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Brexit: Impulse in Briton and Indian Trade

E
uropean Union seems a recent political entity, but its beginning was from World War II. It began as means
of encouraging economic corporation and open trade among 28 member countries. Brexit is the term
coined for Britain’s referendum to exit the European Union. Momentum is growing behind the EU exit
campaign, which wants to end central control by Brussels and give Britain the freedom to manage its own affairs.

During economic recession European Union has lagged behind as compared to rest of the world. Also due to EU
membership i.e. immigrants to one country are free to move to United Kingdom. UK expressed concern that the
country’s economic & social structures are insufficient to support growing immigrant population.

The UK cannot currently decide the level of tariffs which But on the contrary it can do a Norway, by establishing
we levy on imports, because these are set at a uniform bilateral trade agreements with European Nations even
level for the EU as a whole under the EU's customs after coming out of European Union.
union. After exit, WTO rules would apply which would
The first direct impact will be, Britain saving on EU
allow the UK to decide the level of our own tariffs on
imports, provided that tariffs on average are no higher membership fee. Currently Britain pays £8.5bn as the
than under the EU customs union. membership fee, which would be 12.23% of their fiscal
deficit for FY2016 of £69.5bn. This will not go to zero,
Though the overall economic situation would remain but it will be substantially lower, and might lead to
difficult for the next two to three years. The global additional collection of duties as Britain imposes duties
recovery remains frail and the Brexit move is on certain goods as an importer.
detrimental to the overall health of the global economy.
The ways in which India will be affected, The
The exit from the European Union has increased the
announcement of the Brexit referendum drew an
risk of United Kingdom falling into a recession. Britain
has been more of an importer than exporter. With a big immediate reaction from the stock markets and
economy and low resources it is dependent on Europe, currencies world over. India was no exception from this
contagion effect. The Sensex tanked by 450 points
China and India for its imports Europe being a free
(from the opening value) on June 24, 2016 falling below
trade area has been providing the free access to markets
for Britain until now. But in case of a Brexit, Britain the 26000 mark and the Rupee value crossed 68 for a
needs to look into other markets like India and China US Dollar.
and other emerging economies for trade.
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