IMPACT ON GLOBAL TRADE

WHAT IS BREXIT?• The United Kingdom (UK) intends to withdraw from the European

Union (EU), a process commonly known as Brexit, as a result of a June 2016 referendum in which 52% voted to leave the EU. • The separation process is complex, causing political and economic

changes for the UK and other countries.• The term "Brexit" is a portmanteau of the words "British" and "exit".

• What is the European Union• The European Union is a politico-economic union of 28 member

states that are located primarily in Europe.

Reasons For Brexit• Britain did not get their money back. In cash terms, Britain is the

second biggest contributor to the EU budget after Germany.• Britain could decide who comes into the country.• Britain could make their own laws again• Britain wouldn’t have to accept decisions forced on us by other

countries• Britain could set their own tax rates• Britain could have blue passports again instead red one.• Britain wouldn't have to fund EU foreign aid

BACKGROUND• The country subsequently applied to join the organization in 1963 and

again in 1967, but both applications were vetoed by the President of France, Charles de Gaulle, ostensibly because "a number of aspects of Britain's economy, from working practices to agriculture" had "made Britain incompatible with Europe“• The UK made a third application for membership, which was

successful. Under the Conservative Prime Minister Edward Heath the European Communities Act 1972 was enacted. On 1 January 1973 the United Kingdom joined the EEC

• 1975 REFERENDUM

• In 1975, the United Kingdom held a referendum on whether the UK should remain in the EEC or not.

Choice Votes %

Yes 17,378,581 67.2

No 8,470,073 32.8

Valid votes 25,848,654 99.79

Invalid or blank votes 54,540 0.21

Total votes 25,903,194 100.00

2016 REFERENDUM

• Cameron announced a referendum date of 23 June 2016 and set out the legal framework for withdrawal from the European Union in circumstances where there was a referendum majority vote to leave, citing Article 50 of the Lisbon Treaty. Cameron spoke of an intention to trigger the Article 50 process immediately following a leave vote and of the "two-year time period to negotiate the arrangements for exit.

Choice Votes %

Leave 17,410,742 51.89

Remain 16,141,241 48.11

Valid votes 33,551,983 99.92

Invalid or blank votes 25,359 0.08

Total votes 33,577,342 100.00

Registered voters and turnout 46,500,001 72.21

Global Impact • To forecast the consequences of the UK leaving the EU, assumptions about

how trade costs change following Brexit because there is a lack of clarity over the consequences of Brexit for trade costs between the UK and the EU.• There would be two scenarios: an optimistic scenario in which the increase in

trade costs between the UK and the EU is small, and; a pessimistic scenario with a larger rise in trade costs.

(i) Higher tariffs on imports;(ii) Higher non-tariff barriers to trade (arising from different regulations, border controls, etc.)(iii) The UK may not participate in future steps that the EU takes towards deeper integration and the reduction of non-tariff barriers within the EU.

Global Impact• Trading freely with EU allows UK business to grow and create jobs. Therefore

leaving EU might pull this at risk. • Small markets saying access to EU is important to their future growth, therefore

leaving the EU may suffer losses to them. Even also 70% major business also think they might suffer loss if UK leaving EU.• As per TTIP and CETA deal between US-UE and UE-Canada will not benefit UK if

they leave EU.• All EU members are worse off: Ireland suffers the largest proportional losses from

Brexit, alongside the Netherlands and Belgium. Countries that lose the most are those currently trading the most with the UK. Some countries outside the EU, such as Russia and Turkey, gain as trade is diverted towards them and away from the EU.

Impact on Currency• The Sterling Pounds is falling against all major currencies.• Down by 2% against US dollar and hit the lowest since 2009.• Dropped 1.3% lower against the Euro.

Economic Impact• One in Every ten UK jobs are linked to the trade with the EU.

Therefore Brexit might affect 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, helps small businesses in the UK grow and create jobs. This might be affected.• Impact of Brexit could lead into lower trade between EU and UK

generating complications.• It could also affect FDI, immigration and economic regulation of UK.

Impact on Society• Being in EU 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 the prices – leaving UK families out of pocket • Independent experts estimate the benefits of being in the EU are

worth pound of 3000 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.

Impact on India• This will make dollar stronger thus lead to inflation.• Negative impact on the Indian firms in UK(TATA).• It will negatively affect the markets by hike in crude oil and gold.• Scope for increased investment in India firms by foreign nations.

Conclusion• As form this discussion on Brexit and its impacts on Global terms will

lead us to the conclusion that as every coin have both side same as Brexit will give advantages to UK somewhat but as its impacts may also damage or lower the economy of UK and other countries as well who currently trading with them being in EU member.• As Britain imports more than exports and they have low resources

hence they are depended on China , Europe and India for its imports. Europe providing free trade area to Britain till now. So, Exit from EU is somehow risky for the Britain in long term.