously, Economists for Brexit) wrote in a pamphlet that gains would result as tariffs are removed on imports from outside the E.U.