Brexit – Meaning, Impact, Debate


The ramifications of Brexit will spill through Britain’s politics, Europe’s brittle economy and the world’s restive financial markets.


What does Brexit mean?

It is a word that has become as a shorthand way of saying the UK leaving the European Union (EU) – merging the words Britain and exit to get Brexit.

What is happening ?

A referendum is being held on Thursday, 23 June, to decide whether Britain should leave or remain in the European Union.

What is the European Union ?

The European Union – often known as the EU – is an economic and political partnership involving 28 European countries. It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other.

It has since grown to become a “single market” allowing goods and people to move around, basically as if the member states were one country. It has its own currency, the euro, which is used by 19 of the member countries, its own parliament and it now sets rules in a wide range of areas – including on the environment, transport, consumer rights and even things like mobile phone charges.

With GDP of more than $18,000 bn and a population of more than 500 m, it is the biggest economy in the world. Member states remain the most powerful actors within the EU — with Angela Merkel, German chancellor, the bloc’s most powerful leader.

What is a referendum ?

A referendum is basically a vote in which everyone (or nearly everyone) of voting age can take part, normally giving a “Yes” or “No” answer to a question. Whichever side gets more than half of all votes cast is considered to have won.

Why is a referendum being held?

Prime Minister David Cameron has promised to hold a referendum if he won the 2015 general election, in response to growing calls from his own Conservative party MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum. The EU has changed a lot since then, gaining more control over their daily lives, they argued. Mr Cameron had said: “It is time for the British people to have their say. It is time to settle this European question in British politics.”

Who Will be able to vote ?

You are eligible to vote if you are a British, Irish or Commonwealth citizen over the age of 18 and you are resident in the UK. You may also vote if you are a UK national who has lived overseas for less than 15 years.

What is the procedure to vote?

It is a similar system to that during other elections. Firstly, if you have registered to vote, you’ll have been sent a card telling you when voting takes place and where you should go to vote on 23 June. On that day, when you go to the polling station you will be given a piece of paper with the referendum question on it. You then go to a booth, which will have a pencil in it for your use. You then put a X in the box which reflects your choice and put the paper into a ballot box

 Who wants the UK to leave the EU?

The British public are fairly evenly split, according to the latest opinion polls. The UK Independence Party, which won the last European elections, and received nearly four million votes – 13% of those cast – in May’s general election, campaigns for Britain’s exit from the EU. About half of Conservative MPs, including five cabinet ministers, several Labour MPs and the DUP are also in favour of leaving.

Why do they want the UK to leave?

They believe Britain is being held back by the EU, which they say imposes too many rules on business and charges billions of pounds a year in membership fees for little in return. They also want Britain to take back full control of its borders and reduce the number of people coming here to live and/or work.

One of the main principles of EU membership is “free movement”, which means you don’t need to get a visa to go and live in another EU country. They also object to the idea of “ever closer union” and what they see as moves towards the creation of a “United States of Europe”.

Who wants the UK to stay in the EU?

Prime Minister David Cameron wants Britain to stay in the EU. Sixteen members of his cabinet also back staying in. The Conservative Party has pledged to be neutral in the campaign – but the Labour Party, SNP, Plaid Cymru and the Lib Dems are all in favour of staying in.

US president Barack Obama also wants Britain to remain in the EU, as do other EU nations such as France and Germany. As mentioned above, according to polls, the British public seems pretty evenly split on the issue.

Why do they want the UK to stay?

Those campaigning for Britain to stay in the EU say it gets a big boost from membership – it makes selling things to other EU countries easier and, they argue, the flow of immigrants, most of whom are young and keen to work, fuels economic growth and helps pay for public services. They also believe Britain’s status in the world would be damaged by leaving and that we are more secure as part of the 28 nation club, rather than going it alone.

Would Britain be better in or out?

It depends which way you look at it – or what you believe is important. Leaving the EU would be a big step – arguably far more important than who wins a general election – but would it set the nation free or condemn it to economic ruin?

Key Arguments for Stay Key Arguments for Leave
           Foreign affairs:

As part of a 500 million-strong economy, Britain has greater influence over international matters.

·         Sovereignty:

Britain has proved that it can opt out of EU policies it considers counterintuitive, such as the euro, the Schengen Agreement and enforced migrant quotas.

·         Security:

A union better equips Britain to tackle threats to security, including terrorism and cross-border crime.

·         Money:

Europe provides Britain with billions of pounds’ worth of investment each year.

·         Trade:

Membership in the EU gives us the strength to negotiate favourable trade agreements with countries around the world.

·         Business:

Free trade within the EU reduces barriers and enables UK companies – particularly small ones – to grow.

·         Jobs:

Millions of jobs linked to Britain’s membership would be put at risk.

·         Consumer goods:

The average person in Britain saves hundreds each year thanks to lower prices of goods and services facilitated by the EU.



           Foreign affairs:

EU membership limits Britain’s international influence, ruling out an independent seat at the World Trade Organisation.

·         Sovereignty:

Britain would have more control of its laws and regulations, without risk of having counterintuitive policies forcefully imposed.

·         Security:

Britain’s domestic security would benefit more from greater border control than political union.

·         Money:

Britain contributes billions of pounds in membership fees to the EU every year.

·         Trade:

Membership in the EU keeps Britain from fully capitalising on trade with major worldwide economies like Japan, India and the UAE.

·         Business:

The EU subjects Britain to slow and inflexible bureaucracy, making it more prohibitive for smaller, more innovative companies.

·         Jobs:

Improved global trade agreements and more selective immigration would have a positive effect on the British job market.

·         Consumer goods:

The average person in Britain lose hundreds each year owing to policies regarding VAT contributions and agricultural subsidies.


Impact of Brexit on India

Despite being a ludicrous proposition, countries across the world must address the contingency of a Brexit. If it does happen, it will have wide-ranging repercussions on every country that is remotely connected with the global financial market. Here are five ways in which India will be affected:

1. The uncertainty following Brexit: The biggest drawback of the Leave Campaign is that they have not mapped out the future course of action if Brexit indeed happens. There is no sound plan regarding Britain’s future relationship with the EU or any other specific country within the EU.

If Brexit does happen, global financial market volatility can be readily expected. Markets across the world will tank. The pound will depreciate against most major economies. India cannot remain immune to this. Sensex and Nifty will tumble in the short-run.

2. Investment: India is presently the second biggest source of FDI (Foreign Direct Investment) for Great Britain. One of the main reasons for this is the historic and cultural ties with the UK that India shares along with the fact that the UK proved to be a gateway into the rest of Europe. Indian companies that would set up their factories in the UK could sell their products to the rest of Europe under the European free market system.

However, if Britain exits the EU, it will not be as attractive a destination for Indian FDI as before. Having said that, Britain would not want to lose out on capital coming in from India. Thus, one can expect Britain to try extra hard to woo Indian companies to invest there by providing much bigger incentives in terms of tax breaks, lesser regulation and other financial incentives. Further, if Britain is leaving the EU due to the latter’s complex bureaucratic regulatory structure, Indian companies can expect  a deregulated and freer market in Britain.

3. Another EU partner: If Britain exits the EU, India will lose its gateway to Europe. This might force India to forge ties with another country within the EU, which would be a good result in the long run.

India is already trying to build trade negotiations with Netherlands, France, Germany, and others, albeit in a small way. Netherlands is India’s top FDI destination as of now. A Brexit could force India to build trading partnership with other EU nations in order to access the large EU market.

4. The Commonwealth: With Britain cutting off ties with the EU, it will be desperate to find new trading partners and a source of capital and labour. There have already been many proponents of the Leave Campaign that suggest that the UK should look towards the Commonwealth to forge new alliances.

Britain will still need a steady inflow of talented labour, and India fits the bill perfectly due to its English-speaking population. With migration from mainland Europe drying up, Britain would be able to accommodate migration from other countries, which will suit India’s interests.

Further, Britain is one of the most important destinations for Indians who want to study abroad. Presently, British universities are forced to offer subsidized rates for citizens of the UK and EU. With Brexit, however, the universities will no longer be obliged to provide scholarships to EU citizens, which will free up funds for students from other countries. Many more Indian students may be able to get scholarships for studying in the UK.

5. Ties with European Union: With or without a Brexit, it would be in Europe’s interest to develop India as a strong trade and strategic partner. Brexit would surely accelerate this process. Europe needs to counterbalance United States and China geo-politically and would also need to hedge against a slowing China for its economic interests.

For this, Europe would be looking at the fastest-growing major economy in the world and would need to quickly resolve the pending trade issues with India in order to develop a lasting relationship.

Thus, even though Britain stands to suffer from leaving the European Union in terms of reduced trade and a sustained drop in its GDP, the net effect can turn out to be positive for India.

With inputs from BBC and NDTV

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  • dhilis :))

    wow what a fantastic article…. a big thanks to the team… anyways the Britain made his own stand as become an independent nation…. stock markets are facing a major hits… meticulously TATA MOTORS…..uncertainty prevails…

    • Thank you.
      I appreciate your feedback.

      • dhilis :))

        You’re most welcome


    If India is presently the second biggest source of FDI for Britain then doesn’t that mean, Indian investors (us) will benefit a lot in log run, reason being Britain would want to expand and if we invest more money in the companies trading there, we will benefit from that a lot.

    • dhilis :))

      Yes your right however Britain is the only gate way for us to have an ease in trade inside the EU,that’s why we have invested a lump sum of money(FDI) in Britain. Since the Brexit has happened,uncertainty follows the Britain and we are facing a massive hit(which reflects in GOLD PRICE increased RS.1000 within a day ). The fact is no countries in the world was expecting this could have happen. In order to make our trade in a long run we have to find another friendly country inside the EU.

  • Irshad Khoja

    Thank you very much

  • Abhinav Gupta