Brexit

Introduction

Brexit is a word which has been formed from the merger of two words- Britain and exit that
refers to the exit of UK from the European Union.

Two terms- "Hard Brexit" and "Soft Brexit" have been much in use. These terms mainly refer
to the closeness of UK's relationship with the European Union post-Brexit.

Hard Brexit refers to the UK refuse to compromise on issues like free movement of people
so that EU could be maintained as a single market.

Soft Brexit means that UK could retain membership of EU as a single market for goods and
services and allows free movement of people to some extent.
Reasons for Brexit

People who are supporting Brexit base their support on factors like the global
competitiveness of British businesses and European Debt crisis.
Immigration - People are also concerned about rapid immigration to the UK. They cite
sovereignty and democracy, and they want that the UK will control its borders and there
should be some restriction on the number of people coming there to live or work.
Sovereignty- Another reason for Brexit is the rise of nationalism across the world.
Theres a growing distrust of multinational financial, trade, and defence organizations
created after World War II. Opponents of EU believe that these organizations take
control away from individual nations.
Overall Impact

Pound slumped 15% lower against the dollar and 10% against euro.
Predictions of downfall in GDP hasn't been proved very accurate. UK economy has
grown by 1.8% in 2016 that has been second after Germany's 1.9% among world G7
leading industrialised nations.
Inflation has increased to 2.3% in February which is highest in three and half years,
but unemployment has fallen to 4.8% which is lowest among 11 years.
Annual house price increases have fallen from 9.4% in June to 7.4% in December.
Britain can remain well integrated with Europe is to model itself on Norway or
perhaps Switzerland, two countries that are not part of the E.U. but maintain free
trade within the bloc.
Decline in business confidence and a rise in uncertainty, paired with limited
responses by central banks, makes a recession a major risk in Britain and in the rest
of Europe and the United States.

Impact on Brexit on Indian Economy

Positive implications

Plunge in the British pound will make study and travel in the UK less expensive
especially for Indian students.
Falling currency also helps Indian companies as well as individuals to go for less
expensive real estate options which are otherwise very expensive
 Brexit will compel the UK to seek more robust trade relationship with India. As India
is one of the highest growing GDPs in the world, UK will try to enter into a trade
agreement with India.
Due to political and financial uncertainty across the European Union, Indian stock
market has become an attractive destination for foreign investment
Due to Brexit, there will be changes in immigration policy that would favour high
skilled workers from India. Britain might face a dearth of high-skilled EU workers if
the movement of people from EU is stopped. This situation will support Indian
workers.

Negative implications

India owned businesses in the UK likely to be hurt

800- No of Indian owned businesses in UK
Lot of people have been employed in these businesses
Biggest challenge would be to find another European city as their entry point
Earnings of IT companies likely to be affected.
6.6-14%- Revenue of top Indian IT companies to their UK businesses
3-8% hit would be taken by companies in their earnings due to Brexit
Remittances to India will suffer because of depreciation of British pound.
Remittances from UK to India in 2015-16 is $ 3.9 billion
Britain is one of the major market for Indian exports like textiles, clothing,
machinery and jewellery. This export rate might decrease after Brexit