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Globalisation?: What Is Brexit?

Brexit refers to the June 2016 referendum where British citizens voted to exit the European Union. The referendum caused global market turmoil, including a sharp drop in the value of the British pound. Brexit occurred due to several factors, including concerns about immigration, loss of British identity and independence, and a desire for change from younger voters who have not benefited as much from the current political system as older generations. While Brexit marks a retreat from globalization, it does not mean the end of globalization overall. It remains unclear exactly how the UK will separate from the EU and whether it will pull out of all trade agreements or have a partial separation focused on issues like immigration.

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157 views3 pages

Globalisation?: What Is Brexit?

Brexit refers to the June 2016 referendum where British citizens voted to exit the European Union. The referendum caused global market turmoil, including a sharp drop in the value of the British pound. Brexit occurred due to several factors, including concerns about immigration, loss of British identity and independence, and a desire for change from younger voters who have not benefited as much from the current political system as older generations. While Brexit marks a retreat from globalization, it does not mean the end of globalization overall. It remains unclear exactly how the UK will separate from the EU and whether it will pull out of all trade agreements or have a partial separation focused on issues like immigration.

Uploaded by

Aman Varshney
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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What is Brexit?

Brexit is an abbreviation for "British exit," which refers to the June 23, 2016, referendum
whereby British citizens voted to exit the European Union. The referendum roiled global
markets, including currencies, causing the British pound to fall to its lowest level in decades.
It has been supposedly derived from the term Grexit, which was exit of Greece from EU.

Globalisation?
Globalization is much more than simply the integration of different economic systems. It is,
rather, the merging of social and political value systems, as well as economies, although
admittedly, proponents of globalization have tended to focus on the economic aspects alone.
It is not a recent phenomenon and has been there for hundreds of years. In modern world its
pace has increased drastically, especially after the Information Technology revolution.

Probable Reasons for Brexit?

Immigration- free labour movement Since the EU was enlarged to include lower
wage areas in Eastern Europe the inevitable happened, the British were now
competing in their own labor market with people who were happy to accept lower
wages, with an increase in the supply of labor rates fell. This especially hit blue collar
workers and those in the trades.
Immigration Cultural. The huge influx of people from Europe over the last 10
years has changed the cultural dynamic of the country. This can be viewed as either
positive or negative depending on your perspective but either way this happened or
many people were not happy with this. The recent Syrian refugee crisis has not
helped the situation, Europes borders are under threat constantly and the Channel
Tunnel is a continued source of attempted illegal immigration. Open borders were an
issue for Britain at the outset of the EU experiment and to a great extent the worries
have proved correct.
Loss of British Identity & Independence: Britain had never really identified itself
with Europe, it had its own Empire and the growing cultural and institutional impact
of Europe did not sit well with the British people. Brussels was increasingly seen as
an ivory tower which was bureaucratic and unaccountable. Britain wants its
sovereignty back and to steer its own cultural path.
Generational Change: Millennial do not feel that they have benefited from the
established political setup. The present setup was good for the baby boomer
generation - They were able to get good middle class jobs with good pay and were
able to buy a nice house, get a good pension and save money. The new generation
cannot afford housing, are moving from gig to gig and are the first generation after
many years who are NOT guaranteed to be wealthier than their parents. These
younger voters want change and do not share fears of socialism or any memory of a
Europe in conflict which can only be kept together by political and economic union.

Is Brexit the end of globalisation?


No it is not. It is simply an attempt by a nation to gain independence from a supranational
organisation because it doesnt agree with the policies approved by that organisation.
People who voted for the demerger were mostly under the impression that their country is
losing much more compared to what they were receiving by being a part of this organisation.

It is still unclear how the UK will split from the European Union. Whether Britain will be
pulling out of all the free trade agreements that led to emergence of EU or will it be a partial
demerger where only the thorny issues such as immigration, will be addressed.
But, this Brexit vote is already a setback for advocates of free trade. Viewed in economic
terms, the Brexit marks the first tangible retreat from globalization since World War II. Fears
are rising of Frexit, the exit of France from the European Union. France was once the very
core of European unity. But the French voted down the proposed EU constitution in 2005. A
recent Pew poll found that 61% of French voters had an unfavourable view of the EU,
against 48% in the UK. In Italy, the xenophobic Northern League and populist Five Star
Movement have got a shot in the arm. Right-wing nationalism is already mainstream in
Hungary and Austria. Angela Merkel, once cheered by German.
But at the same time many multi-lateral agreements are being worked out which goes over
and above the mandate of WTO. Some examples are:

TTIP
TPP
RCEP

Far more important will be the political repercussions. The Scots voted massively to remain
in the EU, and the Scottish Nationalist Party may want a new referendum to split from the
UK. Donald Trump's presidential campaign will be boosted by the very jingoist, racist
xenophobia that fuelled Brexit. Prospects of a Trump presidential victory can hit markets
much harder than Brexit.

Effect of Brexit on Indian Corporates?


Indian companies have traditionally had substantial operations in the UK. Currently over 800
of them function in that country, employing more than 100,000 people in all. The UK has
also been an entry-point for Indian businesses to the rest of Europe. The overall impact
depends on how the UK moves after the exit in the long run with respect to free trade
agreements with EU countries or WTO-based arrangements.
Two potential casualties, if a Brexit were to happen, could be manufacturing companies that
have set up base in the UK while having a substantial exposure to mainland Europe, and
firms in the services sector, especially information technology firms.
Indias Tata Group, which owns 19 companies in the U.K. For e.g. The U.K.s divorce with
the European Union could affect Jaguar Land Rover, the luxury car-maker Tata Motors
acquired from Ford Motor Co. in 2008. Europe accounted for nearly a quarter of Jaguars
sales in 2015 and is also a large supplier of automotive components. Tata Motors makes for
80% of Tata Groups revenue., .
In the 2016 financial year, India-UK bilateral trade was worth $14.02 billion. India exported
goods and services worth $8.83 billion while imports from the UK were at $5.19 billion. In
the last five years, the trade has been more or less stable. Britains exit from the EU
probably wont have any significant impact on this, said Biswajit Dhar, a professor of
economics at the Jawaharlal Nehru University (JNU).
Yet, there are arguments that getting out of the EU would enable Britain to forge new trade
pacts with India and other countries. For e.g. UKs investment and expertise in cyber

security, its military technology are still competitive, and can become the point of
convergence under Make in India.

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