Brexit and its logic

The U.K. appears destined to leave the European Union. It is difficult to predict the close call of the forthcoming Referendum, scheduled for 23rd June 2016 in the U.K. Apparently, however, the “Brexit – Leavers'” Campaign is gathering steam and votes necessary to give the “Stayers'” a run for their money.

May be the European Union is economically stagnant. May be it has a porous territory which allows thousands of refugees from the Middle East to stream in, uncontrolled by borders. May be the European Union is going down the drain. It has inflation and serious unemployment problems. May be the Euro is getting into a big mess. And so on, and so forth.

But, the E.U. remains as the largest trading partner of the U.S. Will the U.S. sign a trade treaty with the “separated” U.K. quickly ? Not really, the U.S. President just said that the U.K. will slide back in the queue, and the E.U. will be at the top of the league as far as the U.S. trade is concerned.

The U.K. will surely lose its advantages of trade with the E.U. and most probably will not be treated kindly if the U.K. electorate chooses the Brexit to exit the E.U. It is too much to expect the passionate Europeans to continue supporting British trade when their accommodations to retain the U.K. have been so handily rebuffed by the U.K. So, the U.K. should not dream about getting “favoured nation” status either by the E.U. or the U.S. While it is no external country’s charter to influence the British electorate on the 23rd June referendum, it is only appropriate that facts are communicated without bias so that every citizen of the U.K. understands the real implications of a Brexit. It is not that the Prime Minister David Cameron has not achieved some compromise with the E.U. on his demands for reforms. He has achieved some success, and that needs to be recognized.

Well, the U.K. is surely doing better economically as compared to the rest of the E.U., and is most likely to continue performing well in the years ahead because of its economic dynamism and free market principles. However, it will lose a few percentage points of trade with the E.U. and a few basis points of GDP growth attributable to the E.U. But, on the other hand, it will attain economic and total political independence from the E.U. and will be free to set policies without regulation or interference from the E.U. The U.K. will also be happy to take back control of its destiny from Angela Merkel, the reigning super-queen of the E.U.

While I am nobody to suggest a solution, it is apparent that Brexit is gaining credence amongst the British electorate, and it will be interesting to see the close shave between the quitters and the stayers. Whatever be the result, the U.K. is dynamic enough to survive, and that’s for sure.


Vijay Srinivasan

24th April 2016



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