BREXIT- Britain Stepping into Unknown!
The term Brexit is in talks all around the globe since 2016. Brexit is an abbreviation of ‘Britain Exit’, which is the procedure of the UK creating its own identity by stepping out of the year’s long association of 28 European countries. On the eve of New Year 2021, UK-EU established a new relationship by signing a covenant- ‘The Brexit Deal’.
A string of events that led to Brexit- ‘A Long Road’
European Union marks the merger of 28 countries with common trading and economic rules. It implies that the prosperity and downturn in the economy of one country have a direct impact on other countries. Such was their level of understanding that all the countries allow easy migration of people as if they were a single country. According to many economists, the EU’s central bank couldn’t deal well with the financial crisis of 2008, leading to various job losses and recession. It had a sharp effect on UK’s economy as more and more people immigrated here to win a decent job in unprecedented times, which was manifestly not in favor of the UK’s workforce.
In 2015, Britain’s then PM, David Cameron, made an announcement of a referendum on whether Britain should continue to be part of the EU countries, and a majority by a slight percentage agreed on the referendum. Excessive foreign-born population and apprehensive feelings of Britons regarding the lack of the UK’s sovereignty in the EU, induced people to vote in favor of Brexit. It was a political earthquake that induced the concept of Euroscepticism. The majority of votes in favor of Brexit led to David’s resignation. Theresa May, a pro- Brexit supporter took charge as the PM and triggered article 50 of the EU, to formalize the procedure of Brexit. Her Brexit proposal was criticized and rejected by the parliament thrice. It led to discontentment and was eventually followed by her resignation too. Boris Johnson was elected as the new PM of Britain and his agenda was clear to ‘Get Brexit Done’. After numerous rounds of controversial talks and debates, the Brexit Divorce Deal was finally approved by EU Parliament and Britain Finally left the EU on 31st January 2020.
The Transition Period-
1st February 2020 marks the first day of the transition period. This rocky road of transition was not an easy journey. It was subject to numerous pitfalls in the form of contentious rounds of negotiations to deduce the future relationship of EU-UK. This phase got an extension in June 2020 and finally came to an end after 11 months on 31 December 2020. It marks the date when UK signed the covenant — ‘The Brexit Deal’ with the EU. The 1246 pages long Brexit Deal covers all the sectors- financial, business, defense, legal services, digital trade, and many other essential areas. According to the deal, UK will leave the EU’s single market and the future trade between the two will be free from new tariffs and quotas. It closed the doors and blocked the free immigration of about 500 billion people from the EU- UK.
Is Everyone Satisfied?
Well, the answer is ‘NO’. Those who voted for staying in the EU like Scotland and Northern Ireland, are definitely discontented with the Brexit deal. Scotland was the export hub for the EU, and it will suffer to great extent in post Brexit times. Economists believe that Scotland may leave the UK akin to Brexit. it was a political earthquake in the entire EU and led to its disintegration, inducing other nations to leave the EU too.
The atmosphere of uncertainty has slackened the economic growth of the UK. Not just the EU, UK now has strenuous challenges ahead too. It now has to develop independent trade relations with countries across the globe. Apart from that, political and economic clashes have been observed between the Brexit supporter regions and the Brexit adversaries.
Brexit wasn’t good news for the USA either, as UK served as the mediator between US- EU trade relations. As a result of Bilateral trade between the two, both US and EU have invested heavily in each other’s business conglomerates. The uncertainty caused due to Brexit was the major reason for US apprehension. Now, both the EU and UK are seeking to establish trade relationships with the US separately.
Will Brexit affect the Indian Economy?
Talking about the effect on India and Brexit’s impact on the Indian Economy, Brexit may give birth to a couple of problems with serious implications. As for the US, UK was the medium of free border trade with the rest of the EU for India too. Since the UK forms one of the major export centers for India, Indian exports have suffered a setback.
UK is also one of the major sources of FDI in India. Foreign Direct Investments are responsible for funding Indian Companies and helping them in their expansion. They also facilitate infrastructural development and generates employment. The downturn in the UK economy will therefore indirectly affects the Indian economy.
Indian firms too face a dilemma on whether to invest in UK-based companies in the future. Subsidiaries of Indian Companies also face a major chunk of a challenge as their border-free access to the rest of Europe has now ended with a Brexit agreement.
The long-term consequences of the Brexit agreement are yet to be observed. The future endeavors for the UK and the associated countries are uncertain. Britain has stepped into ‘Unknown’ and time will decide whether this ‘Unknown’ will bring about the greater good or not!