For past few weeks, the whole world is listening and seeing what is going on with UK and EU. Britain’s decision to lead a referendum and then winning the Brexit has shocked some, whereas, pleased some. Most of you might already know a lot about Brexit but here are a few facts you might not know:
- A large number of voters at the referendum voted at their gut instinct. They weren’t able to choose any side mainly because, for many, this referendum had become a question not about what would happen to UK if it left, but about what kind of people voters wanted to be. The ‘Remainers’ believed in community, and tend to define it as broadly as Europe, or even more globally. They gave primacy to the need for countries to work together. They believed that ceding a certain amount of control leads to freedom, and feared that Britain outside EU would become a closed fortress. Whereas, the ‘Leavers’ feared that Britain inside EU lacked sovereignty and control over its destiny. They believe in community too, but also believe that seizing control of their governance is the only way to achieve what’s important for the country. Irrespective of the result, a big part of the country feels aggrieved.
- European Commission President Jean-Claude Juncker, said two days after UK voters decided they wanted to leave EU, that he’d like to start immediately on the strategy of Britain’s exit. Foreign ministers from EU’s six founding countries met in Berlin to discuss the speed and strategy of Britain’s exit. According to Juncker, it didn’t made any sense to wait until October to try and negotiate the terms of their departure, since the Britons already made a decision to leave in the referendum.
- A lot of economists and analysts at the UK treasury, the IMF, the OECD, and the Institute for Fiscal Studies, among other institutions strongly believed and still think that leaving EU would harm the British Economy mainly because of trade. A far larger share of the UK’s exports go to the EU than vice versa. Leaving the EU’s free-trade block puts a big chunk of these goods and services at risk, were tariffs or other barriers to be imposed on them. Many European leaders don’t seem keen to cut friendly deals with a post-Brexit Britain. From Banks to Car-makers, many multinational businesses say that Brexit would put their jobs at risk.
- Britain’s trading options with EU after Brexit. One option would be EEA membership—the so-called Norway option—which would give Britain trade with the EU almost as unfettered as it has now. Another option might be a more limited set of bilateral agreements, like those agreed between Switzerland and the EU. Other option could be a free trade agreement such as those that the EU has with South Korea or South Africa. Most trade with the EU would be tariff-free, but the big barriers to trade caused by “behind the scenes” protectionism—discrimination against foreign companies’ bids for public contracts, for example—would go largely untackled. And finally, the UK could trade with the EU under World Trade Organisation (WTO) rules in order to regain as much sovereignty as possible.
- Curb on immigration after Brexit completely depends upon the trade arrangement Britain will negotiate with the EU. EEA membership would require Britain to remain open to immigrants from the EU, as would a Swiss-type agreement. As to curb immigration being a big reason for leaving the EU, it seems unlikely that Britain would opt for either of these two arrangements. On the other side the EU would probably insist a customs union with Britain that will come at the price of continued free movement, which is highly unlikely, therefore if Britain were to opt for a free trade agreement it might have some scope to control immigration from the EU. The only situation in which Britain would certainly be free to limit immigration is if it opted to trade under WTO rules, which would maximise economically damaging trade barriers with the EU. Britain would face an invidious choice: damage its economy by leaving the single market entirely, or allow free movement to continue.
- Some regions will have more to lose from Brexit than others. Around 40 per cent of the EU’s budget is used to spend on developing the infrastructure and industries of the Union’s poorer regions. If Britain after leaving the EU, fails to agree a free trade deal in goods, the northeast and other manufacturing regions would face EU tariffs, weakening their economies. Meanwhile, if Britain made a deal on goods trade with the EU but no services agreement is struck, London would be more badly hit, because 8 per cent of London’s private sector activity comprises export of services, largely financial, to the EU.
- More than two and a half million people have signed a petition demanding a second EU referendum after an MP called for Parliament to refuse to ratify Brexit. Most Brexit voters are regretting after they voted Britain out of EU. According to Professor Vernon Bogdanor, a prominent constitutional expert, a second referendum is “highly unlikely”. He also told The Telegraph that he doesn’t thinks that EU might want to bargain any further, they will take the already cast vote to be final.
- Brexit might as well lead to Scoxit. It is not necessary, but it is possible, as Nicola Sturgeon, the SNP leader, had promised another referendum if Britain voted to leave the EU against the wishes of Scots. But would Scots really want an EU border with their largest trade partner, England? After four decades of EU membership, Britain’s formal relationships with the rest of Europe are governed by a tangle of treaties, institutions and laws. The reach of the EU into British life is so far-reaching that Brexit would require a renegotiation of most of Britain’s international obligations. A new trade agreement would have to be signed with the EU—and more than 50 with other countries outside Europe, to make up for those annulled by Brexit. So Scotland might—probably against its economic interest—leave the UK, which would lead to another round of political and economic turmoil.
Although, Brexit’s affect on Britain are certainly quite unsung at the moment, we really hope these facts will aid to a better understanding of Brexit. We would really like to know what you think about these, please tell us in the comments below.