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Brexit-The Exit from EU
1. BREXIT(BREXIT ISANABBREVIATION OF "BRITISH EXIT",
WHICH REFERS TO THE JUNE 23, 2016 REFERENDUM BY
BRITISH VOTERS TO EXITTHE EUROPEAN UNION.
Prepared by :Virendra Singh
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2. Contents
Why was the EU created?
When was the EU formed?
Which countries are in the EU?
How big is the European Union's economy?
What is the purpose of the EU?
What impact would an exit have on Britain’s economy?
Impact on Indian economy
Brexit-The Morning After
**EU: European Union
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3. Why was the EU created?
• After the Second World War there was a new movement to create unity
between Germany and France, which would ultimately lay the foundations
for the European Union four decades later.
When was the EU formed?
• The EU can trace its origins from the European Coal and Steel Community
(ECSC) and the European Economic Community (EEC), formed in 1951
and 1958 respectively by the Inner Six countries of Belgium, France, West
Germany, Italy, Luxembourg and the Netherlands
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4. Which countries are in the EU?
• The European Union is an economic and political union of 28 countries. Each
of the countries within the Union are independent but they agree to trade
under the agreements made between the nations.
• The 28 countries within the European Union include Austria, Belgium,
Bulgaria, Croatia, the Republic of Cyprus, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia,
Slovenia, Spain, Sweden and the United Kingdom.
• The European Economic Area (EEA) includes EU countries and also Iceland, Liechtenstein and Norway. It allows them to be
part of the EU’s single market.
• Switzerland is neither an EU or EEA member but is part of the single market - this means Swiss nationals have the same
rights to live and work in the UK as other EEA nationals.
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5. How big is the European Union's economy?
• The economy of the EU generates a GDP (nominal) of around
€14.303 trillion((US$18.5 trillion in 2014) according to the
International Monetary Fund.
• it makes the largest or second largest economy in the world
respectively if treated as the economy of a single country
depending on the source used.
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6. What is the purpose of the EU?
• The European Union operates a single market which allows free movement of
goods, capital, services and people between member states.
• European Union are to promote greater social, political and economic
harmony among the nations of Western Europe.
• Nations whose economies are interdependent are less likely to engage in
conflict.
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7. What impact would an exit have on Britain’s economy?
1. Brexit will make Britain poorer. It’s hard to put a number on the
trade effects of leaving the EU, but it will be substantial.
2. Higher inflation A lower pound means that imports would become
more expensive.
3. Interest rates might rise If a fall in the pound threatens to push
prices up faster than this, then the Banks will raise interest rates.
4. Trade and manufacturing:EU is the destination for about half of
all British goods exports , additional cost in form of taxes & tariffs
5. Consumption and property market –it impacts on the
property market overall and on aggregate consumption in the
economy will be limited.
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8. What impact would an exit have on Britain’s economy?
6.International Influence: it loses the benefit from being able to influence
both in & through the EU , Impacting on economic & foreign policy interest
7.Foriegn direct investment, immigration & economic regulations , it hard
to quantify the changes on trade but it will further declines the income.
Conclusion :The economic consequences for the UK leaving the EU are complex. But
reduced integration with EU countries is likely to cost the UK economy far more than is gained
from lower contributions to the EU budget. Static losses due to lower trade with the EU would
reduce UK GDP by between 1.1% in an optimistic scenario and 3.1% in a pessimistic one. The
losses due to lower FDI, less skilled immigration, and the dynamic consequences of reduced
trade could also be substantial.
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9. What impact would an exit have on Indian economy?
1.Market (Short term impact):Sensex & Nifty went down , oil prices plunged
more than 6 % in Asia .
2.Currency :British pound plunged to a 31 year low & INR fell by .89 paisa
against dollar.
3. Trade :Indian trade with Britain was worth $14.02 billion in 2015-16 , trade
could take a hit if the British economy slows down .
4.Investment :Foreign funds might move out of the riskier markets like India .
5.Companies :Indian companies like Airtel, HCL & Apollo tyres would hit there
earnings & might lead to few pullouts .
6.GDP :We have lowered our aggregate 2016 GDP growth forecast for Asia
excluding Japan from 5.9% to 5.6% and India's 2016 GDP growth forecast to
7.3% from 7.6%
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10. Brexit –The MorningAfter
• Brexit has revealed deep divisions across Europe between political classes & generations
;between centralists & the regions .
• The sterling (pound) & the Euro are freefall ,pound suffering its biggest fall for any currency in
40 years .
• UK Prime Minister announced his resignation.
• The labour leader Jeremy Corbin now looks set to be ousted .
• Scottish First Minister Nicola Sturgeon is set to hold a second referendum.
• London Mayor , Sadiq Khan ,demanding the UK must remain part of the single market .
• Nationalist Politicians in France ,Italy & the Netherlands are calling for their countries to leave
the EU .
• Assets managers have renewed their warning that UK jobs will move to European Fund
Centre (Dublin & Luxembourg )
• Spain is Now demanding Gibraltar back (Gibraltar is a British Overseas Territory located on the southern end of the
Iberian peninsula)
(Total Chaos !!!!!!!!!!)