Published: Wednesday, 06 July, 2016 10:40 AM
Brexit Casts Doubts over EU’s Future
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Read General Awareness Topic :Brexit Casts Doubts over EU’s Future
Drawing curtains on a 43-year old relation, Britain has voted to exit from the 28-nation European Union (EU) in a historic referendum famous as “Brexit” on June 23, 2016. The referendum results showed a majority 52% of voters favouring the United Kingdom breaking away from the supra-national organization formed in the aftermath of the Second World War. Following the results, British Prime Minister David Cameron resigned as he had staked his political prospects on his country remaining in the EU. Over 72% of the electorate turned out to vote in the historic referendum, which reportedly is higher than in any general election since 1992 in the UK. The results sent global markets into a tizzy and raised uncertainty across business world and among investors. According to media reports, global investors lost up to two trillion dollars on the day of results alone.
Uncertain EU Future
While there are procedural formalities still left to initiate Brexit, which may reportedly take about two years to implement, the decision to break away from Britain will arguably remain the biggest political event this year. And its ripple effect will reverberate in multiple areas. The foremost impact pertains to the future of the EU. A poster-boy for regional economic integration and globalization, the EU is highly likely staring at an existential crisis now; there is no unified European agenda and common solutions for member nations facing myriad problems. There has been a significant rise of far right-wing political parties across the member states, which are demanding their countries break away too. Economic slowdown and illegal migration from the Middle East and North Africa has provided ammunition to these parties.
The latter has also resulted in a sharp rise in extremism and terror attacks in major Western European nations further triggering backlash from the natives against migrants. This is when a young migrant population could have helped the EU countries to supplement their fast ageing workforce and enhance productivity.Economic slowdown has prompted massive downsizing within businesses and budgetary cuts in the welfare model of governance. It has resulted in severe backlash from trade unions and civil society groups against pro-market reforms in Spain, Greece, Italy, France and Belgium. There also exists a seemingly hostility over German hegemony within the EU.
UK Never Integrated Fully
Britain’s decision to part ways with the EU was not a hastily made decision. The country was always in two minds over its integration within the EU. It joined the EU in 1973, more than a decade after the foundation for the economic group was laid in 1957. Britain always wanted a special treatment within the EU, including its currency, British pound, due to its historical legacy and global status. In the last decade, anxiety was growing within Britain over EU policies failing to prop up economic growth and employment and providing any significant value addition to the British economy. On the other hand, locals were losing job opportunities to migrants from East European countries like Hungary and more recently, from the Middle East and North Africa. Businesses were also taking advantage of the unorganized labour sector to cut employment opportunities for permanent workers. The multicultural values that the EU openly promoted utterly failed as ghettos have sprung up across West European cities with migrants failing to assimilate within their host societies. After Brexit, the key question is how the UK will deal with the EU – a complete separation or greater autonomy while retaining ties with major EU structures on governance. Brexit has also raised the possibility of Scotland breaking away from the UK as an overwhelming of voters in the region favoured staying within the EU.
Opportunity Vs Challenge for India
As for India, Brexitpresents an opportunity as well as a challenge. As per the Commerce Ministry, India-UK bilateral trade was valued at 14.02 billion dollars in 2015-16. India gained 3.5 billion dollars from it. But New Delhi will have to revisit its ongoing negotiations with the EU on free trade agreement. In fact, India will have to ink separate free trade agreements with the EU and the UK. Britain may also review its policy to deny post-study work visas to Indian students, which may increase the flow of students. Indians studying in the UK has reportedly fallen in recent years due to the policy. India on its part will have to woo British investment in core sectors and give it special treatment.
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