What is ‘Brexit’ ??
Brexit is an abbreviation of “British exit“, which refers to the June 23, 2016 referendum by British voters to exit the European Union.
British Prime Minister David Cameron, who supported the UK remaining in the EU announced he would step down in October.
What has happened?
A referendum – a vote in which almost everyone of voting age can take part – was held on Thursday 23rd June 2016, to decide whether the UK should leave or remain in the European Union.
Leave won by 51.9% to 48.1% who said Remain(close call).
The referendum turnout was 71.8%, with more than 30 million people voting. It was the highest turnout in a UK-wide vote since the 1992 general election.
Referendum has been a popular method to gain the overall population’s opinion on a national matter. It works in countries with relatively smaller population, but for countries like India this method is a distant dream as of today.
It is important to understand that the ‘outcome’ of this vote need not be considered as a decision per se, though the government has power to turn down the vote, PM David Cameron decided to respect the principles of democracy and decided to go ahead with the people’s choice.
Opinions are divided on whether Britain was right to leave Europe. Pro-Business camp felt let down as their products would be hard to sell within Europe and hiring of young immigrant workers from Europe will not be easy now. While others have argued that the EU has burdened UK with regulations costing the British economy as much as 350-600 million pounds per week. After Brexit, the UK will now be able to amend some EU laws to make savings shrugging off the burden from EU regulations.
What is the European Union?
The European Union – often known as the EU – is an economic and political partnership involving 28 European countries. It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other. It has since grown to become a “single market” allowing goods and people to move around, basically as if the member states were one country.
What happens now?
For the UK to leave the EU it has to invoke an agreement called Article 50 of the Lisbon Treaty. Invoking this would then set in motion the formal legal process of withdrawing from the EU, and give the UK two years to negotiate its withdrawal.
Please note that until the entire legal and official policies are complete, status quo (current conditions) still continues.
What are the issues revolving around Brexit ?
The economy: Economic growth, bureaucratic red tape, corporate independence, EU membership fees, the EU budget and fiscal policies are contentious issues.
Immigration: One of the founding principles of the EU is free movement for European citizens between EU member States. The increase in migration into the UK is a controversial topic. Pro-EU parties cite evidence for the positive economic benefits of immigration while anti-EU parties argue that immigrants take away local jobs and hurt individual wages.
Sovereignty: The primary slogan of the Leave campaign is “Take Back Control”. The relevance of EU laws over British ones and decreased national autonomy are the main talking points of the Leave campaign while the Stay campaign has advocated Europeanism and oneness.
What is the impact on India ?
According to some analysts, Britain leaving the EU could set the stage for a Free Trade Agreement between Britain and India. Indian companies are the third largest source of foreign direct investment for the UK and the FICCI has warned about “considerable uncertainty for Indian businesses” and “adverse impact on investment” if Brexit were to occur. British Indians are the single largest ethnic minority population in Britain, and the 1.4 million-strong community will no doubt be affected by the vote. Prime Minister Narendra Modi has spoken in favour of Britain remaining in the EU, calling the UK India’s “gateway to Europe” and affirming that “India always
stands in support of a strong and united Europe.”
What was the immediate impact on world stock markets?
Global stock markets lost about $2 trillion in value on Friday after Britain voted to leave the European Union, while sterling suffered a record one-day plunge to a 31-year low and money poured into safe-haven gold and government bonds. The S&P 500 finished down 3.6pc, while the Dow Jones index was down 3.39pc, all but erasing gains made since the start of the year and showing the biggest falls since August. The Nasdaq ended the day down 4.12pc, its worst fall since 2011.
As for the Indian Markets, the BSE Sensex took a staggering blow on friday 24th June reaching intraday low of nearly 1100 points and eventually closing the day down 604 points (-2.24%) at 26397 and NSE Nifty ending at 8088.60, down 181.85 points (-2.2%). The total investor wealth, measured in terms of cumulative value of all listed stocks including that of promoters, slipped by about 2 lakh crores.