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London Bridge is falling down
Our favourite childhood nursery rhyme, London Bridge is falling down, may just be coming true. On 24 June 2016, Britain voted to leave the European Union (EU).

Britain Exit (Brexit) has come as a shock, its after effects just taking shape in waves of change in leadership, currency fluctuations, and effects that are yet unknown to both Britain and EU. This exit comes as a first for any nation that was a part of the EU. Only time will tell whether Britain is going to fall or is going to come back stronger!

As a part of his election campaign, last year former Prime Minister David Cameron proclaimed to hold a referendum to take an opinion to understand Britain’s role and position in the EU. The Conservative party leader, who won the elections earlier with a clear majority, strongly advocated the ‘Stay,’ reiterating the benefits of UK’s partnership with the EU. On declaration of the referendum, multiple parties such as the UKIP initiated an intense ‘Brexit’ campaign. High advertising on how EU membership money is  wasted, increase in immigrants and lack of free trade were some of the cries of the opposition.


Composition of United Kingdom

The UK is divided into England (53.4 per cent leave; 46.6 per cent stay), Scotland, Wales, and Northern Ireland. And then, there is London. I say this distinctly as the voting from each of these regions, along with the ages of the voters seemed to have made a big difference to the overall voting percentage. London, known as a hub for global citizens embarking on jobs, education and tourism, has voted to remain in the UK, as has Scotland. The other parts of the country have chosen to leave. What is interesting is the skewed age group of the decision makers. Youth i.e. tomorrow’s leaders, have all decided to ‘Stay’ on account of lost opportunity, friendships and of collaborative agreement (i.e. travel opportunities) with 27 other countries. Retirees have opted to leave, the implications of which will not affect them as much as the current generation.

The day of the counting and results (51.89 per cent leave; 48.11 per cent stay; 72.21 per cent voting share) generated shock waves across the country, the first being the drastic drop in the value of Pound Sterling (a trend that has been consistent ever since the Brexit!). David Cameron, stepped down on the same day as he believed that he would not be ‘the captain of the ship’ while Britain embarked on this new journey.


Different impacts

Before, during and after Brexit, the world has been waiting with bated breath on what the consequences of Britain’s exit from the European Union would mean.  Some of the key issues that were highlighted include:

Immigration: Is this a key reason why Britain wanted to exit? With the influx of migrants from Eastern Europe and the Middle East to Germany, France and Greece, does the UK want to remain away from this? Alternatively, in the future will they curb EU immigration to the UK? The Stay campaigners strongly echoed that Britain is a centre for Indians, Europeans, Sri Lankans and Pakistanis each of whom add unique skills to the success of the British economy. The issue of immigration has been compounded by a threat to borders and security, with the Stay campaign promoting that UK is safer within the EU. This view was challenged by strong advocates of the Leave campaign who believed that without secure border security mechanism, threats to the country increased.

Trade and Economy: Stay protestors were worried that the UK would lose access to its free trade agreement with the EU. 45 per cent of exports were from the UK to EU. Changes in trade agreements would have an impact on the economy as well.  Does the Brexit mean that London, one of the world’s largest financial capitals, will lose out to other European finance capitals? With J P Morgan offshoring 5000 jobs to Luxembourg and Frankfurt (pre-Brexit) and other financial and investment firms reducing their operations in London, is Europe’s financial capital to move? This has a spiral effect on employment opportunities.

Socio-Cultural: This one is London-specific. What sets apart Britain from any other country in the globe is that it is a hot pot of culture with students and professionals from across the world accounting for the metro’s population. If London loses this status of being a cosmopolitan financial hub, what the impacts on tourism (though it has become cheaper), education... is unknown.

Each of the above is inter-linked, but no one knows yet, what the impact of the Brexit will be.

 

What does it mean for India?

 

Soon after the Brexit, RBI Governor Raghuram Rajan asked India not to panic and reassured that India is currently well-placed. Industry Minister, Nirmala Sitharaman said that the Ministry was keenly watching the outcome of the Brexit and had initiated a dialogue with the UK on a trade pact. Indian tourists are happy that they can enjoy vacation at less cost and students are more pleased that their fees have come down marginally, taking the most advantage of the fall of the Pound Sterling.

 

Looking ahead

 

Theresa May, former Home Secretary, has been elected the new Prime Minister.  While she takes up the post at an uncertain time, the first week as Prime Minister has proved that she is confident and empathetic with the population’s mixed views on the Brexit. Her newly formed Cabinet has Philip Hammond as the Chancellor and Boris Johnson ( a staunch supporter of the Leave campaign) as Foreign Secretary. The ministers in her cabinet reflect gender balance, but most position holders are those who were skewed towards a Remain or Stay vote rather than towards an Exit. It is interesting that Priti Patel, strong Exit campaigner and currently International Development Secretary, herself is the daughter of immigrants.

May has had a first round of talks about Brexit with Chancellor of Germany, Angela Merkel. May will be the one to invoke Article 50 of the Lisbon Treaty, but this won’t be up until at least a year. The time is needed to negotiate and have a clear plan before giving the reins to the EU for decision-making and roll out.  The effects of invoking Article 50 are still unknown. Much power is in the hands of Brussels as the EU and not the UK has the rights to dictate the terms of the exit. This puts the UK in a sensitive position with much uncertainty.

The initial reactions of shock and fear have passed. The reality has sunk in; a new Prime Minister has taken over. London Bridge hasn’t fallen yet, but it really will depend on how the ship is steered!  We, as Britain and the EU are, have to wait and watch!

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