Dr Ashwani Mahajan
British voters have given a big setback to European Union by voting in favour of exit from the union. This is being termed as ‘Brexit’; that is, exit of Britain from European Union. It is notable that Britain has been the largest economy of the European Union. With this ‘Brexit’ referendum, Britain has become the first country to exit from the European Union.
With European Union coming into existence and ultimately 28 European nations joining the Union, all walls between nations were demolished, while maintaining nationality of the respective nations. Whole Europe turned into a single market and same rules and regulations were implemented in all countries.
In ‘Shengen Area’, with 9 nations being part of it, even passport requirements were done away with. In ‘Euro Zone’ with 19 member nations participating, one new currency ‘Euro’ came into existence and their respective currencies ceased to exist. It is important that Britain was not member of either of these groups.
According to the rules of the European Union, free movement of persons, goods and capital was ensured between the member nations. Same economic policies including trade, agriculture, regional development policies were being implemented throughout the European Union.
Economic Arguments Favouring Continuation
It is notable that before Brexit, total GDP of European union was 24 percent of world GDP; and Human Development Index in 26 (out of total 28) member nations of EU was categorized as ‘high’. EU’s share in total world trade has been 16 percent. Therefore, it was argued that due to free movement of goods, capital and persons, continuation in EU has been helping these economies to grow and maintain good living.
Extent of Britain’s relation with EU is depicted by the fact that out of total trade of Britain, 52 percent has been with EU. This is also said that this huge trade, helps creating jobs in UK. Britain’s huge financial services market also depends on European Union. As per a report of UK’s Government, huge size of UK’s market has been due to single market of EU. Therefore, those who favoured Britain’s continuation in EU, argued that for it would be good for its strength and well being.
Thinking Then and Now
Though Britain joined EU in 1973; during 1974, general elections, it was promised to hold referendum on the issue. Accordingly, referendum was carried out in 1975, in which 67 percent of the voters, favoured EU. Now, the question is what changed in the past 4 decades that favorites of EU have shrunk to merely 48 percent.
Another thing which needs to be kept in mind is that, the trend in voting for ‘yes’ and ‘no’ to EU was not uniform in all regions of Britain. Out of 12 regions, 9 said ‘no’ to EU; however 3 said ‘yes’ too. These 3 regions were Scotland, Ireland and London. Indications are that people in different age groups also voted differently, and whereas youth favoured EU, while aged people voted against it.
How ‘Yes’ was Defeated?
Economic analysis have repeatedly been saying that after exit from EU, Britain will incur heavy losses, as losing on trade and business, which may cause loss of not only employment, it may also lead to erosion of economic clout of Britain.
It is notable that despite, the fact that there was no dearth of economic argument in favour of continuation with EU, there was no consensus, not only amongst different political parties, but even within those political parties. Though Prime Minister David Cameron was in favour of EU ‘personally’, all his party colleagues didn’t share his view point. A new political party UK Independence Party has also been vehemently opposing continuation in EU. Result of referendum shows that Britons have rejected the economic argument in favour of continuation with EU.
Those who were favouring ‘no’, argued that though 52 percent of British trade is with EU, its trade was no less before EU. On the contrary, Britain has to shed nearly 19 billion to maintain bureaucracy and other institutions of European Union. If it comes out of the Union, this huge sum could be saved. Apart from this Britain is incurring huge losses, both economic and other, while bringing uniformity in legal framework throughout EU.
Those who favoured ‘no’ rejected the argument that EU may raise tariffs and therefore Britain may lose a big chunk of trade. Looking at the present global trading rules and dependence of EU on trade with Britain, EU may not be able to raise tariffs. Apart from this Britain has good scope to raise trade with BRICS (Brazil, Russia, India, China and South Africa) nations and other emerging economies of the world.
Immigrant Issue
After the ‘Brexit’ vote, there is a general belief that Britons have given preference to refugee issue over the economic arguments in favour of EU. Voters felt that the benefits, which could accrue from EU, are much less then the losses it would incur from other factors. Today, whole of Europe has been going through the menace of refugee and immigrants’ problems. East European people have been entering different countries of Europe in search of employment. Rules of European Union have been encouraging immigration, brunt of which is borne by the Britons. Nearly 3.5 lakh East European people have so far come to Britain, impacting employment and wages of British youth adversely.
Global recession in the last one decade has also changed the mindset of British people. Increasing miseries of Greece, Spain, Portugal, Italy etc. have also affected their thinking. Though, British Government has tried to maintain social security; austerity measure, adopted in wake of depleting exchequer, make elderly people believe that membership of European Union has caused hardships to the Britons. Though rising proportion of elderly people has also been behind rising cost of social security, however the same population with negative approach towards EU perhaps has also tilted the results in favour of ‘Brexit’.
We also need to understand that Europeans are always resolute about their respective nationalities; and EU has been compromising their national identity. Perhaps, precedence given to immigrant issue over economic issues in Brexit, indicates towards this mindset.
(The author is Associate Professor, PGDAV College, University of Delhi)
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