Brexit (Part - 1)

Who coined this term?

‘Brexit’ as a term was coined by Peter Wilding.

In a famous quote he said “Unless a clear view is pushed that Britain must lead in Europe at the very least to achieve the completion of the single market then the portmanteau for Greek euro exit might be followed by another sad word, Brexit.”

What does this mean?

Brexit is an abbreviation for "British exit," referring to the U.K.'s decision in a June 23, 2016 referendum to leave the European Union (EU). It is an abbreviation similar to “Grexit” a lesser known term that was used for many years to refer to the possibility of Greece leaving the Eurozone. Brexit refers to the possibility of Britain withdrawing from the European Union (EU). 

What led to this?

Brexit campaigners used worries about immigration to create a populist backlash against Europe’s political elite, overcoming concerns about the fallout from Brexit on trade and the U.K. economy. They argued that the EU is morphing into a super-state that increasingly impinges on national sovereignty. Britain has global clout without the bloc, they said, and can negotiate better trade treaties on its own. Years of frustration led to this referendum and all of this can be summarized into three bullet points which are:

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Economy - Opponents of the EU argued that it is a dysfunctional economic entity. The EU failed to address the economic problems that had been developing since 2008 for example, 20% unemployment in southern Europe. The difference between the lives of southern Europeans and Germans—who enjoy 4.2% unemployment—is profound.

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  Sovereignty- The second reason for Brexit is the rise of nationalism across the world.

There’s a growing distrust of multinational financial, trade, and defense organizations created after World War II. The EU, the IMF, and NATO are good examples of this. Many who oppose the EU believe these institutions no longer serve a purpose. Not only that, these organizations take control away from individual nations. Mistrust and fear of losing control made Brexit a reasonable solution to them.

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Political Elitism- Finally, the political leadership of Britain faced a profound loss. The “leave” voters rejected both the Conservative and Labour parties. Both parties had endorsed remaining with the EU and saw many of their members go into opposition on the issue.

Ultimately, it was a three-way struggle. Two established parties wanted to remain in the EU, and a third faction, drawn from both parties, opposed it. People in this third group saw both of the establishment parties as hostile to their interests.

The Social, Political and Economic impact of Brexit on the EU and Britain

Great Britain’s withdrawal from the European Union would not only change the internal political climate, but it could have important political repercussions within the EU and also on its relations with other European Community’s countries.

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  Social Impact:  This initial analysis suggests that the Brexit vote reveals wider and deeper societal tensions along the lines of age, class, income, and education. By providing an account of the background and events of the referendum it asserts that the vote was a case study in populist right-wing Eurosceptic discourse, but it also reveals strong elements of English nationalism in parts of British society.

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Political Impact on the United Kingdom- The referendum of United Kingdom’s membership of the European Union was one of the major promises of the Conservative Party in the UK’s general parliamentary elections in 2015, in which they won. On June 23, 2016, the British people voted in favour of Brexit with a narrow result of 51.9% to 48.1%. England had the highest percentage of Brexit voters, also the Wales with 52.5%, while Scotland was the country with the highest percentage of anti-Brexit voters, than the Northern Ireland with 55.8%.The risks of Brexit are very serious as they may result with the dissolution of the United Kingdom, a union that was created more than 300 years ago. Based on the results of the referendum, Scotland and Northern Ireland voted against leaving the EU, and the most dissatisfaction with Brexit were in Scotland. The results of the June 23 referendum highlighted a hypothesis that perhaps the UK might be dissolved in the future and that maybe in five years there will no longer be a United Kingdom. Scotland will be independent and part of EU.

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Political impact on the European Union - The European Union is described as sui generis, or ‘unique’ in its own right because, unlike the United Nations and other international governmental organisations, it can actually be said to exercise a degree of sovereignty over its members via law-making powers in certain areas that its members agreed to relocate to the supranational level. In Europe there is a rising tide of discontent with the growing power of the EU and a desire in some political circles to weaken, or even dissolve, the organisation so that more of the power returns to the states. The European integration project is in poly-crisis mode: the financial crisis, the debt crisis, the economic crisis, the Greek crisis, the populism crisis, the productivity crisis, the terrorism crisis, the refugee crisis and the democratic deficit crisis. But Brexit is a different type of crisis. Brexit raises fundamental questions about the integration project. After the Brexit referendum, important elections were held in the main EU countries, in the Netherlands, France and Germany, characteristics of which were the Eurosceptic and anti-immigration views of some candidates who received extraordinary support from their citizens. Increase of Eurosceptic views is contributing to the frustrations of the EU member countries citizens towards its institutions regarding economic management and the immigration issues. The British Brexit vote is perceived as a vote against immigration

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Economic impact - A large number of economic studies have now been produced which attempt to quantify the likely longer-term impact of Brexit on UK’s economic output. These studies focus on estimating how the level of UK output in around the year 2030 is likely to compare, post-Brexit, to the level of output that would have been produced in that year if the UK had remained a member of the EU.

• JOBS- To the extent that there is a loss of GDP, it will also, in macroeconomic terms, mean a lower level of employment in the UK economy. Demand from other EU countries constitutes around 12% of final demand for UK goods and services and this translates into around 3.3 million jobs.
• EU BUDGET- Based on the 2014 data most often quoted, the saving would be around £280 million per week, not the £350 million so often claimed, because what the UK ‘sends to Brussels’ is an amount from which the UK rebate has already been deducted.
• POST‐BREXIT TRADE REGIME—POSSIBLE SCENARIOS- Once the UK is outside the EU, it will have its own trade policies. Depending on which framework the UK chooses, its new relations with the EU can be quite different. Trade policy is often entwined with a country's domestic policy.·       UK re-joins European Free Trade Association- By joining EFTA and opting for membership in the EEA like Norway's status, the UK would be eligible to participate in the Single Market. In this case, the UK can have access to the EU's 53 external free trade agreements (FTAs)
•  UK seeks a customs union with the EU- In this case, the UK would retain full or partial access to the EU market. It would not be bound by the EU's principle of free movement of people and its other regulations. Furthermore, the UK would be able to conduct its own trade policies towards other countries.
• UK adopts the WTO rules and chooses no separate deal with the EU- In this case, the UK's trade with the EU would be governed by the WTO's “most‐favoured‐nation” rules. Thus, Britain would face the EU's common external commitments on services. Without them, it cannot even be guaranteed to trade securely under the WTO rules.