it's all about the Economic Aspect: Brexit; Macro economic challenges faced EU

1. Economic Aspect: Brexit; Macro
economic challenges faced EU
Under the guidance of Dr. Swaroop Reddy and
Prof. Sudindra V.R
Presented by:
Vyshnavi.V-181248
Narasimha Rao.M-181250
Team No-9A
Sec-B
PGDM
2018-2020

2. Contents
BREXIT
 What is the European
Union
 Road to the European
Union
 Purpose of EU
 What is Brexit ?
 What are the impacts of
Brexit ?Economic
Impacts
 Impact on currency
 Impact on Trade
 Impact on Society
Macro economic challenges
faced EU
 The European Union
 28 Members of the EU
 Challenges
 Causes of Sluggish Growth
 A Single Currency (Euro)
without an Integrated
Monetary Policy
 Austerity Policies
 Crisis in Greece
 The European Migration
Crisis
 Conclusion

3.  On 23 June 2016 the UK held a referendum on its membership in the
EU. The majority of the British people voted for Britain’s exit from
the EU (Brexit)
 BREXIT - POSSIBLE ECONOMIC IMPACT FOR THE EURO
AREAAND THE EU

4. What is the European Union
 The EU is a unique economic
 Political partnership between 28
 European Countries that together cover much of the
continent.

5. Road to the European Union
 After seen the horror of WWII the European Community
needed an alliance.
 In 1951 European Coal and Steel Community was formed
by 6 countries.
 In 1957 European Economic Community was formed.
 In 1973 the UK joined to the European Economic
Community.
 In 1993 the European Union was formed.
 In 2002 the Euro became the currency of Eurozone.

7. Purpose of EU
The fundamental purposes of the European Union are to
promote greater social, political and economic harmony among
the nations of Western Europe.
Now the European Union is an economic and political union of:
 28 member countries.
 With the population of approximately 507.4 million people.
 With an economy that generates a nominal GDP of about
€14.3 trillion (US$18.5 trillion in 2014)

8. What is Brexit ?
Brexit is an abbreviation of "British exit" that refers to the
possibility of Britain's withdrawal from the European
Union.
Reasons that leads to Brexit :
 The interference of European Union.
 The UK tax payers money goes directly into European
Union, £ 14.5 billion a year.
 The European Union regulations cost UK businesses over
£ 600 million every week

9. What are the impacts of Brexit ?
Economic Impacts
 One in every ten UK jobs are linked to the trade with the EU.
Therefore Brexit might affect there jobs directly or indirectly.
 61% of UK small business exports go to the EU. Being able to trade
freely with EU countries, with no tariffs or barriers, helps small
businesses in the UK grow and create jobs. This might be affected.
 Impact of Brexit could lead into lower GDP of 2.2% in 2030 or
hopefully lead into higher GDP of 1.6%.
 Leaving the EU could lead into lower trade between the EU and UK
generating complications.
 Leaving the EU could also affect Foreign Direct Investment,
immigration and economic regulation in UK.

10. Impact on currency
 Investors are worried about the possible economic impact of a
decision to leave the EU.
 The Sterling Pound is falling against all major currencies.
 It was down by 2% against US Dollar and hit the lowest since 2009.
 It’s dropped 1.3% lower against the Euro.

11. Impact on Trade
 Trading freely with the EU allows UK businesses to grow. Being
able to trade freely with the EU helps UK businesses grow and create
jobs. Therefore, leaving EU might put all this at risk.
 4 out of 5 Small Business back the EU. Four out of five UK small
businesses say access to EU markets is important to their future growth, in
case of UK leaving EU, these small business might suffer losses.
 70% of major business expect damage if UK leave the EU. A new survey
shows 70% of FTSE 350 firms, some of the UK’s largest companies, think
they’ll be hit if UK leaves the EU.
 TTIP (Transatlantic Trade and Investment Partnership) deal between US
and EU will not benefit UK if they leave EU.
 CETA (The Comprehensive Economic and Trade Agreement) between
Canada and EU will also not benefit UK if Brexit happens.

12. Impact on Society
 Being in European Union means lower prices for UK families -
because it's cheaper to trade and there’s more choice. If UK left the
EU, the cost of imports could rise by at least £11 billion (sources:
HMRC & WTO) – leaving UK families out of pocket as prices rise.
 Independent experts estimate the benefits of being in the EU are worth
£3,000 a year to the average UK household - due to lower prices and
more jobs, trade and investment. This will be all lost if UK leave the
EU.

13. Should the UK remain a member of the EU
or leave the EU?
And I say UK should remain a member of
the EU.

14. Macro economic challenges faced EU

15. The European Union
 1951 Formation of the European Coal and Steel Community
 1957 Treaty of Rome created the European Economic Community (6
members)
 Creation of the Unified Market under the Maastricht Treaty of 1992
 1985 Passports abolished under the Schengen agreement
 Creation of the Euro in 1999

16. 28 Members of the EU
 1952 Belgium, France, Germany, Italy, Luxembourg,
Netherlands
 1973 Denmark, Ireland, United Kingdom
 1981 Greece
 1986 Portugal, Spain
 1995 Austria, Finland, Sweden
 2004 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Malta, Poland, Slovakia, Slovenia
 2007 Bulgaria, Romania
 2013 Croatia

18. EU dominated by Larger Countries

19. Challenges
 Addressing the Causes of Sluggish Growth
 Managing the Euro Zone debt crisis
 Reducing youth unemployment levels
 Increasing global competitiveness of lesscompetitive regions
 Preventing potential departures from EU or Euro Zone
 Grexit
 Brexit
 Coping with the Rise of Populism, Nationalism, and Racism

20. Unemployment in Europe

21. Causes of Sluggish Growth
 Major contraction following the financial crisis of 2007-8
 Major increases in deficit spending financed by public debt to
maintain pre-crisis levels of growth and employment
 Increased debt leads to increased interest rates in weaker
economies
 Adoption of austerity policies to deal with budget shortfalls
 Delayed restructuring of sectors that continue to drag down the
overall economy

22. Interest Rate Spreads in EU Bonds

23. A Single Currency (Euro) without
an Integrated Monetary Policy
 Considered by many economists to be a key flaw in the
adoption of the Euro by the Euro Zone countries
 Key difficulty is the inability to use currency exchange
rates to adjust for changes in competitiveness over time
 The main beneficiaries of the system have been countries
like Germany and Belgium that have experienced increases
in international competitiveness
 Other countries have tried to provide the same social
guarantees as Northern Europe without the underlying
economic strength

24. Government Debt

25. Austerity Policies
 Reduced spending
 Health, education, and welfare
 Scaled back pensions
 Increased taxes
 Higher VAT
 Wealth taxes
 Labor Market Reforms (wage reductions)

26. Changes in Wage Rates

27. Budget Deficit in Greece

28. Crisis in Greece
 23 April 2010 EU 45 Billion Euro bailout loan to Greece
 Greek bond rating slashed to “junk” status
 1 May 2010 Government announces austerity measures
 October 2011 Second bailout loan from EU of 130 Billion Euros
 Papandreou government falls in November 2011
 Interim government adopts new austerity measures
 Late 2014 new Syriza-led government under Prime Minister
Alexis Tzipras and Yanis Varoufakis as Finance Minister
 July 2015 referendum rejecting new austerity measures fails,
Varoufakis resigns

29. Impact of Austerity Policies on
Greece

30. EU Angry Birds

31. The PIIGS

32. Grexit or Brexit (or both)?

33. Brexit: For and Against
Boris Johnson David Cameron
Jeremy CorbynLabour Party
Both Tories

34. Public Opinion on Brexit

35. Brexit Referendum: June 23

36. The European Migration Crisis
 Began in 2015
 Rising numbers seeking asylum: espec. Syrians, Afghanis, and
Iraqis
 Largest number of asylum application in Germany but large
numbers of asylum seekers in Greece and Turkey
 Turkey has 2 million Syrian refugees now
 EU-Turkey deal in March 2016 to send Greek asylum seekers to
Turkey in exchange for a big aid package and accelerated
negotiations for membership in the EU

37. Migration Routes

38. Rise of Rightwing Euroskeptic
Parties

39. Conclusion
 EU still recovering from the financial crisis
 Growing inequality between rich and poor countries and between
young and old workers
 Threat of EU debt defaults and exits is affecting the global economy
 The Syrian migration issue is further dividing the countries of the
region
 The Obama administration has lobbied for keeping the EU intact and
generally opposes the rise of rightwing forces
 How do you think U.S. interests should be defined?