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All you need to Know about Brexit

June 30, 2016
Posted by: Team Clat Possible
Category: General Knowledge

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“Brexit”: Whose court is the ball in?

“Brexit” has become the buzzword internationally and nationally over the past few months. The term began to be used for Britain’s possible exit from the European Union (EU)- a bloc of 28 nations, including the United Kingdom (UK). In a referendum held on June 23, the UK voted 52%: 48% in favour of leaving the EU, leaving not just the EU and the UK but also the rest of the world reeling under the shock of this result.

What is EU?

First things first. What is the EU? The EU essentially started off as an economic union among European nations in the aftermath of the second World War, mainly to consolidate and rebuild the continent after the tragic consequences of war. Its founding members were France, Germany, Italy, Belgium, Netherlands and Luxembourg.

Economic Cooperation: Why EU Exist

This economic cooperation through a customs union gradually gave way to increasing monetary union as well with the emergence of the Eurozone, where many countries adopted the Euro as their common currency. The Lisbon Treaty of 2009 reformed the EU’s working and institutions and the EU as we know it today stands not just as an economic entity but also as a political union of sorts. Many EU members also signed up to be part of the Schengen Area, which comprises of countries between which passport control has been abolished.

The fact that the UK did not agree to be a part of either the Eurozone or the Schengen Area itself reveals much about its degree of integration into the EU. In fact, time and again, UK made it clear that it did not want to be a part of the EU’s idea of an “ever closer union”.

The reason the referendum on whether Britain should “remain” or “leave” the EU was conducted was PM David Cameron’s poll promise that he would hold such a referendum if elected, owing to reports that many segments of people were unhappy with this “uneasy” union with the EU and wanted out. A last ditch attempt was made by Cameron (anti-Brexit) to keep Britain in the EU on the former’s terms when he tried negotiating new terms with the EU leadership earlier this year. However, the result was a diluted one for Britain, which fuelled the “Leave” campaign further.

All you need to Know about Brexit

The issues under consideration in this referendum were mainly sovereignty, security, immigration, economy and the single market. The “Remain” camp emphasized on the positives of EU membership, including access to the large single market of the EU. The “Leave” camp emphasized on the perceived loss of sovereignty of the UK over its affairs, filling the coffers of the EU when it could instead use the funds for its own schemes and the “threat” of uncontrolled immigration.

The result of the referendum awarded a win to the “Leave” camp but reports suggest that this is not the voice of the educated youth of the country. Rather, many uninformed or old or right-wing enthusiasts voted thus but the repercussions will now be felt throughout the world. The fact that the pound plunged to a 30-year low after the result is a portent of things to come. While the economy is already taking a hit, there is no certainty as to how the exit would be effected. For a member to leave the EU, Article 50 of the Treaty on the European Union needs to be triggered but as of now, Cameron is leaving the job to his successor since he has announced his resignation following the result. The process will involve negotiations with the EU and is likely to take upto 2 years. Meanwhile, there is apprehension from both sides regarding their existence in a globalized world- the EU is concerned about falling apart while Britain is in danger of becoming isolated and left behind. In Scotland, that voted to stay within the UK recently, voices for a fresh referendum are already growing stronger since it wants to stay within the UK. It is left to be seen whether the “Leave” camp can achieve any of the things it was expecting to get from “Brexit” because if UK leaves the EU and wants to gain access to the single market, not only will it have to shell out money but also will have to accept EU regulations and standards, including those on free movement of labour.

Impact of Brexit on India

The impact of “Brexit” in India was felt soon after the result as the Sensex plunged to a low as did the rupee. India invests more in Britain than it does in all of the rest of Europe combined and thus, closing of borders with Brexit will definitely affect Indian companies and investors with interests in Britain. Immigration laws are also likely to become stricter- thus, the job prospects of Indian students after studying in the UK may be adversely affected as will the chances of procuring a work visa. All these are causes for worry for India, but our Finance Minister Arun Jaitley and other people in the know have allayed fears by stating that India is prepared to handle “Brexit” and the economy will be stable.

“Brexit” has come as a shock and at the time of writing this post, a petition has already been signed by more than 3 million people in the UK seeking a second referendum on Britain’s EU membership. Meanwhile, Cameron has clarified that a second referendum was “not remotely on the cards”. Only time will tell in whose court the “Brexit” ball lies.