Effects Of BREXIT
The European Union emerged in 1951 in order to mitigate the effects of World War 2 by facilitating duty free trade among the nations belonging to the European Union. The consortium initially constituted only six nations. It was initially only a coal and steel community, and later in 1957 the treaty of Rome created the ‘European economic community’. Britain however joined the community later in 1973. And in the aftermath of joining the group they went through a referendum in 1975, in order to decide whether or not to stay in the group, and, subsequently was part of Eurozone as majority were in favour of being a part of it.
The same situation prevails today, where the people are out to vote in favour or against staying in the group, thus deciding the fate of their country. Thus in the current situation, there are ones who are advocating the leave campaign- and there are others who want to stay in the zone.
Reasons for Britain’s exit (BREXIT)
Immigration: under the freedom of movement clause, people in the zone are entitled to migrate in and out of any country belonging into the Eurozone in search of work, education etc. Thus, the one’s favouring exit of Britain argue that, the people moving in Britain from the rest of the Europe cause strain on their resources, and undermine their employability along with increase in welfare spending. While those in favour of staying in the zone state otherwise. According to them, migrants contribute more than what they take away, since a person coming from some other part contributes in increase in the demand for amenities, subsequently nudging the economy to grow.
Security: security of the people in the country is of paramount importance, and is an important mandate of the government. Thus if any random person arriving in, may raise scepticism amongst the citizens and so is the reason for the naysayers to be dogmatic. On the other side of the aisle, the stay campaigners argue that safety and security can only be maintained with greater co-operation amongst the member nations than stated otherwise.
What happens if UK leaves?
Europe being a single market, the trade facilitation is devoid of any tariffs and border controls. 45% of UK’S trade is carried along with Europe, thus if it leaves it may also leave the benefits that are accrued to them in terms of trade and exports. And if at all it has to carry on trade with euro countries, it has to discuss terms separately with each country. The flipside of the equation is, 17% of laws that are made in the Britain are in accordance with the EU.
For eg, farmers therein have to adhere to certain standards in order to export their produce to the EU, while the fishing zone that lies on the periphery of the UK is shared between the members with specific quota being allotted to each member. Thus, leaving may seem a good option as it abandons these laws.
What happens If UK stays?
If it stays, it’s a silver lining for EU in the midst of a global slowdown since a major chunk of money that EU receives, comes from its member states. The same money is used for spending on education, cultural wellbeing, helping poor EU countries by providing grants for science and research. Thus UK leaving the zone may be catastrophic for EU.
While it is easy to envisage what the after effects might be, but actual effects globally might only come into picture how the events happen to turn out. While how it affects India is still a murky picture to paint, it might affect the Indian companies operating therein and which are directly or indirectly involved in trade with the EU