Britain + Exit = Brexit
United Kingdom was led into new era of its history on the dawn of 23rd June 2016. When the highest turnout of 71.8% decided the fate of world’s fifth largest economy about to leave or to remain in European Union (EU). The decision remained crystal clear in the eyes of the world as 51.9% voted to leave EU whereas 48.1% voted to be a part of the EU. The changing political scenario gives rise to many questions. Is the European Union, which was made after World War 2 for protection from the communist bloc, losing its strength? For the answer to this question and many other similar questions/queries, it has to be explained first what European Union is and how it works.
What is the European Union?
- European Union is the political and economic alliance of European countries.
- The first foundation of its establishment was laid in the 1950s when the coal and steel community of Europe began to think that they should go for trade together instead of fighting with each other.
- There were six founding member countries of this union which were Belgium, Germany, France, Italy, Luxembourg and Netherlands, though it came to be established under its current name (EU) in 1993. There are now 28 countries in total, including Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, France, Germany, Greece, Ireland, Italy, Poland, Portugal and Spain, etc.
So how does it work and what are the advantages of this European nation?
- They have their own currency which is used by 19 countries out of 28.
- They have their own parliament (European Parliament).
- The European Union also has set rules in different areas for European citizens, like environment, transport, human rights and even small things such as mobile phones charges.
- Special offer for tourists for 90 days visa free travelling.
- European Health and Insurance Card (EHIC) in case a medical urgency develops while travelling.
- Less tariff or free trade between European Nations.
Is the European Union going to collapse?
- The recent series of events is giving a perception of the weakening of the European bloc.
- Like Greenland, the overseas territory of Denmark left the bloc in 1982 after referendum in the country.
- Recently, after the leave-vote by England, anti-Islam opposition leaders of France and Netherlands are also calling for exit.
- There is the issue of restoration of boundaries due to the recent influx of migrants from Syria as a result of terrorists insurgencies.
- Moreover, the uncertain economy of Greece is also an important issue.
Whether the European Union is going to collapse or not is a question which cannot be answered at this moment. But the recent series of events is a clear portrayal that the European Union is somewhat losing its strength.
The departure of England after 40 years of partnership has given voice to many queries about the referendum. After the said referendum, 6 founding members reacted vigorously. German Chancellor Angela Merkel and UN Secretary-General Ban ki Moon are looking for “pragmatic negotiations” as the “only solution”. The point here is that the UK may face internal pressure because of its economy and the most alarming question is that whether Scotland can make the UK come back into the European Union. And whether there is any door still left open for the UK. But the outcome of the referendum cannot be ignored.
Why did the United Kingdom need a referendum?
The ground realities of the United Kingdom give us a clear reflection of why the masses wanted a referendum. As a result of the emergence of capitalism, there is no society left in this world that is not capitalist. Same is the case with UK – the class system is strengthening day by day and the middle and lower classes are losing their strength, while the elite class, which is mostly business oriented, is becoming richer and richer. Now how does this situation relate to the referendum?
- Due to the European Union’s soft migrant policy, the migrants not only kept on rushing to the land of the United Kingdom but also joined many workplaces of the existing working class, thus depriving locals of their jobs while providing cheap advantageous labour to the business class.
- Under these circumstances, a faction within the Conservative Party also wanted a referendum, since prior to the elections the previous PM of United Kingdom promised to hold one for solving this matter.
Along with these ground realities, economic reasons also paved way for a referendum:
- According to some economists, the UK used to pay billions of Pounds to EU in terms of its membership fee, as evident from the report given by some cabinet members of UK which states that UK has to pay more than 350 million Euros a week in terms of different things to the EU.
- Due to this, the UK’s National Health System (NHS) is declining as it is not providing better health facilities to the common people who have to rush to private health centers which are much more expensive than government hospitals. So in view of the cabinet members, the money could have been used to improve the NHS.
Can Brexit be a problem for the people?
- The agreements which UK had with EU could cause problems in the short run, for example the Triple Lock Agreement is an agreement between UK and EU under which pensions increase according to the level of earnings, or inflation, or by 2.5% every year.
- Since the British also enjoyed less tariffs or tariff free trade with many European countries, the departure can disturb these free trade deals which can result in the rise of inflation, increase in taxes, downfall in businesses for some time, or an uncertain stock exchange which can draw out the investors.
Despite all of this, the UK could face these problems for only a shorter span of time as the UK leadership could overcome these by negotiating deals with the EU and by developing ties with other countries.
What are the internal problems faced by UK?
Another problem which is gaining strength in the UK is that of Scotland. Scotland is the region of UK in which the referendum for separation was held in the year 2014, and is also a staunch supporter of remaining in the EU. As the First Minister of Scotland Nicola Sturgeon said, “Scotland will do whatever it takes to remain in the EU bloc.” Adding fuel to the fire, the German Chancellor welcoming Scotland as an independent nation into the EU also causes sweat on the forehead of UK leadership.
Will the UK try to get back in?
As per international law, the referendum which was held in UK is not legally binding, though politically and democratically it is.
- Whether UK will try to get back in depends on Article 50 of the Lisbon treaty (the agreement between European countries).
- This article clearly states that a member state which wants to withdraw will notify the European Union of its proper intentions – terms of future relations and the process of departure will be discussed or negotiated within two years time.
- This decision also has its dependency on the successor of PM Cameron who is now Theresa May of the Conservative Party, although Boris Johnson (then Mayor and now Foreign Minister) did call it to be a glorious opportunity for Britain to find its voice in the world again.
- Moreover, UK will never be able or agree to give up its currency, the Pound for the Euro, under the new rules and regulations of EU, according to which any new country that joins EU shall have Euro as its currency.
Will the decision of Brexit affect the economies of the world?
Britain’s exit has not only stirred discussions about EU and UK, but has also accelerated debates about its effects on other economies of the world. Nowadays, the economy of a country not only depends upon its internal progress and workforce, but also upon the relations which it exercises with other countries:
United States of America:
- Since US-UK relations have always been at the forefront and these two countries have also fought shoulder to shoulder on the war against terror, USA’s economy would also be affected by the historic decision of Brexit.
- The Transatlantic Trade Investment and Partnership is a treaty between the EU and US. According to this treaty the US with the help of EU shall create a free trading zone spanning the North Atlantic.
- Furthermore, the US always considered UK as a voice for influencing the decisions of EU.
- In spite of all this, the trade between UK and US can also be affected since US is the biggest export destination market of the UK, worth 3.5 million Euros.
Other markets of the world:
The repercussions cannot be avoided by the countries like China, Japan, India and Pakistan as well.
India, another emerging economy of Asia, also has its business setups in England which are likely to suffer and thus have a bearing on the Indian economy, for example the business giant of India, TATA has been operating in UK since 1907, even before the independence of the subcontinent.
Pakistan is not likely to suffer much, although immediately after Brexit the Pakistan Stock Market (PSM) tumbled 1400 points. According to a report by the Express Tribune in light of Pakistan’s Gross Domestic Product (GDP), the effect of Brexit would most likely be minimal because Pakistan only has 7% of exports to the UK.
Physically the climate and the weather on this very globe is changing. But more importantly, the world is also changing in its political and economic form. Instead of waging war against each other, countries are preferring the table of negotiations. The UK must also consider such an environment and go for negotiations and new relations with other countries.
The views expressed in this article are those of the author and do not necessarily represent the views of CourtingTheLaw.com or any other organization with which she might be associated.