What Is BREXIT | Consequences | BREXIT Impact In India

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Brexit is the short form for ‘UK leaving the European Union’, merging the words Britain and Exit. European Union is political and economic partnership involving 28 European countries. A referendum was held where every one of voting age can take part and vote whether UK should leave or remain part of European Union. Leave won by 52% to 48%. This took place on Thursday, June 23rd and nearly 30 million people voted. The greater ratio, which involves of Britain leaving the EU, consists of about half of conservative MPs, including 5 cabinet ministers, most of the labour MPs and DUP. They all believe that Britain is being held back by EU. This leads to too many rules on business and membership fees of billions of pounds with very less return. They also wanted to reduce number of people coming here to live or work.

BREXIT Issue

Prime Minister David Cameron wants Britain to stay in the EU. Sixteen members of cabinet, Labour Party, Lib Dems, Plaid Cymru and SNP also wants to stay. They proposed to stay because they get a big boost from membership – it makes selling easier to the EU countries.

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Consequences of Brexit

  • This will lead to weakening of the pound, and could boost the U.S dollars, this is because investors look for stable currencies.
  • Increased trade costs could knock down the U.K’s GDP reducing the economy to its lowest level because of financial crisis.
  • U.K would lose out on EU trade deals with the U.S.
  • It has been found out that Britain would be permanently poorer by the equivalent of £4,300 per household by 2030 and every year thereafter.

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Impact of Brexit in India

  • Uncertainty following Brexit – There is no future course of action mapped, if Brexit really happens. There is no sound plan of U.K’s relation with EU and if Brexit does happen, global financial market will vaporize. The pound will depreciate against most major economies. Even Sensex and Nifty will tumble in the short run.
  • Investment – India is currently the second biggest source of FDI for Britain. This is because of the greatest and historical connections between India and U.K. Britain would not want to lose out capital coming from India, thus Britain would try extra hard to convince Indian companies to invest there by providing numerous incentive schemes and lesser regulations.
  • Ties with European Union – It’s in Europe’s hand whether they want to build strong ties with India and develop a strong trade by being a strategic partner.
  • The Commonwealth – As Britain is cutting ties with EU, it will definitely be needing sources of funding of capital and labour. Britain will be able to accommodate migration from other countries like India, which will suit India’s interests.
  • Another EU partner – India will lose its gateway to Europe, if Britain exits. This might force India to make ties with another country within the EU, which can prove to be a good result in the long run.

Thus, even though Britain could suffer huge loss by cutting off ties with EU, it can be of great deal for India.

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