BREXIT
UK voted to leave EU in a referendum held in June 2016. The “leave” side prevailed 52 percent to 48 percent, which had a turnout of 72 percent. Out of 12 regions, only three, Scotland, Northern Ireland, and London voted to remain in the EU, while the others led the “Leave” vote to win by a narrow margin.
• The UK is the first major country to
decide to leave the bloc, which evolved from the ashes of the Second World War
as the region’s leaders sought to build links and avert future hostility. The
Conservative Party's general election victory last year activated a manifesto
pledge to hold a referendum on Britain's membership of the European Union by
the end of 2017.
•
Britain joined the European Community in 1973. This was the second referendum on
Britain’s relationship with the European integration project. Labour Prime Minister
Harold Wilson had the first referendum on Britain’s membership in 1975 in which
66% people voted to stay in the European Community.
Arguments
in favour
1)
The EU threatens British sovereignty, is the most common argument. A series of
EU treaties have shifted a growing amount of power from individual member
states to the central EU bureaucracy in Brussels: On subjects where the EU has
been granted authority – like competition policy, agriculture, and copyright
and patent law – EU rules override national laws. The EU’s executive branch,
called the European Commission, is not directly accountable to voters in
Britain or anyone else.
2)
EU is strangling UK in burdensome regulations. EU’s regulations have become
increasingly onerous. Some EU rules sound simply strange, like the rule that
one cannot recycle a teabag, or that children under eight cannot blow up
balloons, or the limits on the power of vacuum cleaners.
3)
The EU allows too many immigrants which puts severe strain on national
resources and add up to welfare expenditure. The emotional case for Brexit is
heavily influenced by immigration. The flood of immigrants from Southern and
Eastern Europe has depressed the wages of native-born British workers and concerns
about immigrants using scarce public services.
4)
UK will save huge sums of money which it otherwise contributes to the EU budget.
Taxpayers would get an immediate saving of over £20 million a day. British
farmers, fishermen and small businesses would all be free from ruinous Brussels
policies.
5)
UK could pursue independent and beneficial economic and trade policies: The UK
economy would thrive like Norway or Switzerland. Britain could negotiate its
own trade deals with the likes of China, the United States and Russia on terms
tailor-made to suit the national interest. Trade with the EU countries would
continue – it will be in their interests to maintain Britain’s access to the
European free market
6)
EU was a good idea, but Euro is a big disaster. The 2008 global recession was much
worse in countries that had adopted Europe’s common currency, the euro. Though
the UK chose not to join the common currency, deeper fiscal and political
integration will be needed for the eurozone to work properly. Britain is
unlikely to go along with it.
Arguments
Against
1)
Safety first: In an uncertain world where Western democracies are under threat
from a resurgent Russia, unrest around the Middle East, terrorism, and nuclear
rogue states, Britain is safer and stronger working with France, Germany and
the others within the EU on diplomacy, development and building democracy
around the world. It helps the fight against international crime through
Europol and the European arrest warrant.
2)
Better together: Outside the EU, Britain would lose global clout. Europe is one
of the four major players on the world scene. As the world’s biggest economic
bloc, the EU’s leverage is unmatched in global talks on climate change and WTO
issues etc.
3)
Useful EU regulations: EU regulations guarantee safety standards on everything
from food and toys to nuclear power plants. Its environmental protection is the
highest in the world. Brussels’ anti-trust authorities protect consumers
against abuses by multinational companies.
4)
Sound economic rationale: Over half Britain’s trade goes to the EU, bringing
the country around £400 billion a year. That dwarfs any savings from not
contributing to the EU budget. Over one-in-ten British jobs are directly linked
to EU membership and studies show Brexit could wipe up to 10 percent from UK
GDP. International companies invest in Britain because it’s a gateway to the
EU’s 500 million consumers. Even if a post-Brexit UK persuaded former partners
to grant it Norway-style access to the EU market, it would have to accept EU
rules without any say in shaping them.
5)
On Migration: In no way will leaving the EU stop immigration to the UK. EU
immigration is a great asset to the UK economy, and people from EU countries
pay a lot more in taxes than they receive as benefits.
6)
In the event of a Brexit, the economic downturn that will follow will make
Britain a far less attractive country compared to other parts of Europe. Also
it will bring the migration crisis to Britain’s doorstep.
Process
of BREXIT
• For the UK to leave the EU it has to invoke
Article 50 of the Lisbon Treaty which gives the two sides two years to agree
the terms of the split.
• The government will also enact a Great
Repeal Bill which will end the primacy of EU law in the UK. It will incorporate
EU legislation into UK law, after which the government will decide which parts
to keep, change or retain.
• EU law still stands in the UK until it
ceases being a member. The UK will continue to abide by EU treaties and laws,
but not take part in any decision-making.
•
The post-Brexit trade deal is likely to be the most complex part of the
negotiation because it needs the unanimous approval of more than 30 national
and regional parliaments across Europe, some of whom may want to hold
referendums.
Impact
of BREXIT on UK
Political
Impact
1) British PM David Cameroon had to
resign after shock results in referendum and was succeeded by Theresa May.
2) The divisive nature of Brexit
referendum has the potential to threaten the territorial integrity of UK.
Scotland and Ireland voted to remain in EU. Scotland's termed forced Brexit as democratically
unacceptable and calls have been increasing for second independence
referendum from UK. Northern Ireland politicians have termed the impact of
Brexit would be very profound and that the whole region of Northern Ireland may
want to vote on reunification with Ireland.
3) Racist or religious abuse incidents
recorded by police in England and Wales jumped 41% in the month after the UK
voted to quit the EU.
4)
Quitting the EU will not exempt the UK from the decisions of The European Court
of Human Rights (ECHR) in Strasbourg as it is not a European Union institution.
For it, the UK government has to repeal the Human Rights Act which requires UK
courts to treat the ECHR as setting legal precedents for the UK.
Economic
Impact
1) The UK economy appears to have
weathered the initial shock of the Brexit vote, although the value of the pound
remains near a 30-year low. Britain also lost its top AAA credit rating,
meaning the cost of government borrowing will be higher.
2) With Brexit, fears have been raised
that London may lose its prominence place as financial Hub in Europe in the
long run.
3) The complex exit negotiations with EU
may accentuate economic uncertainty at least for two year which may hamper
economic recovery and there are chances of investments moving from Britain to
other EU countries due to higher perceived economic benefits there.
4) As far as UK citizens working in the
EU are concerned, a lot depends on the kind of deal the UK agrees with the EU.
If it remains within the single market, it would almost certainly retain free
movement rights, allowing UK citizens to work in the EU and vice versa. If the
government opted to impose work permit restrictions, then other countries could
reciprocate, meaning Britons would have to apply for visas to work.
5)
EU nationals living in UK with a right to permanent residence, which is granted
after they have lived in the UK for five years, will be be able to stay. The
rights of other EU nationals would be subject to negotiations on Brexit and the
will of Parliament.
IMPACT
on EU
Political
Impact
1) Brexit will weaken those forces in
the EU that favour greater integration and may trigger chain reactions of
referendums being pushed by Eurosceptics especially in Netherland and France.
It may also strengthen far right and anti-establishment parties throughout
Europe at the cost of European unity.
2) Britain’s exit will reduce political
clout of EU in world Affairs because of loosing UK - a permanent member of
United Nations Security Council (UNSC).
3) Britain is the EU’s foremost military
power and also brings to the EU its significant diplomatic network,
intelligence capabilities and soft power. Brexit could therefore undermine any
future development of serious EU military capabilities.
4) The EU would lose an influential,
liberalising member, shifting the balance of power in the European Council. It
would become harder to block illiberal measures.
5) EU policy-makers, already
overburdened with problems like the Greek economy, instability in the European
neighbourhood and influxes of refugees, must now find extra energy to handle
the complexities of the Brexit talks, which may drag on for five years or
longer.
6)
It will also make Germany even more preponderant in EU. In recent years both
France’s weakness and the UK’s semi-detached status have made Germany the
dominant country in the EU. On issues such as the eurozone crisis, refugees and
the war in Ukraine, Germany has determined the EU’s response.
Economic
Impact
1) Brexit may adversely impact Europe’s
fragile growth. Rapid depreciation of already weakened Euro will impact
competitiveness of EU market.
2)
It may weaken economic muscle of EU as the UK is the fifth largest economy in
the world and the second largest in the EU. Its net contribution to the EU
budget was around £8.5bn in 2015, which EU stands to lose.
3)
Some research studies have predicted a symmetric decline in exports to and
imports from the UK would lead to reduction of EU’s GDP. Subsequently, trade
growth would likely be lower than otherwise, increasing the potential losses
over time. The damage would be a bit more severe in the manufacturing hubs in
central and Eastern Europe as well as in the tourism hotspots in the
Mediterranean.
4)
Moreover, there would likely be a new regulatory dynamic with the UK outside
the EU. The UK may seek to undercut the EU on standards impacting on the
business environment; but this in turn may create a healthy regulatory
competition by putting pressure on the EU from the outside to be more liberal
in its policies.
5)
The Brexit impact on the rest of the EU via trade and finance will also depend
on the follow-on agreement between it and the UK. A number of models exist:
Norway’s, Iceland’s, and Liechtenstein’s European Economic Area (EEA) or
Switzerland’s European Free Trade Area (EFTA) agreement or A Turkish-style
customs union or Free trade agreements such as those with Mexico or South
Korea. The extension of such agreements to the UK may face political obstacles,
but at least the economic damage could be minimised.
•
So in the final analysis, The economic and financial frictions could be limited
if both parties would try to strike an amicable separation agreement, but
political considerations, including the desire of the rest of the EU to prevent
Brexit emulation, might result in a far more damaging outcome for both.
IMPACT
of BREXIT on India
• Brexit affects the rupee through both
trade and the financial channels. The UK and European Union account for 23.7%
of the rupee’s effective exchange rate. The UK’s exit could lead to a prolonged
period of risk aversion in the equity markets which could spark foreign
portfolio investor outflows and add to the rupee’s weakness.
• India is the third largest source of
FDI to the UK .Access to European markets is therefore a key driver for Indian
companies coming to the UK. But with Brexit, this benefit will be taken away
and may result in companies relocating their business set ups to other places.
So may have a bearing on future investment decisions.
• Hence, Indian investment pattern in EU
might change as Indian companies favoured border free access to EU, which will
not remain available after Brexit.
• Automobile, Pharma and IT might be the
most affected. NASSCOM has predicted that the effect of Brexit will be felt on
the $108 Billion Indian IT sector in the short term. Leading Indian IT firms
foresee a possibility of renegotiations for all the ongoing IT projects because
of the devaluation in the value of pound.
• In the automobile industry, Brexit may
lead to reduction in sales and companies that derive good revenues of profits
from Britain could get hurt majorly. India's pharmaceutical sector has
significant exposure to the UK and a drop in demand in the UK and the EU will
impact profits and sales.
• There are many unanswered questions regarding
Brexit – Whether the Brexit will change the rules of doing business or the
rules related to access to higher education.
• However for some experts, in the long
run, Brexit will help strengthen our ties with Britain because India's focus on
innovation and entrepreneurship still makes it an attractive destination for
outsourcing and investment. Brexit means redrafting of India-EU FTA text.
•
EU was considered as biggest obstacle to U.K – India trade. Last year, Indian
mango shipment to U.K. were banned due to stringent EU regulations. Brexit
might lead to realisation of trade potential between these two countries.
Effect
on Education sector/students & Travel:
•
British universities were forced to offer scholarships and subsidies to the
citizens of the UK and EU. Brexit frees up funds for the other students and
more Indian students might be able to get scholarships. Reduction in pound
value will reduce travelling cost to the UK and will make it a good travel
destination.
During
the visit of Indian PM to UK in November 2015, the following announcements
relating to education were made:
·
2016 would be the UK-India year of Education,
Research and Innovation. This will highlight the strengths of the bilateral
relationship, drive further collaboration, including a range of digital
technology enabled education and training initiatives, so that both countries
create a new 21st century framework as partners in education, research and
innovation partners, in the global context.
·
Virtual partnerships would be initiated at the
school level to enable young people of one country to experience the school
system of the other.
·
3rd phase of the UK India Education and Research
Initiative will be launched and mutual recognition of UK and Indian
qualifications will be done.
•
For Indian students UK has traditionally been a favourite destination.
Management, computing, engineering, media studies, art and design are the
preferred courses of the Indian students. At present, there are approximately
20,000 Indian students pursuing Undergraduate and Postgraduate courses in the
UK.
•
Global Initiative of Academic Network (GIAN) is a new network in Higher
Education in India aimed at tapping the talent pool of eminent scientists and
academicians, internationally to encourage their engagement with the
Institutes of Higher Education in India.UK has committed to send 100
academicians to India over the next two academic years as part of the GIAN.
Cultural
Relations
•
Cultural linkages between India and UK are deep and extensive, arising out of
shared history between the two countries. There has been a gradual
mainstreaming of Indian culture and absorption of Indian cuisine, cinema,
languages, religion, philosophy, performing arts, etc.
•
The Nehru Centre is the cultural wing of the High Commission of India in UK
which was established in 1992, and is currently one of ICCR’s flagship
cultural centres abroad.
•
A Memorandum of Understanding on Cultural Cooperation was signed between
India and the UK in 2014.
•
On the 70th anniversary of Indian Independence (2017), UK-India Year of
Culture will be organised in 2017 to celebrate our deep cultural ties and
mark.
Indian
Diaspora
•
Indian diaspora is well represented across all walks of life in the UK. The
achievements cross everything from business to sport, and science and
politics.
•
The India Diaspora in UK is one of the largest ethnic minority communities in
the country, with the 2011 census recording approximately 1.5 million people
of Indian origin in the UK equating to almost 1.8 percent of the population
and contributing 6% of the country’s GDP.
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