REASONS FOR THE CLAMOR FOR BREXIT:ECONOMIC REASONS:The primary argument was that Britainloses more than what it gains, economically. The first issue was about themembership fees of around 340 pounds to be paid per year per household. The UKbelieved that they charge so much with too less in return. The other issue wasthat it was said that the policies of the European Union did not supportcompetitiveness which would be beneficial for the British economy. Followingthe Sovereign Debt Crisis, Fiscal compact was introduced and greater controlwas established on national budgets by the EU.

This made Britain uncomfortable.London was an important Financial Hub but the Tobin tax which was proposed byGermany to impose taxes on the financial transactions were not favorable toLondon.SOVEREIGNTY ISSUE:Although EU is a transformative idea, itleads to the weakening of national sovereignty.

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EU would give on greaterdecision-making powers to the European Parliament which would lead to theweakening of the authority of the British Parliament.IMMIGRATION ISSUES:One of the main principles of EU is freemovement which means a citizen of EU nation need not require a visa to live inanother EU country. Most of the British legal migrants come from the EU. Thereis a feeling that this might have a negative impact on UK born workers as morethan three fourth of the jobs were taken up by the EU migrants.

EU put up anobligation to accommodate more refugees during multiple crisis in Middle Eastand Africa. UK believed that these immigrants would pose a threat to nationalsecurity.IMPACTS OF BREXITOn UKNearly 45% of the British exports are dependingon the EU. The largest market for UK’s exports is EU and it is also a sourcefor EU’s imports. Excluding Germany and Sweden, UK has a positive balance oftrade with all other countries of EU.

After Brexit, trading with EU marketswould be suffer for UK. Though UK has emerged as major financial hub, postBrexit it will face a hit. This is the major reason behind the soaring down ofLondon exchangeOn GeopoliticalThe future of Scotland and NorthernIreland remains unanswered, because their desire to stay with UK wasprecondition on UK remaining a part of EU. In an interconnected world, being a part of multilateralorganizations is a key to influence policy matters. No country can do it alonein a rapidly changing international environment. UK will lose some ofits power for voting Brexit.On EUEU whose origin lied in the centuries ofwar that ravaged Europe was a transformative idea in international relations,enmeshing countries in cooperation. With the exit ok UK, there is a possibilityof other countries such as Greece, etc to follow suit.

Thus the idea of EUstands challenged. EU is currentlyhandling various crises and a financial crisis is one among the important. Itis difficult for the both EU and British to face those crises individually.

On IndiaCons Theimmediate impact of Brexit is an increase in risk aversion when it comes toinvesting. This will affect the FPI outflows from foreign portfolio investors.Rupee value may depreciate because of the double effect of foreign fund outflowand dollar rise.Pros While on the positive side, Brexit has driven away fears of aUS Fed rate hike and could lead to lower commodity prices. Brexit has become anew worry for commodity producers, coming on top of concerns about China’sslowing economic growth.

If news flows from both these sources continue tocloud the outlook for commodities, then prices may turn weak. Brexit’s impactwill then be a fateful one for commodity producers and producing nationsĀ 


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