Ankur Jain

Chief Knowledge Expert, T.I.M.E.

www.time4education.com
 Brexit

Ankur Jain
Chief Knowledge Expert
T.I.M.E.

www.time4education.com
England, Britain or the UK?
 What is the EU?
• European Union
• WW II
• Marshall Plan, World Bank, IMF
• United States of Europe, 1946
• Schuman Declaration, 1950
• Six members (West Germany, France,
Belgium, Netherlands, Luxembourg, Italy)
• European Coal & Steel Community, ECSC,
1951
• European Economic Community, EEC, 1957
 What is the EU?
• EURATOM – European Atomic Energy Treaty
• UK invited in 1957, declines
• 1963, UK applies but application vetoed by
France
• 1967, ECSC, EEC and EURATOM merge via
Treaty of Brussels
• 1973, UK, Denmark, Ireland join
• 1979, First Elections
• 1981, Greece joins
• 1986, Spain, Portugal join
 What is the EU?
• 1987, Single European Act. Free flow of
people, goods, and money is the major
objective.
• 1993, Maastricht Treaty
– More powers to the European Parliament
– European Union created
– Common Foreign and Security policy, Justice and
Home Affairs, Common Currency envisioned
• Makes the union from Economic to Political
• Treaty ratified by UK Parliament but no
referendum held. This is one source of present
discontent.
• Direct consequence is the UKIP and the
Referendum Party.
 What is the EU?
• 1995, Austria, Finland, Sweden join.
Schengen Agreement, Borderless Europe,
UK stays out.
• 1999, Amsterdam Treaty, Single treaty for
EEC and EU, Greater transparency
• 2002, Euro Common Currency launched for
12 countries out of 15. UK stays out. Today
19 countries use it
• 2003, Treaty of Nice expands European
Parliament
 What is the EU?
• 2004, Largest enlargement ever – Cyprus,
Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovakia, Slovenia
• 2007, Bulgaria and Romania join
• 2009, Treaty of Lisbon. Gives more power
to European Parliament. ECB, EC official
institutions.
• 2012, Nobel Peace Prize to European Union
• 2013 , Croatia joins
 What is the EU?
• 2018, EU was the world’s 2nd largest
economy at 18.7 trillion USD out of 87
trillion USD. EU is not really a military
grouping, with NATO performing that task
mostly.
 Why did UK choose to exit?
• Perceived high-handedness of EU
• Loss of sovereignty
• Immigration issues
• Employment
• Political manoeuvring
– Cameron, Boris Johnson (Conservatives)
– Labour (Jeremy Corbyn), Lexit
– UKIP
• Vote is not binding. Divorce long, complex
and unprecedented.
 The timeline of Brexit
• 1974, The opposition Labour Party wins the
February general election without a
majority and then contested the
subsequent 1974 October general election
with a commitment to renegotiate Britain's
terms of membership of the EC, believing
them to be unfavourable, and then hold a
referendum on whether to remain in the EC
on the new terms.
• 1974, Labour wins a second election with
majority.
 The timeline of Brexit
• 1975, Britons vote “stay” in the referendum
• 1983, Labour campaigns with a
commitment to withdraw. After massive
loss, changes policy.
• 1985, Conservatives ratify “Single European
Act” without referendum.
• 1990, UK joins European Exchange Rate
Mechanism, which pegs the British Pound
to the Deutsch Mark. Leaves it in 1992.
 The timeline of Brexit
• 1993 – Maastricht Treaty ratified by UK without
referendum
• UKIP and Referendum Party
• 2012 – David Cameron rejects referendum. Later
supports due to rise in popularity of the UKIP.
• 23 January 2013 - Cameron announces that a
Conservative government would hold an in-or-out
referendum on EU membership before the end of
2017, on a renegotiated package, if elected in the 7
May 2015 general election. Included in the
Conservative Party manifesto for the election.
 The timeline of Brexit
• 2015 - Cameron favoured remaining in a
reformed EU.
• 2015 - sought to renegotiate on four key
points:
– protection of the single market for non-
eurozone countries
– reduction of "red tape“
– exempting Britain from "ever-closer union“
– and restricting immigration from the rest of the
EU.
 The timeline of Brexit
• December 2015 – Opinion polls show a clear
majority in favour of remaining in the EU. Support
would drop if Cameron did not negotiate
adequate safeguards.
• February 2016 – Outcome of negotiations
announced. Some limits to in-work benefits for
new EU immigrants were agreed, but before they
could be applied, a member state such as the UK
would have to get permission from the European
Commission and then from the European Council,
which is composed of the heads of government of
every member state.
• Feb 2016 – Referendum date announced of
23rd June 2016
• Passionate campaign from Leave and
Remain campaign
Leave
Recent campaign
Remain Campaign
Remain Campaign
Remain Campaign
 Result
• 51.89% Leave
• 48.11% Remain
 Impact on the World/EU
• Anti-globalisation
• Protectionism ↑
• Anti-Immigrant
• Chinese and Indian exports to UK would
suffer
• EU’s monetary contributions ↓
• Weakens the EU, makes other giants like
USA and China gain power
Impact on the UK
 Impact on the UK
• Pound at 31 year low against USD
• Imports costlier
• UK shares have fallen, wiping off investor
wealth. Later they have gained.
• Britain’s credit rating has fallen
• Businesses looking to enter Europe may now
move to Ireland as it speaks English
– Lower tax rates additional incentive!
• UK economy may shrink by 5%
• Scotland may revisit Referendum to leave UK
and rejoin EU
• Northern Ireland may leave UK and join Ireland
 Impact on India
• Short term – Negative as Indian businesses
exporting to UK or EU face uncertainty
• Currency volatility
• Pound falling helps lower cost of funds for
Indian companies who raised money in the
UK
• Business contraction in EU and UK reduces
demand for Indian exports to UK
• Indian companies competing with UK
companies for EU business will gain
 Impact on India
• Indian companies competing with EU
companies for UK business will gain
• India third largest source of FDI for UK.
• India invests more in the UK than all other
European countries combined.
• UK is the largest G20 investor in India
• Indian companies, especially the IT industry,
using UK as base for EU exports will face
higher overhead costs and more
uncertainty. Approximately 800 Indian
companies have EU HQ in London
 Impact on India
• FIIs may move out of riskier markets like
India. Indian markets lost, at least initially.
• India negotiating free trade pact with EU
since 2007. Now separate pact required
with UK.
• Demand for Indian professionals may
increase in the UK. Xenophobia is on the
rise though.
• UK is likely to woo Indian companies to
enter and invest in the UK.
• In the long run, India will gain due to this.
 THANKS !

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 Bibliography
• http://www.bbc.com/news/uk-politics-32810887
• http://www.telegraph.co.uk/news/2016/06/20/what-is-
the-eu-why-was-it-created-and-when-was-it-formed1/
• http://www.thehindu.com/specials/history-of-
eu/article8765088.ece
• http://www.thehindu.com/opinion/lead/a-brexit-from-
economic-wisdom/article8807936.ece
• http://www.livemint.com/Politics/oS6jJi0YjwvZsNcTwE
QlSM/The-ins-and-outs-of-Brexit-and-the-
consequences-for-India.html
• http://www.testcurrentaffairs.com/2016/06/ten-
impact-on-india-britain-exit-eu-european-union.html
• http://www.firstpost.com/world/brexit-as-referendum-
draws-near-heres-why-india-is-on-its-toes-2851018.html
• https://www.independent.co.uk/voices/futility-of-a-
house-with-no-windows-1487252.html
• https://www.bbc.com/news/uk-politics-34770875