BANK of England Governor Mark Carney warned politicians a no Brexit deal could lead to “de-globalisation”.
Mr Carney claimed a deal is in the “interests of everyone, arguably everywhere”. Here we fully explain what globalisation is.
What is globalisation?
Globalisation is where countries and businesses across the world work increasingly closer together.
It sees countries integrate rather than remaining isolated, and signals a greater economical and political cooperation worldwide as more ideas are shared.
The term describes a world with a freer transfer of capital, goods and services across borders.
While affected largely by business dealings globalisation also sees the sharing of popular culture between nations.
This has been made a greater reality by technological advances in recent years.
It has been suggested by some economists globalisation could hurt smaller or more fragile economies.
What is the effect of globalisation?
Prime Minister Theresa May touched on the effects of globalisation in her speech at Davos on January 19, as she said Britain is ready to trade with the world.
She said: “Those of us who meet here are optimists, who believe in the power of public and private collaboration to make the world tomorrow better than today.
“Free trade, partnership and globalisation. But outside this hall, those forces for good which we take for granted are being called into question.
“Forces that have had such a positive impact, lifting millions out of poverty, broken down barriers and raised living standards, are now being undermined.”
She warned of the negative impacts of greater globalisation, which can mean jobs are outsourced and people’s wages are undercut.
Globalisation can bring benefits to culture, economy and trade for a country but can also be damaging if countries are unable to keep up.
While Mark Carney warned on February 12: “A no-deal, no-transition Brexit would be an economic shock for this economy … and it would also send a signal globally about the prospects of refounding globalisation.
“In many respects, Brexit is the first test of a new global order and could prove the acid test of whether a way can be found to broaden the benefits of openness while enhancing democratic accountability.”
What are the pros and cons of an integrated global economy?
The pros of globalisation include free trading, a benefit to consumer and economy, competition between countries driving prices down, other nations given more opportunities and the free movement of labour.
The cons can see smaller countries suffering and developing countries left behind, it can cause a strain in the job markets, an inability to recoup investment, a loss of cultural identity and a negative impact on the environment.
One of the biggest successes of globalisation can be seen within military forces and environmental protection advances around the world.
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The Strategic Arms Reduction Treaty and NATO’s Partnership for Peace are just some of the examples of nations working together.
Some people are very against the idea of globalisation – the majority of these opponents are in developed countries, usually middle-class and college-educated.
But others see globalisation as a positive movement for the world as a whole as nations share resources and skills.