How brexit may impact european union & the world

1. How Brexit may Impact
European Union & the World

2. On 23rd June, Britain will vote whether it wants to remain a part of the European
Union (EU), or leave. A vote to leave the EU would start a long and complicated
process that would result in a fundamental change in the UK's relationship with
other members of the EU. There are pros and cons for both parties. Increasing
restrictions and introduction of political borders increases the cost of trade and
services. Financial Times estimates the GDP hit to be at 2-7% with most of the
losses front-loaded if Britain leaves the EU and fails to strike a deal or reverts into
protectionism.
On the other hand, as per an independent think-tank Open Europe, if the UK stays
with the EU and manages to strike liberal trade agreements with the members, the
benefits would be 1.6% of the GDP by 2030. The EU remains the largest market for
Britain's exports, constituting 40-45% of its exports. The UK's primary goal is likely
to be to retain access to the EU's internal market but it will find it difficult to gain
liberal trade terms from the EU if it chooses to exit the EU. Economic factors will
hurt both the parties. Britain is a strong member of the EU and losing Britain will
weaken the EU, both economically and politically .

3. Contd…
A Brexit could trigger capital flight from Britain. It could have a profound
effect on London's real estate market, among the most vibrant in the world.
Stricter regulations will curb capital flows both from within the EU and
outside it (read China & Russia). Brexit will only compound inflation and the
sterling's worries.
Given London's status as a global nerve centre outside New York, BREXIT
could weaken the EU as far as it share in world trade and commerce is
concerned. For Britain, separation from the EU will mean stricter
immigration laws. Pertinent to note that Britain has benefitted from the
influx of skilled immigrants. The number of EU workers in Britain is now
estimated at roughly 2.15 million.As per the OECD, immigration accounts for
half of the UK's growth since 2005 and immigrants have filed 2.2 million jobs
since that period. Stricter immigration laws could make it difficult for EU
skilled workers to work in UK.

4. Contd…
Likely beneficiaries of Brexit:
In my view, dollar assets will emerge as the biggest beneficiaries of
Brexit. Events like these are usually followed by periods of volatility and
economic pain. Given the current state of global economy , investors
will be quick to rush to safer havens. Few asset classes can cope with
capital flows of this magnitude. I believe that capital will flee to near-
dated US Treasuries in the short term and will ultimately find its way
into other dollar assets in the medium to longer term.

5. Contd…
Impact on India:
As far as India is concerned, in the near term it will heighten global
volatility thereby impacting capital flows and in medium term we will
most likely be impacted through currency exchange. India has a
substantial trading corridor with EU.Any material depreciation of the
EuroPound could lead to increased headaches for India in a sluggish
export environment.Indian businesses have a material presence in both
the UK & Europe.As per The Guardian, there are more than 800 Indian-
owned businesses in the UK, with more than 110,000 employees.
Besides, Brexit, could also endanger the flow of investment and
personnel by diminishing Britain's role in providing access to Europe.

6. Contd…
To conclude:
Brexit, if it happens, will have implications; UK Real estate prices may correct (on
account of thinner capital flows from EU), inflation will climb on expensive imports,
London's financial centre status may get threatened if money flow and settlements
are hampered. Goldman Sachs estimates 15-20% drop in the sterling as a response
to Brexit. The long-term economic impact of Brexit is hard to discern, but the short
term disruption while the UK negotiates and renegotiates is only likely to be bad
news for both sterling and Euro assets.
It is difficult to gauge the precise medium to long-term economic impact of Brexit
on both the parties concerned. However, the outcome of Brexit in my view is the
biggest macro risk affecting fund managers and investors bigger than oil price or
even the Fed rate hike. Having said that, at this moment, it is almost impossible to
predict the outcome. We will have to wait till June 23rd to know the future of EU
and Britain.

7. For Details and Appointment contact:-
Parveen Kumar Chadha… THINK TANK
(Founder and C.E.O of Saxbee Consultants & Other-Mother
marketingandcommunicationconsultants.com)
Email :-saxbeeconsultants@gmail.com
Mobile No. +91-9818308353
Address:-First Floor G-20(A), Kirti Nagar, New Delhi India Postal Code-110015