SSB Lecturette Series : The Brexit

It’s been a long time there is an issue in the news all over the world about Britain’s exit from EU (European Union) and its effects on other countries. Be it the trade sector, defense sector or education sector impacts are obvious as there is a say “when elephants fight the grass suffers.” And India is not deprived of such impacts. We will discuss the advantages and disadvantages of this step taken by UK one by one. Before that, let’s take a look at the reasons behind such a step in precocity.

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It never happened in the history that any country left EU, else Greenland which once held a referendum in 1982. One of the major reasons behind the exit is that Britain has to pay millions of pounds each week as a contribution to the European budget. Unmitigated migration from European countries into Britain creating imbalance in welfare schemes could also be another reason. But some say that Britain earns more than its contribution from EU. Whatever be the reason, if Britain leaves EU there will be severe and sudden effects on other countries. Another reason is that Britain’s political sovereignty was lost since UK joined EU in 1973.

Arguments Against Brexit:

·         EU is the largest free trade agreement in the world. Britain is earning more than its weekly membership fee i.e. 350 million pounds to EU. Britain is exporting 45% of its total exports and it is able to get into a free and well organized market.

·         The Brexit supporters say that this would let Britain negotiate a better trade deal in Europe. But EU may not give it a favorable deal.

·         As per IMF report the UK’s economy could plunge into a deep recession as a result of the exit.

·         Scotland wants to stay in EU. This could give strength to the demand of freedom from UK in Scotland.

Drawbacks For India:

·         Sensex and Nifty will tumble in the short run. Because, pound will depreciate against most major economies.

·         India is the biggest source of FDI for Britain and Britain is the gate way for India to other European countries. If Indian firms setup their Industries in UK they can easily get into European market and sell their stuffs. So this step can separate the Indian firms from European countries.

·         This may increase petrol and diesel prices to an extent.

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Advantages For India:

·         No-doubt Britain is the biggest FDI provider for India and biggest trade partner in Europe and India uses UK as a gate way to European market. But, if Britain quits EU, India will get advantage to have direct trade treaties with other European countries like Germany, France, Italy etc. and this will boost the relations with other countries.

·         When Britain quits EU it will definitely block pouring migration from European countries. Then it will eye on the commonwealth countries for skilled labors. And India will be obviously the top priority for its large population of English speaking people.

·         UK is the first priority for Indian students willing to study abroad. Britain currently provides subsidies for students from European countries and students from India have to pays a large amount to avail themselves the facilities.  So, when Britain will be out of the EU it will not provide such facilities to students from Europe and Indian students will be benefitted by that.

·         With depreciating pound effects Indian firm owners may be able to acquire more ho-tech assets.

·         India being more of an importing country than an exporting country it could be good news for India as pound will depreciate.

·         Indian tourists will also be benefited as they will be able to visit UK with an affordable price.

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Let’s see how this truffle ends and what the impact of this on the world is? Keep reading SSB vision for all updates and important topics related to SSB. If you want details on some topic do write to us. All these articles are written by the defense aspirants only. If you also want to test your writing skills, we are ready to provide the platform. Follow us here and apply for email notification for getting instant updates.

About the Author: Saurabh Bhoi belongs to Sambalpur, a city in Odisha. He is a B.Com and an Ex-NCC cadet holding C certificate with Alfa grade. He loves mountaineering and do participate in expeditions time to time. Since his childhood he was highly fascinated by the life of an army officer and would like to serve in the army as an officer as soon as possible.