What is Brexit

Brexit is an abbreviation for Britain Exit

from the European Union, as a result of the
referendum held on June 23, 2016
The referendum turnout was 71.8%, with
more than 30 million people voting.
51.9% of the people of Britain voted for the
exit
Government intends to invoke Article 50 of
the Lisbon Treaty on European Union by
March 2017, which would result in official
exit by March 2019
 Formation of EU
Booming Britain economy in the 19 th century
industrial revolution etc.
After World War I & II, government
interventions and regulations slowed down
growth and competition
Germany rose from the ruins due to the
presence of a deregulated economy and
open, free trade
Formation of the European Economic
Community France, Italy, West Germany,
Luxembourg, Belgium, Netherlands
 Formation of EU
European Union was formally
established when the Maastricht Treaty
came into force on 1 November 1993.
On 1 December 2009, the Lisbon
Treaty entered into force and reformed
many aspects of the EU. In particular,
it changed the legal structure of the
European Union, merging the EU three
pillars system into a single legal entity
 The EU
The EU is a politico-economic union of 28 member
states that are located primarily in Europe.
It has seven principal decision-making bodies -
European Council, Council of the European Union,
European Parliament, European Commission, Court
of Justice of the European Union, European Central
Bank, European Court of Auditors.
Created an internal single market allowing for free
movement of capital, people, services, goods
Have common policies on trade, agriculture,
fisheries, and regional development
A monetary union composed of 19 EU member
states which use the euro currency
 Reasons for exit
Sovereignty
According to a poll, nearly half the voters
cited this as one of the biggest reasons.
People, especially from disadvantaged
backgrounds and the older generations
voted for the exit
Most people are unaware of how the EU
functions and label it to be almost anti-
democratic
 Reasons for exit
Immigration:
One third of leave voters said that
leaving offered the best chance for the
UK to regain control over immigration
and its own borders.
Economic divide in the post WWII period
led to large scale immigration. The west
had speedy recovery given the Marshall
aid and others provided by the U.S.
 The countries with maximum change
in the number of immigrants over the
past few years voted for it.
Educated people give importance to
cultural diversity too
 Reasons for exit
Lies and misleading information:
UK sends almost 120 million pounds every
week to Brussels(capital of EU).Pro- BREXIT
campaigners inflated this number to 350
million pounds and presented that to the
UK population.
Claimed that it would reduce refugees and
asylum seekers coming to Europe, but the
vote had nothing to do with immigrants
outside EU
 Referendum was called upon by the then
Prime Minister, David Cameron.
Presented it to the nation as his attempt to
resolve the issue
Saw it as an opportunity of show of strength
Expected decisive majority for Remain to
settle the EU issue and give himself the space
to implement his legacy agenda of One
Nation reforms to improve peoples life
chances.
 Brexit impact on UK
TRADE
Official trade statistics show that the European
Union is the destination for about half of all
British goods exports.
The trading links are bigger if we include the
countries that the United Kingdom trades freely
with because they have a free trade agreement
with the European Union.
These agreements mean that 63%of Britains
goods exports are linked to European Union
membership.
 Brexit impact on the UK
UK may consider remaining in the
EEA as aEuropean Free Trade
Association(EFTA) member, or
seeking to negotiate bilateral terms
more along theSwiss modelwith a
series of interdependent sectoral
agreements.Britain has not
negotiated a trade agreement since
before 1973, and the government is
looking to the private sector for
CURRENCY
The pound was worth $1.50 on 23 June. It is now
trading at around $1.30 down about 13%. Sterling
had not been at levels this low against the dollar
since the mid-1980s.
The pound has also lost ground on the euro. On 23
June the pound was worth 1.30. It is now trading at
around 1.19.
Bloomberg reported on 8 July thatthe pound had
overtaken the Argentinian Peso to become the
worlds worst performing currency in 2016.
IMMIGRATION
If Britain wanted to retain full access to the
single market, it may have to keep the free
movement of labour between the United
Kingdom and the Union.
However, policy is far more likely to change to
restrict the number of low skilled workers
entering the country and shift towards attracting
more highly skilled workers.
Overall, policy would shift to be more specifically
designed for Britains migration requirements.
PUBLIC SECTOR
The British government could save about 10bn per year on
its contributions to the European Unions budget if the
country left the bloc. This figure could be higher if either the
British rebate was to be threatened in the years ahead or
Brexit was to result in overall faster economic growth.
On the other hand, a little economic disruption and lower
migration as a result of Brexit could offset these savings. The
government might also continue to make some contributions
to the union if it wanted to preserve single market access.
It might need to compensate sectors of the economy and
specific regions that currently benefit from European Union
handouts Brexit wouldbenefit the public finances, but not to
a huge degree.
 Effect of Global Economic
changes on the Indian Economy
India is one of the most lucrative markets
for foreign investors and, hence, we attract
attention globally. So, any major change
across the globe, be it political or economic,
is bound to have an impact on India too
Britain always provided a gateway to the
European Union. Many Indian businesses
have their offices in Britain so they can
avail benefits and continue to remain a part
of the EU. But with Brexit, this benefit will
be taken away and may result in companies
relocating their business set ups to other
 Britain ranks 12th in terms of India's bilateral trade with individual
countries. It is also among just seven in 25 top countries with which India
enjoys a trade surplus.

As per data with the Commerce and Industry Ministry, India's bilateral
trade with Britain was worth $14.02 billion in 2015-16, out of which $8.83
billion was in exports and $5.19 was in imports. The trade balance thus
was a positive $3,64 billion.

This apart, the country brief of India's Ministry of External Affairs says
Britain is also the third largest investor in India after Mauritius and
Singapore, with a cumulative inward flow of $22.56 billion between April
2000 and September 2015.

Source:
http://economictimes.indiatimes.com/articleshow/52831547.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
 Sectors affected by
Brexit
Automobile, Pharma and IT industries might be
the most affected.

Leading Indian IT firms have not commented on

Brexit since there is a possibility of
renegotiations for all the ongoing projects
because of the devaluation in the value of pound.

Any negative impact on the British economy in

terms of slower growth or worse, could reduce
opportunities for Indian companies in UK.
 Revenues for Indian Pharma Companies
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Aurobindo Torrent NatCo Dr Reddy's
Europe Non-Europe
 Revenues for Indian Automobile Companies
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Motherson JLR Bharat Forge Apollo Tyres
Europe Non-Europe
 Investors moving to safe haven - gold.
Britain's decision to leave the EU has forced many to sell their
risky assets and rush towards safe haven investment option like
Gold. Gold prices in India had breached Rs 32,000 per 10-gram
level.
In the long run, Brexit will help strengthen our ties with Britain
because India's focus on innovation and entrepreneurship still
makes it an attractive destination for outsourcing and
investment.
India's economy is doing well and should use the current turmoil
as an opportunity. For the common man, with every uncertainty
there is a bigger opportunity to pick great stocks. It pays to
focus on companies in the consumer driven sector. Financial
sector companies too can surely generate great returns.
Source:http://economictimes.indiatimes.com/wealth/invest/how-brexit-will-
impact-the-indian-market/articleshow/52912741.cms
 Impact on Indian GDP
Brexit will have an impact on India's GDP growth.
"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%," said the Nomura
Report.
However, there is no need for Indian investors to
worry about this small fall in the growth rate,
because India will still be the fastest growing
major economy of the world.
The government is also taking steps to boost the
GDP growth and steps such as the recent FDI
liberalization will make it a reality.
 Effect on Education
sector/students & Travel
Britain is one of the most sought after
education destination for Indians. Before Brexit,
British universities were forced to offer
scholarships and subsidies to the citizens of the
UK and EU. Brexit frees up funds for the other
students and more Indian students might be
able to get scholarships.

Reduction in pound value will reduce travelling

cost to the UK and will make it a good travel
destination