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Brexit

Background
BREXIT refers to the possibility of withdrawal by Britain as a member of the European Union (EU). On 23rd June 2016, the UK, in a closely fought referendum, voted in support of withdrawal from the membership of the European Union. With more than 30 million people voting in the referendum the voter turnout was 71.8% in which the leave won by 52% to 48%.

This was the second referendum on Britain’s relationship with the European Union. In 1975, in a referendum on whether the U.K. should stay or leave the European Common Market, the country voted for staying in with a resounding 67.2 percent vote.

The Brexit was due to happen on 29th March 2019 – two years after the PM of Britain, Theresa May formally invoked Article 50 of the treaty of EU in March 2017 and started the negotiations to leave the Union known as Brexit deal. But the date of Brexit stands delayed twice, the new date being 31st October 2019.

The European Union and Article 50
The EU is an economic and political union involving 28 European countries. It has developed a single market and a standardized system of laws which applies to all member states in those matters, and only those matters, where members have agreed to act as one. The European Union policies aim to ensure the free movement of people, goods, services, and capital within the internal market.

Article 50 of the Treaty on European Union, enacted by the Treaty of Lisbon on 1 December 2009, introduced a procedure for a member state to withdraw voluntarily from the EU. Up till September 2019, no member state has withdrawn from the union.

Brexit Deal and its Rejection
The Withdrawal Agreement between EU and the UK consisted of a range of things that includes the rights of EU citizens in the UK and vice versa, the money UK shall pay to the EU, the Irish border backstop.

The main sticking point of the rejection of the deal was the different status for Northern Ireland which could prejudice the existence of the UK and fear that backstop could become permanent.

Presently, there are no border posts or checks on people or goods between the Republic of Ireland and Northern Ireland. The backstop ensures this continues even after the withdrawal of the UK from the EU.

What’s next?
Officially the UK is to leave EU under the leadership of newly appointed PM and pro-Brexit leader on 31st October 2019. However, there is a risk of no deal exit so the MPs from the different parties voted for the law which binds the government to seek a third extension pushing the deadline to January 2020. Any further extension to the UK has to be agreed by all members in the EU so there stands a chance of no further extension to the UK.

A No-deal Brexit
In case the UK leaves the single market then the EU will start carrying checks on British Goods which could lead to delay at ports which could disrupt supplies and damage the economy. It could also affect the price and supplies of some foods. Experts believe the pound could fall sharply and it will lead to economic harm. Though pro-Brexit supporters believe it is hard to predict such consequences in advance.

Impact on India
•It can affect the inflow from foreign portfolio investors (FPIs) to India and GDP growth might be affected.

•With Britain's exit, a requirement for separate headquarters for Europe and Britain might crop up for domestic companies invested in Europe

•Anti-immigration laws in Europe might become more stringent.



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