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Insights into Editorial: Britain casts a dark shadow over Europe

Insights into Editorial: Britain casts a dark shadow over Europe

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25 June 2016

The United Kingdom has opted for a momentous change of course by voting to leave the European Union in a closely-fought referendum held recently. 52% people voted in favor of leaving the EU.

  • The referendum saw a turnout of 72%, the highest in any election since 1992, ‘Leave’ won 17,410,742 votes and ‘Remain’ 16,141,241, with all but the regions of London, Scotland and Northern Ireland voting to leave.
  • This is the second referendum on Britain’s relationship with the European project. In 1975, in a referendum on whether the U.K. should stay or leave the European Community (Common Market) Area, the country voted for staying in with a resounding 67.2% vote.

What does Brexit mean?

It is a word that has become used as a shorthand way of saying the UK leaving the EU – merging the words Britain and exit to get Brexit, in a same way as a Greek exit from the EU was dubbed Grexit in the past.

Why many in UK want to leave the EU?

Many people in the United Kingdom are of the opinion that the EU has transformed a lot over the years. They think that since several countries have joined the union, the EU’s hold over everyday aspects of these countries has increased. Many think that Britain is better off without the EU as it is being constrained by it. Some of the constraints involve imposing many rules on Britain’s business and shelling out billions of pounds in the form of EU fees without much gain in return.

What’s U.K.’s history with the EU?

European Union was originally formed with six nations in 1957. Today, it is a gigantic transnational entity of 28 countries, including the U.K., which joined only in 1973. Though part of EU, Britain has traditionally had a ‘eurosceptic’ stand. It continues to use the Pound as its currency, while most EU nations have moved to Euro. Neither does it participate in the Schengen border-free zone, which allows passport-free travel in EU.

How Brexit will affect Britain’s economy?

In the short run, uncertainty about Britain’s future relationship with the EU, its largest trading partner, could push the UK into a recession. Huge market volatility is already being seen.

  • With Cameron all set to resign, Britain’s prospects of negotiating a favorable deal with the EU could be weakened. The EU may decide to strike a hard bargain to discourage other countries from leaving the EU.
  • Also, the UK’s new leader might not be willing to accept the kind of restrictions that come with a Norway-style deal. And that could create serious problems for businesses based in the UK.
  • Critics say the economic effects could be large. The UK government has estimated that exiting the EU could cause the British economy to be between 3.8 and 7.5% smaller by 2030 — depending on how well negotiations for access to the European market ultimately go.

How it will affect migrants?

One of the most important and controversial achievements of the EU was the establishment of the principle of free movement among EU countries. A citizen of one EU country has an unfettered right to live and work anywhere in the EU. Both Britons and foreigners have taken advantage of this opportunity.

  • Currently there are about 1.2 million Brits living in other EU countries, while about 3 million non-British EU nationals live in Britain. Thanks to EU rules, they were able to move across the English Channel with a minimum of paperwork. Britain’s exit from the EU could change that profoundly.
  • It’s possible, of course, that Britain could negotiate a new treaty with the EU that continues to allow free movement between the UK and the EU. But resentment of EU immigrants — especially from poorer, economically struggling countries like Poland and Lithuania — was a key force driving support for Brexit. So the British government will be under immense pressure to refuse to continue the current arrangement.
  • At a minimum, that would mean that people moving to or from Britain would need to worry about passports and residency rules. And it could mean that some British immigrants may lose their right to continue living and working in the UK and be deported.

How it will affect UK?

Brexit could also change the United Kingdom in a more fundamental way. It’s called the “United” Kingdom because it’s made up of four “countries” — England, Wales, Scotland, and Northern Ireland. But with Britain now on its way out of the EU, there’s a danger it won’t stay united for very long.

  • Scotland supported Remain by a margin of 62% to 38 %. And the Scots in particular have never been entirely satisfied with English domination, as shown by the 44% of Scottish people who voted to make Scotland an independent country in 2014. They like having the UK be part of the EU in part because it provides a counterweight to English power within the UK.
  • So Britain’s exit from the EU could strengthen the hand of Scottish separatists. A key Scottish leader has already signaled that she wants to hold a second referendum on Scottish independence. If that vote succeeded, Scotland would likely petition for admission to the EU in its own right.
  • A similar, but possibly more troubling, situation could emerge in Ireland, which has long been divided between a protestant North that’s part of the UK and an independent Irish republic in the South. Tensions across the border have been minimized by EU rules guaranteeing the right to move across the border. But if the UK withdraws from the EU, the border could become more important and tensions over territory could flare up.

How Brexit affects India?

  • Brexit affects global financial market. Markets across the world will tank. The pound will depreciate against most major economies. India cannot remain immune to this. Sensex and Nifty will tumble in the short-run.
  • India is presently the second biggest source of FDI for Great Britain. One of the main reasons for this is the historic and cultural ties with the UK that India shares along with the fact that the UK proved to be a gateway into the rest of Europe. Indian companies that would set up their factories in the UK could sell their products to the rest of Europe under the European free market system. However, now it will not be as attractive a destination for Indian FDI as before.
  • With Brexit, India will lose its gateway to Europe. This might force India to forge ties with another country within the EU, which would be a good result in the long run. India is already trying to build trade negotiations with Netherlands, France, Germany, and others, albeit in a small way. Netherlands is India’s top FDI destination as of now. A Brexit could force India to build trading partnership with other EU nations in order to access the large EU market.
  • With Britain cutting off ties with the EU, it will be desperate to find new trading partners and a source of capital and labour. There have already been many proponents of the Leave Campaign that suggest that the UK should look towards the Commonwealth to forge new alliances. Britain will still need a steady inflow of talented labour, and India fits the bill perfectly due to its English-speaking population. With migration from mainland Europe drying up, Britain would be able to accommodate migration from other countries, which will suit India’s interests.
  • Britain is one of the most important destinations for Indians who want to study abroad. Presently, British universities are forced to offer subsidized rates for citizens of the UK and EU. With Brexit, however, the universities will no longer be obliged to provide scholarships to EU citizens, which will free up funds for students from other countries. Many more Indian students may be able to get scholarships for studying in the UK.

What next?

Article 50 of the Treaty on European Union establishes the procedures for a member state to withdraw from the EU. It requires the member state to notify the EU of its withdrawal and obliges the EU to then try to negotiate a withdrawal agreement with that state.

  • Britain’s “Leave” vote, however, does not represent that formal notification. That notification could take place within days — for example, when EU member countries meet for a summit that is scheduled for June 28 to 29. Or British officials might wait a few months to pull the trigger.
  • Once Britain invokes Article 50, it will have a two-year window in which to negotiate a new treaty to replace the terms of EU membership. Britain and EU leaders would have to hash out issues like trade tariffs, migration, and the regulation of everything from cars to agriculture.
  • In the best-case scenario, Britain may be able to negotiate access to the European market that isn’t that different from what it has now. Norway is not a member of the EU, but it has agreed to abide by a number of EU rules in exchange for favorable access to the European Common Market.


In summary, it can be said that a Brexit would have damaging effects on the economic development in the entire EU along with some positive effects. Apart from economic disadvantages, a Brexit would also cause severe political damage and would weaken Europe geopolitically.