All which you want to know about Brexit
What took the world, the economists and the markets by a shock, took most of us to boozing heads about what exactly was Brexit and why did UK’s exit or remain in the EU actually mattered. Let’s decode:
Just a year after he clinched a surprise majority in the general election, a visibly emotional Cameron said: “The will of the British people is an instruction that must be delivered” (following the declaration of the results of the UK referendum on Brexit or Bremain).
Friday morning not only brought an almost possible end to UK’s EU membership but also the premiership of the British PM David Cameroon.
What’s Brexit?
EU is a group of 28 European countries formed with the aim of harnessing synergistic benefits, military support, creating and maintaining uniformity among laws (especially Labour laws), relaxed norms with respect to immigration and free trade within the member nations of goods, services, etc. It also involves adoption of the single currency regime, the Euro (€) (although UK has its own currency, the GBP).
“Brexit” was the United Kingdom’s decision to discontinue with the EU Regime. The Brexit is an abbreviation of “British exit” which mirrors the term Grexit, refers to Britain’s withdrawal from European Union.
Why Brexit?
Loss of UK sovereignty – Brexit could be termed as avenging the Luxemburg Court (The EU’s highest court, whose rulings are currently binding on British judges and parliament). The court has been accused of acting to its own whims and fancies and sometimes in a rogue manner as well.
Opposing the EU as an ‘employers union’ – One argument against the EU was that the regime favoured capitalist policies and encouraged the decrease of the role of the government.
Loss of employment to the locals – The binding relaxation in the immigration norms lead to a threat from the immigrants of the loss of employment.
Regaining control over policy formulation and implementation.
What Next? Britain
A Brexit vote on the referendum does not necessarily mean an exit from the EU. Effectively leaving the EU would be a two year process, which would begin only after the government triggers Article 50 of the Treaty of European Union.
The article 50 process has been constructed to give the negotiating advantage to the EU, and not the country planning to leave. If at the two years’ end neither a deal nor an extension has been agreed, the UK automatically reverts to World Trade Organisation rules, meaning the UK faces tariffs on all the goods it sells to the EU.
The EU
The EU leaders expressed concerns and regrets over the decision. The German chancellor, Angela Merkel, expressed “great regret” at Britain’s decision as did the French president, François Hollande. He said the vote would put Europe to the test. The Belgian Prime Minister, Charles Michel, called for a special “conclave” of EU leaders as early as next month.
What seems to be and ought to be the priority of the EU would be to prevent what has been described as the psychology of a bank run gripping the EU, as the calls for parallel referenda proliferate in the Netherlands, France, Poland and Hungary.
The Brexit Impact
Although, Brexit may have been the vote on the “Britain Remain or Exit”, but counter arguments continue to be endless ranging from the accusations on the Brexit being a slap on the face of “Globalisation”, posing a question as “What happens to the rights and legal protections that are currently afforded by EU membership?”, consequences in terms of Dominoes effect it may cause (by strengthening other member nations pitch to their exit), to a global turmoil and unrest such a decision causes.
The markets worldwide reacted and projected the impact. Britain’s benchmark index, FTSE 100, plunged by 5.2%, other European markets fell by upto 8.4%, pound depreciated against other currencies, Asian markets as well were left in a turmoil with the Sensex falling intraday by upto 4.2%. Gold had a bull run as investors rushed to hedge their losses in equities in the “safe haven” while crude, as expected, bled.
