United Kingdom in historic referendum votes to exit European Union
People of United Kingdom (UK) in a historic Brexit referendum have voted in favour of leaving European Union (EU).
In the Brexit referendum, the ‘Leave’ side won decisively by securing 51.9% of the total votes overturning ‘Remain’ side which secured 48.1% votes.
This is the second referendum on UK’s relationship with the EU. In 1975, in a referendum on whether the UK should stay or leave the EU, the country voted for staying with 67.2% votes.
After results were declared UK Prime Minister David Cameron, the architect of the referendum and a passionate supporter of UK within the EU, announced stepping down as Prime Minister in October 2016.
The vote to leave the EU now has triggered a two-year ‘withdrawal process’ which will determine the future of UK’s relationship with the EU. At the end of withdrawal process, UK exits the single market, then EU countries will start imposing tariffs on British products.
Why UK wants to leave the EU?
- Many in the UK think that the EU has transformed a lot over the years.
- Since formation of EU, several countries have joined it and UK thinks that since then EU’s hold over everyday aspects of these countries has increased.
- Many think that Britain is shelling out billions of pounds every year in the form of EU fees without much gain in return.
- UK also thinks that EU’s some constraints have imposed many opposing rules on Britain’s business.
What does UK’s exit means?
- Henceforth UK will be able to secure independent trade deals with important countries such as India, China and US.
- Thus, it can have a stronger influence for free trade and cooperation with other countries as in EU it was having independent influence.
- Now it will have control over wide areas like employment, health, law and safety and immigration policies.
- UK can also save billions of EU fees and use it for scientific researches and for building new industries.
What critics believe?
- By leaving EU, UK would not be able to obtain better trade terms with other countries. It would face problems with different regulations of EU.
- Leaving EU will not help UK to reduce immigration as countries that trade with EU from outside have higher rated of immigration, including from EU countries.
- Other EU members may call for independent protectionism and ultra-nationalism which in recent times is getting hardened across the world.
Impact on India
- UK’s exit from the EU will affect the flow of FDI (Foreign Direct Investment) in India over the short-medium term and the long term periods.
- In short-medium term period FDI may decrease temporarily and potentially led to financial instability and a legal regime overhaul. In the long-term FDI may fall.
- Many Indian information technology (IT) companies based in the UK with large work forces that offer services to Europe Union member countries will be hit.
Categories: Business, Economy & Banking