Brexit is an abbreviation of British Exit similar to the term Grexit. It refers to the possibility that Britain will withdraw from the European Union. An in-out referendum has been set for execution on Britain’s European Union Membership on June 23.
The idea for the European Union first got conceptualized by the Maastricht Treaty on November 1st 1993, with the aim of ending the frequent and bloody wars between neighbours, which culminated in the Second World War. Though, European Union is not the result of one day but of a gradual integration since World War - II. Originally found by the six member countries in 1951, confined to Western Europe, the EU undertook a robust expansion into central and Eastern Europe in the early 21st century.
The treaty of Maastricht was designed to enhance European political and economic integration by creating a single currency (the Euro), a unified foreign and security policy and common citizenship rights and by advancing cooperation in the areas of immigration, asylum and judicial affairs. The EU was awarded the Nobel Prize for Peace in 2012, in recognition of the organization’s efforts to promote peace and democracy in Europe.
On January 1st, 1973, Denmark, Ireland and United Kingdom joined the European Union raising the number of member states to nine. Today it has the membership of 28 nations. Britain joined the EU as a way to avoid its economic decline. The UK’s per capita GDP relative to the EU founding members’ declined steadily from 1945 to 1972. However, it was relatively stable between 1973 and 2010. This suggests substantial benefits from EU membership especially considering that, by sponsoring an overpowered integration model, Britain joined too late, at a bad moment in time, and at an avoidably larger cost.
The movement for Brexit was founded in 1991 (under a different name) to oppose Britain’s EU membership and saw its popularity surge in 2013. The two campaigns, “Britain Stronger in Europe” and “Vote Leave”, that are likely to form the official lobby group for each side in the referendum.
Article 50 (of the Treaty on European Union):
This Article allows European Union member states to notify the EU of its withdrawal and obliges the EU to try to negotiate a ‘withdrawal agreement’ with the state. The form of any withdrawal agreement would depend on the negotiations and there is therefore no guarantee the UK would find the terms acceptable. The EU Treaties would cease to apply to the UK on the entry into force of a withdrawal agreement or, if no new agreement is concluded, after two years, unless there is unanimous agreement to extend the negotiating period.
Arguments in favour of Brexit:
Trade: The Brexitters feel, it can secure better trade deals with important countries like China, India and the US. It will negotiate a new EU relationship without bound by EU laws.
EU Budget: Britain can stop sending £350 million (equivalent to half England’s school budget), to Brussels every week. This money could be spent on scientific research and New Industries.
Regulation: The general feeling is prevailing that leaving EU could mean better and greater regulation, especially in areas like employment laws and health & safety.
Immigration: Eurospectics believe that leaving EU could help Britain reform its policies in this regard by having a sensible regime for the movement of people over skilled and non-skilled people. Britain can change the expensive and out of control system that could offer an open door to EU and Non EU immigrants, who could contribute to Britain.
Influence: Those in favour of Brexit believe that leaving the EU would allow Britain to regain their seat on international bodies where EU represents them, and use their greater international influence to push for greater international cooperation.
1. Overall, it is an opportunity to reassert British National Sovereignty and in a sense to liberate Britain from the bottlenecks of EU, both politically and financially.
Arguments against Brexit:
Trade: Britain avoids exporter tariffs and red-tape, which is important because nearly 45% of its trade goes to EU. Another benefit is that being a member, Britain can obtain better trade terms, because of the EU’s size. Brexit would damage Britain’s export competitiveness.
EU Budget: On the budget front, the Stronger In Campaign contends that the benefits outweigh the costs. Its annual contribution to the EU is equivalent to £340 for each household, according to the Confederation of British Industries, all the trade, investment, jobs and other prices gave £3,000 per year benefit to each household because of EU membership.
Regulation: By staying in EU, Britain can better negotiate for changing regulation. Most EU regulations, they argue is standardized and effectively collapses 28 national standards into one European standard, thus reducing red-tape and benefit businesses.
Immigration: Pro-EU campaign says that leaving the EU will not stop immigration to the UK. Countries such as Norway and Iceland, which are not a part of EU, as per the European Free Trade Association, have to accept free movement and have higher rate of immigration including from EU countries than Britain.
Influence: Pro-EU campaigners’ rests on the fact that Britain is represented twice in international organizations by foreign secretary and EU High Representative. Staying in Europe might only result in better cooperation, which has helped them tackle issues of global concerns like Ebola and piracy in Africa.
1. Overall, Britain will also undermine London’s position as Europe’s financial centre. But in a post-Brexit world, Frankfurt and Paris may overtake that position from Britain.
Brexit consequences on EU:
• If we see the trade pattern then 51.4% goods export to EU from Britain in return to 6.6% from EU to Britain. A post-Brexit Britain will have to form a set of trading and institutional relationship with it to secure above mentioned export.
• EU will become smaller and weaker both in economic and geopolitical terms.
• The EU share of the world population will fall from 7.0 to 6.1 percent. In terms of world GDP, in purchasing power parity, the EU share will decrease from 17.0% to 14.6%, and in current international dollars from 23.8 to 20.0 percent. The EU share in global exports of goods and services at current prices and exchange rate will fall from 33.9% to 30.3 percent.
• The transition process may take several years. It would greatly increase legal and economic uncertainty, not only in the UK but also in EU.
• The political and economic shock created by Brexit could be a step towards further disintegration of the union. Given the increasing strength of Eurosceptic parties in many EU member states.
• It will further aggravate problems with completing the Banking Union, or accepting the burden sharing mechanism to tackle the refugee crisis. Due to its opt-out clauses the UK does not participate in these projects and there are other EU member states that are reluctant to accept larger degree of burden and sovereignty sharing related to them.
• The free movement of people, goods and services has been affected by the Brexit from other EU member states.
• Attracting and retaining this foreign talent will become harder after Brexit, when EU workers moving to Britain will no longer be able to take their pension rights with them, and the other conveniences of a single labour market which are lost.