On June 23, 2016, the UK held a referendum where the public voted in the favour of Brexit. Soon after the results, the then-prime minister David Cameron resigned from the position as he was not in the favour of Brexit.
Pc: The Times
What is Brexit?
In 1993, a regional community was created with the aim to bring economic and political peace after world war 2. This organization is called the European Union. It was the union of 28 European countries where Britain joined in 1975 after mere negotiations. But Britain’s referendum decision was to take an exit from this union in 2016. Brexit came from the two terms “Britain” and “exit”. On January 31, 2020, the UK officially separated from the European Union. This exit left the EU with 27 nations now.
What is the purpose of the European Union?
Pc: the flag shop
There are several advantages for the European countries included in the EU.
- Every country in the EU has a single marketplace with which it becomes easier to trade within the nations.
- Citizens of countries that fall under the European Union are privileged to move freely in the EU countries for work and living.
- There’s constant support in the advancement of science and technology which provides benefits to the countries mutually.
- To develop a workforce within the nations so the workers do not drift outside of the EU market.
- It seeks to maintain peace within the world and also prevent the relentless use of sources to save the environment.
How Brexit will help Britain?
Britain took the decision to exit because, under EU laws, Britain had to pay billions of pounds sterling. The membership of the EU alone costs 24 million pounds per day. Britain represented the central economy of the EU. The exit gives the privilege to control the borders of the country as the number of immigrants in the UK has increased after the greek, Africa, and Syria crisis. This will also create more jobs for British citizens. The saved economy will help the United Kingdom National Health Service. Britain could promote its market outside Europe. Also, the minimum wages and taxes will be fully under Britain’s authority.
Was Britain’s economy affected by Brexit?
Britain witnessed a downturn in the economy after walking out of the EU. The exit bill cost billions of pounds Britain to fulfill financial commitments. Pounds sterling- the British currency fell by 10% to the dollar value, has happened for the first time in 30 years. This could lead to financial and political instability. Britain wouldn’t be benefited from free trade and the single market provided under the union trade agreement. This situation might cause unemployment due to a rise in import costs, as One-third of the imports in the UK are from the EU.
Trade across European countries will become expensive for exporters, which once led London to establish itself as the global financial centre. Britain will not be benefited from the state-of-the-art technologies which are research and development resources granted to the EU members. The jobs for the younger workforce in the labor market of EU countries will not be readily available.
The finance companies already have decided to exit from the UK affecting the banking sector. Summing up, all these factors contribute to the deceleration in the growth of Britain’s economy from the short to medium term. The long-term effects will be estimated based on the UK’s relationship and negotiations with the EU and its pace in the world market.
How is the economy of the European Union affected by Brexit?
The negotiations between the EU and the UK formally ended on 24 December 2020. The agreement to the UK’s terms might affect the economy of the EU. The UK separation will also affect the budget of the EU. For example, the inspection of goods from the UK will result in delays at the ports, disturbing the supply routes and hindering the economy. The major source of economy is tourism in the country like Cyprus will be affected for the long term.
How this Brexit affects other countries?
Pc: financial times
The economic disruption not only affects its country but other countries as well. The financial crisis in Britain would raise the costs of imports in developing countries like India and among others. The border controls would lead to restrictions on immigration and it will become difficult for people to migrate to the UK for jobs, business, and studies.
Indian business entry through Britain in the European Union countries will be affected. Business owners in the UK either have to compromise or can move outside of the UK to enter the market of the EU. Where Brexit might prove to be a threat to the Indian textiles export to the EU, the former prime minister of Britain claimed that the IT professionals in the UK will get a fair post-Brexit chance. Indian students wishing to study in Britain either will be benefited through the fair chance or would witness a downside in more restricted migration.
Disruption of the gateway to free trades for other European countries through Britain is a threat not only to India but to other countries like the US and Canada too. The gold prices in the US went up to 6% after the American shares became too expensive for foreign investors after the increase in dollar value. Though any immediate or direct effects of Brexit on the developed countries might not be seen in the long-term.
As of January 2021, the UK will be able to become a separate marketplace. The free movement of goods, services, and people might be terminated within the EU. British owned trade policies will help Britain to maintain a unique identity in the international market.