NEWS HIGHLIGHTS
Theme : Bilateral, regional and global grouping involving India or affecting India’s interests etc
Paper : GS - 2
Brexit :
It refers to Britain holding a referendum to decide whether it wants to continue membership under the EU or not.
The referendum was held on 23rd June 2016 and 52% voted for BREXITwhereas 48% voted for remaining within the EU.
Lisbon Treaty: The UK has to invoke an agreement named Article 50 of the Lisbon Treaty.
TABLE OF CONTENT
- Context
- Brexit
- Reasons for Britain to seek Brexit
- Arguments in favor of Britain leaving the EU
- Arguments against Britain leaving the EU
- Current Issues
- Key Challenges faced by UK
- Implications for India
Context : Rishi Sunak, a committed Brexiteer, will face turbulence as most of Britain’s economic headwinds are of Westminster’s own making.
Brexit :
- It refers to Britain holding a referendum to decide whether it wants to continue membership under the EU or not.
- The referendum was held on 23rd June 2016 and 52% voted for BREXITwhereas 48% voted for remaining within the EU.
- Lisbon Treaty: The UK has to invoke an agreement named Article 50 of the Lisbon Treaty.
Reasons for Britain to seek Brexit :
- Sovereignty: Some of the policy decisions such as competition policy, agriculture, copyright, and patent law were against the interests of Britain.
- Regulations were becoming a Burden: Such as –limits on the power of vacuum cleaners, non-recycling of tea bags, etc
- Immigration: Britain was not a signatory of the Schengen Border free zone(allows easy travel across Europe)-opposition towards migration into the country from within the EU and its effects on wages and public services.
Arguments in favor of Britain leaving the EU :
- Migration of people: It will stop migration from both within and outside the EU, especially from West Asia (Syria and ISIS Issue) and East European nations.
- Contributions to EU Budget:The UK’s contribution is not proportionate to the benefits it gets back.
- Failure of EU: EU failed on several fronts in creating one community and one identity while solving the differences among its members, including Britain.
Arguments against Britain leaving the EU :
- Great divide:It has reflected the great divide between Britain and the EU.
- Immigrants: Majority of the immigrants are young and hence would have boosted economic growth and will help pay for the public services.
- Trade: Trade gets a major boost for Britain if it stays with the EU.Selling products to other EU nations becomes easier with EU membership.
- Security: leaving the EU affected the ability to fight cross-border crime and terrorism.
Current Issues :
- National Health Service (NHS):under-funding and a lack of staff
- Turbo-charged growth: once the constraining labor laws and financial regulations of the EU were discarded
- Comforting delusions: that countries would be lining up to sign trade deals with a ‘free’ Britain
Key Challenges faced by UK :
- Trade shock: An increase in the price of imports relative to exports
- For households: the looming cost shock will hit those least able to bear it
- The weakness on the supply side of the UK economy: While output is 2.6% short of its pre-Covid trend, current excess demand is in the order of 1.4% of GDP.
- Unemployment: It is expected to rise in the near term as demand falls.
- Inflation: It is expected to rise further
Implications for India :
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Trade: India-UK trade got a boost. The stringent regulations of the EU which were the biggest obstacle were done away with.
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The weakening of pounds: It will also be advantageous for Indian imports.It will also benefit tourists and Indian students studying in the UK.
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Indian Businesses in the UK:Indian businesses will not be able to utilize the UK as the gateway to the European Union.
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Indian IT firms which have considerable exposure to the European markets, particularly the UK, will be affected since there is a risk of a decrease in growth levels in the EU and UK.
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Tourism: Due to the weakening of the pound, there will be a decrease in tourists flowing into India from Britain.
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Immigration: India-UK trade agreement is locked because of the immigration issues.
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Indian students in the UK: Got benefited since the number of applicants from EU nations to the universities in the UK is likely to decrease after Brexit.Weakening of the pound may lower down the total cost of education for Indian students.
FAQs :
1. What is Brexit?
Answer : It refers to Britain holding a referendum to decide whether it wants to continue membership under the EU or not.
2. What are the Current Issues of the UK?
Answer : The Current Issues are :
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National Health Service (NHS):under-funding and a lack of staff
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Turbo-charged growth: once the constraining labor laws and financial regulations of the EU were discarded
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Comforting delusions: that countries would be lining up to sign trade deals with a ‘free’ Britain