– JATIN NAYAK
These past few weeks have been quite tumultuous in terms of world affairs. Coupled with Game of Thrones, Britain’s exit from the European Union or the rather sexier sounding “Brexit” has captured people’s imaginations.
Just as Jamie Lannister threatens Walder Frey of breaking off their ill-formed alliance, Britain has finally decided to leave behind its member nations and sail into the sunset…well, almost.
While, the drama and suspense surrounding the referendum make for wholesome entertainment, the actual process of leaving the EU requires Britain to formally enter into negotiations to replace its terms of membership. This process itself could take another two years. Two years which will be riddled with uncertainty and, quite possibly chaos across world markets.
The European Union single market, which was completed in 1992, allows the free movement of goods, services, money and people within the European Union, as if it was a single country. The idea was to boost trade, create jobs and lower prices.
In the short run, uncertainty about Britain’s future relationship with the EU, its largest trading partner, could push the UK into a recession. And that volatility reflects market worries about more severe consequences in the months ahead.
Norway is not a member of the EU, but it has agreed to abide by a number of EU rules in exchange for favorable access to the European Common Market.
One possibility during the negotiations is that, the EU may decide to strike a hard bargain to discourage other countries from leaving the EU. And that could create serious problems for businesses based in the UK.
One of the major forces behind the Brexit campaign was the free migration of people from poorer countries – like Poland and Lithuania – into Britain, thus creating a competition for jobs and other resources within Britain. However, as the global economy becomes more open, this mass migration of people across nations is something that is essential for a smooth running of the world markets.
This sense of nativism is one of the major reasons that Britain voted to leave the EU.
A decision such as this requires sound weighing of the financial and political implications of what leaving or staying with the EU will entail. However, in general, voters are largely ignorant of the true breadth of what is yet to come and have merely been lulled into voting based on flimsier considerations.
In its advertisements, the Leave campaign had claimed that the U.K. sent 350 million pounds a week to the European Union, and promised that in the event of an exit the money would come home—specifically to fund the National Health Service. However, within hours of the results being announced, the leader who had made the claim- Nigel Farage – reneged on the promise.
Some of the costs that could affect the average British individual include an increase in telecom prices. One of the major accomplishments that the EU was able to provide was its “roam-like- at-home” policy, which it managed to enforce by pressuring telecom groups. By June 2017 consumers across the EU will pay the same price to use their mobile devices in other member states. However, UK mobile groups will no longer need to abide with the ruling.
Nevertheless, leaving the EU also entitles the UK to certain privileges, which can benefit it in the long run.
It will now be free to write its own rules. This was something that the UK could not indulge in earlier as the EU requires its member nations to have a framework that is mandatory for all its member nations. The UK can now reduce corporate tax for U.S. companies, which would definitely lead to an inflow of trade onto the islands.
One of the other major factors to be considered is that the EU has a large variety of binding rules and regulations. EU law lays down that the standard rate of VAT must be at least 15 per cent, and the reduced rate, which can only apply to certain specified goods and services, must be at least 5 per cent. It does not allow governments the freedom to decide that there should be no VAT on chosen items – hence that long argument over VAT on sanitary goods, dubbed the ‘tampon tax’ which was eventually scrapped.
Outside the EU, the UK could now decide on its own framework, which should definitely lead to an increase in productivity.
One of the interesting statistics to come out of Brexit is that voters in Northern Ireland supported ‘Remain’ 56% to 44% and voters in Scotland supported ‘Remain’ by a margin of 68% to 32%.
So Britain’s exit from the EU could strengthen the hand of Scottish separatists. A key Scottish leader has already signaled that she wants to hold a second referendum on Scottish independence. If that vote succeeded, Scotland would likely petition for admission to the EU in its own right.
There’s also a chance that a UK exit from the EU could provide renewed momentum for Northern Ireland to try to leave the UK and unify with the rest of Ireland.
Brexit could herald the end of Britain, as we know it.
A lot of uncertainty lies ahead. Although, one thing is for certain.
Winter has come.
Image credits: http://www.spectator.co.uk/
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