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June 23, 2016, is a black day for the European Union as the people of
the United Kingdom voted in favour of leaving the union. Clearly, it is a
massive drive to the European experiment in post world war-II. It will
have outrageous implications all over the world especially for the
developing countries like Bangladesh though the decision of departing
the EU will come into effect after 2018. Furthermore, other EU
countries may be influenced to leave the bloc subsequent to Brexit.
Indeed, European politics and financial markets are thrown into a great
turmoil after the referendum in Britain.
vegetables,
fruits
and
allied
products
enter
the
UK.
After the referendum, the pound fell more than 10 percent that is the
lowest value since 1985 and devaluation of pound through Brexit might
hurt Bangladesh economy in different ways. UK may adopt an
immediate conservative move on their financial expenditure as the
purchase of goods or services in the UK will be more expensive and
goods being sold to other countries from the UK will become cheaper in
particular. Again, it could encourage imposition of a huge tariff on
imports to raise revenue or to protect their domestic industries. If
Brexit is effective, migrant workers and NRBs may defer sending
money back home until the currency regains its old position. Racial
tension may be raised as vote highlighted disagreement on
immigration. Finally, it will echo around the world that may induce
further
shock
in
the
world
economy.
As a consequence of Brexit, Bangladesh may lose its competitiveness
over its counterparts, especially in the export trade. Thus, Brexit may
negatively impact on exports and remittance earnings of Bangladesh.
Moreover, it may significantly influence our future plan of expanding
export
which
is
linked
with
Vision
2021.
Nobody exactly knows what will be the impact of Brexit on the world
economy including Bangladesh. However, if the UK continues to allow
duty-free market access after its exit, Bangladesh would not have
difficulties in export. If something like this happens, the impact will be
lesser than anticipated. UK would continue to grow because of a large
number
of
non-resident
Bangladeshis
there.
According to Capital Economics, a London-based research firm, Brexit
would cause at the most a GDP drop of 0.2 per cent across Asia. This is
a matter of concern for us. The government will have to make
necessary adjustments in the proposed budget and keep the export
The decision of Brexit from EU apparently emits deep global uncertainty hurting the attractiveness
and growth prospect of EU and heightens global trade, business and investment volatility, says
Dhaka Chamber of Commerce & Industries (DCCI)
Apparently, leave majority decision is going to emerge a new geo-political and geo-economic epoch
throughout the globe.
Indeed, EU is the largest export market and UK is the second largest Bangladesh bound foreign
investor and export destination for Bangladesh worth of US$3.4 billion led by $2.9 billion RMG and
other non-traditional products.
DCCI in a statement yesterday feels considerable anxiety that the jolt from the Brexit may affect
Bangladesh undermining the export growth potential under GSP facility and remittance earning and
spill catastrophic impact on the bilateral trade and investment relationship above all growing
development cooperation for Bangladesh.
DCCI also fears that Brexit will adversely upset and affect the global financial and capital market
depreciating Pound Sterling against major dominating currencies. Meanwhile, the Pound Sterling fall
by 10% against the dollar and euro plunged by 3% which cant guarantee immunity to Bangladesh.
Potential thwart of purchasing power slump of EU zone customers and devaluation shock of pound
and euro will adversely hit incremental export business and earning of Bangladesh especially
flagship of RMG sector given that EU accounts for 55 percent and UK accounts for 12% of global
RMG export of Bangladesh and other potential exportable products in the pipeline.
The plunge will also downsize remittance flow and FDI inflow in Bangladesh. In addition, $50 Billion
RMG export target earning backed export led economic graduation may dwindle.
In the wake of the newly emerged context, DCCI requests the government to immediately take into
account the possible consequences and precautionary measures to deal with the changing
development initiating focused bilateral discussion with foreign office of UK and UKTI to find
alternative way-outs and avoid unforeseen economic menace.
DCCI also solicits government to form a national committee comprising of trade bodies, trade expert,
international trade law practitioner, economist, researcher, and representative from concerned
ministries and agencies to observe and report findings to the government on post BREXIT global
economic order.
- See more at: http://archive.dhakatribune.com/business/2016/jun/26/brexit-may-impact-tradegrowth-bangladesh#sthash.4LycswS2.dpuf
Bangladesh is not about to face a doomsday scenario when Britain finally leaves the European Union
in 2019 as expected. It is quite possible that between now (August 2016) and 2019 (called B-Day
in Whitehall) when Britain officially leaves the EU, many other major events can affect our
economic and political landscape, but it is unlikely that the economic prosperity of Bangladesh or its
trade relations will change in a big way entirely because of Brexit. But there are some changes on a
small scale that will possibly happen, such as more immigration from Bangladesh to Britain,
increased levels of trade with Britain, and more international aid. However, a major factor that will
affect us in the final analysis is the precise terms of withdrawal negotiated by the EU and the UK,
particularly the trade deals.
Against this backdrop, the UK representative to UNCTAD Mr. Mark Mathews' assertions that Brexit
will have no impact on UK-Bangladesh relationship is a little empty, since in the post-Brexit world,
market forces will determine what happens to trade relationships. Most importantly, if the UK falls
into a recession (the income effect) or its exchange rate goes down (the price effect) for a
sustainable time period, Bangladesh exports to UK could be hurt. His other claim that the UK will
continue to meet its commitment to providing 0.7 percent of their Gross National Income in Overseas
Development Assistance (ODA) will obviously be good news for its recipients. This will allay any
fears that ODA might drop after Brexit, a claim made by the United Nations Office of the High
Representative for Least Developed Countries, Landlocked Developing Countries and the Small
Island Developing States (UN-OHRLLS), which estimates that British aid to all developing countries
will drop by $1.9 billion.
Currently, UK is Bangladesh's third largest importer of RMG after the US and Germany. The lower
value of pound will make Bangladeshi garments more expensive to British buyers, but this price
effect is expected to be minuscule and short-lived. Bangladesh now enjoys a duty-free-quota-free
status (DFQF) with the UK, and unless something changes, we should be able to keep that DFQF
status, at least in the short run. On the other hand, our imports from the UK will be cheaper and it
might be a good time to buy British equipment and other capital goods.
It may be worth mentioning here that some in the anti-Brexit camp have been predicting dire
consequences of Brexit for developing countries. Overseas Development Institute (ODI), for
example, has estimated Bangladesh will experience a significant drop in exports due to its
dependence on the UK and EU for 50 percent of its export destination. To quote its July 7 report,
Bangladesh and Cambodia in textiles and garments, and Kenya in flowers, will be among the
countries most directly affected. In the case of Bangladesh, 90 percent of Bangladeshi exports to the
UK are in textiles and garments, with the UK representing 10 percent of Bangladeshi exports.
Assuming a unit elasticity of demand, total Bangladeshi exports are expected to fall by 0.9 percent as
a result of the weaker pound. This does not even include the negative effect in the UK demand
associated with the fall in income and a decrease in consumer confidence. Needless to point out, the
pound has bounced back and Bangladesh is maintaining its competitive position in the UK market.
In so far as trade is concerned, in case the UK is allowed to remain in the single market, a privilege
it now enjoys, British businesses will still have access to 500 million consumers across the EU. The
impact on Bangladesh will then be minimal. The question is how likely is this outcome? The single
market stipulates free movement of goods, people, services and capital between the countries and is
made possible by removal of trade barriers including tariffs and the harmonisation of national rules at
the EU level. In the post-Brexit world, it is impossible for the UK to comply with many of these
regulations, including free movement of labour, child benefit for migrant workers, open fisheries, etc.
In fact, the most clamorous voices in favour of single market are equally vocal against the free
movement rules. Thus, it needs to be seen whether Britain can skilfully negotiate a deal which lets it
maintain the unfettered trade relationships it enjoyed while it chooses to opt out of the less popular
ones that the Brexit voters rejected.
Turning to immigration, it is a foregone conclusion that the UK will tighten its immigration rules to
slow down net immigration from the EU. How that affects the rest of the world, including
Bangladesh, is still up in the air. In 2015, the UK had a net migration of 333,000 up from 318, 000 in
2014. Some 630,000 people moved into the UK in 2015, while 297,000 left the country, for a net
migration of 333,000. Of those, 184,000 came from the EU. These figures are in sharp contrast to
David Cameron's promise in 2010 to keep the net migration level to 100,000 (100K). While it is
not clear if the new cabinet in UK will adopt this 100K target, it is known that the new Prime
Minister Theresa May had as early as 2014 embraced 100K as the magic number, and most recently
reiterated her preference for the 100K ceiling.
In this context, Bangladeshi students who were planning to study in the UK might find some
universities or colleges of their choice have tightened their admission rules. The new government is
of the view that many future migrants find colleges as easy entry points to the UK. The British Home
Office has reportedly estimated that one in five foreign students overstays their visa and continues
to live in Britain long after their course has finished.
Whatever the final outcome from UK-EU negotiations, Bangladeshi restaurant owners in the UK are
already rejoicing and it is expected that Brexit will benefit them considerably. It is reported that five
restaurants are closing every week due to shortage of Indian chefs, which is blamed on the EU
immigration policy. Since Britain last year had 333K net influx of immigrants, it had decided to
curtail immigration from non-EU countries, including Bangladesh, India, and Pakistan, to comply
with free access for EU citizens rule. According to Pasha Khandaker, President of the Bangladesh
Caterers Association (BCA), a trade association in the UK, EU's freedom of movement rules had led
to the UK Government introducing crippling limits on non-EU workers, which had made it much
harder for curry businesses to recruit skilled chefs. Needless to point out, BCA members are likely
to savour the rosy outlook for the future of their industry.
Exit of the United Kingdom form the European Union (EU) might have impact on
Bangladeshs economic growth, the Dhaka Chamber of Commerce and Industry (DCCI)
said in a statement on Saturday, says news agency UNB.
The business body in the statement said the decision of Brexit from EU apparently emits
deep global uncertainty, hurting the attractiveness and growth prospect of the EU as well as
heightening global trade, business and investment volatility.
Apparently, the decision will emerge as a new geo-political and geo-economic epoch
throughout the globe, it said.
The EU is the largest export market and the UK is the second largest Bangladesh-bound
foreign investor and export destination for Bangladesh, worth $3.4 billion, the statement
noted.
The jolt from the Brexit may affect Bangladesh, undermining the export growth potential
under GSP facility and remittance earning and spill catastrophic impact on the bilateral
trade and investment relationship above all growing development cooperation for
Bangladesh, it added.
DCCI urged the government to immediately take into account the possible consequences
and take precautionary measures to deal with the developments this regard, also to initiate
focused bilateral discussion with the UK to find alternative way outs and avoid unforeseen
economic menace.
DCCI also urged the government to form a national committee comprising representatives
of trade bodies, trade experts, international trade law practitioners, economists,
researchers, and representatives from concerned ministries and agencies to observe and
report the findings to the government on post-Brexit global economic order.
The whole world is paying its attention on the Brexit issue as it has turned into a topic of
concern where uncertainty looms at a huge degree. Too much question has remained
hung as not much of answers can be derived too soon over the impact of Brexit. The
UK is heading towards a new era where it is supposed to put a barrier on the free
flowing of immigrants from all over the Europe. After an evenly battle over the option to
leave and remain in the European Union, it has been confirmed that leaving EU has
been won by the slightest margin. Soon after the decision to leave EU has been
confirmed, Moodys has changed their stable outlook on the UK to a negative outlook
mainly because of the uncertainty that persists over the future of UK economy after the
Brexit. The credit rating of UK currently stands at Aa1 by Moodys score which is just
below the highest rating marked by AAA. It might drop down by single or more notches
depending on the aftermath of Brexit. A lower credit rating means a higher borrowing
cost and it may come as a blow to the UK economy. It is yet to see whether such doubt
turns into reality. The value of pound also plummeted soon after the revealing of the
vote results. Although it has been marked as an overreaction of the outcome of the
voting, it is yet to see where it leads to eventually.
In another analysis, it has been found that younger generation had more support on
remaining in EU than leaving and older generation had more support on leaving EU
than remaining. Such analysis concludes that UKs majority decision to leave EU
doesnt really represent the true picture of public demand from overall demography.
Such situation creates more tension over the outcome of the decision.
Brexit issue is a concern for Bangladesh too as the UK is the third largest export
destination for Bangladesh. Some changes after the Brexit may affect Bangladesh
economically. Some changes may also come into play over the immigration issue.
Simply, Brexit in a way may change the business strategy of Bangladeshi exporters.
How? Please continue to the second part of this article.
- See more at: http://www.alpharating.com.bd/brexit-impact-bangladesh-part1/#sthash.bB2e2qzn.dpuf
The first blow that may hit Bangladesh as a result of the Brexit is the loss of duty
benefits amounting to over USD 3 billion. Departure from EU by the UK may lead to the
departure of Bangladesh from duty benefits on the export to UK that was inexistent
when UK was part of the EU. The UK is the third largest export destination for
Bangladesh and such loss is quite significant for the country. This might lead to a shift of
products exporting to the UK to other countries where the costs will be lower.
The remittance income may see a downfall that has been generating from the UK for
Bangladesh till date. Out of the total remittance income of more than USD 15 billion,
migrant workers of UK from Bangladesh contributed USD 1 billion. This is the second
largest contributing countries in remittance for Bangladesh. In the recent outbreak the
pound has experienced a diminished value and hence the risk of more downfall exist
which will lead to a lower number of remittance.
The export issue is more concerning than anything for Bangladesh. Bangladesh
exported USD 3.23 billion worth of products in the year 2014-15 which registered 21.28
percent growth in export to the UK from the previous year. Such growth may face a
setback due to the Brexit as more costs will be assigned to exported products with the
absence of duty-free benefits. Among the exported goods to the UK, 90 percent is
International Trade Center data shows that in 2015 more than 10% of total
Bangladesh export went to UK. UK being one of the oldest trade partners of
Bangladesh, it is not surprising.
Bangladesh exported more than $3.5 billion to UK which was having on an
average 6% growth for last five years. Among $3.5 billion of total export to
UK, more than $3.23 billion is of RMG goods. Knitwear sector was having 5
% and woven wear was having 10% average growth for last five years. This
data show how important is the UK for Bangladesh trade. UK has been
considered to be a thirst market for Bangladesh and the country has set
higher export target in UK market in the current fiscal year.
ITC data in table 1 show that Bangladesh exported $35.16 billion and for
RMG it was $ 30.12 billion in the calendar year 2015.
Besides Textile and apparel footwear sector is seeing huge growth in the UK.
For last five years the sector was having 25% average growth.
There is a certain impact on Bangladesh export to UK:
Poll Brexit doesnt mean overnight divorce of Britain from EU but many
leaders in EU and UK will push to finish the process within shortest period of
time. Immediate impact of Brexit has already been immersed. The first
impact is significant depreciation of pound sterling. Weak pound means
higher cost of import, means there will be a certain impact of Bangladesh
export to UK immediately. Though all the import payments will rise for UK
and it is a common phenomenon, it is definitely going to affect the current
trade mathematics.
These days, as Bangladesh was British colony, Bangladesh-Britain trade
channel was used for many other European Countries exports and imports.
Increase of import cost for UK against USD and Euro means those channels
will be disrupted. If immediate alternatives were not developed, those export
from Bangladesh will certainly be affected.
UK has many famous retail brands namely Primark, M&S, Asda, Newlook
among
others
which
are
importing
huge
amount
of
garment
from
Along with the political instabilities, financial issues are also to be taken time
to be settled. As many new policies would be adopted in a short period of
time many changes would come for trade partners of UK. Companies in
Bangladesh working with British companies would keep eagle eye on the
developments. They should keep them prepared for adopting any possible
changes.
Bi-lateral relation is very important:
Britain is mainly being separated from UK to regain their national pride and
identity and also to stop huge flow of European and non-European migrants
to the country. Bangladesh community comprises a huge part in British
society. With the emergence of British nationalism, the community will be
under pressure. Many Bangladeshi businessmen who contribute to bilateral
trade and business would find things difficult in coming days.
On the other hand, out of EU when Britain will be reforming its international
relations. That would be very important for Bangladesh. As Bangladesh
currently having a pro-Britain government, it is expected that Bangladesh
will be able to keep the relation intact and will be able to gain trade &
business advantages from Britain.
Table 1 show that Bangladeshi goods require no tariff to enter in UK. It is
because of the EU GSP policy towards LDC countries. Bangladesh should
take immediate action as if those benefits never be disrupted.
Britain is to re-establish its manufacturing strength:
Brexit definitely is going to bring major changes in Britain and also in EU. 28
countries open market with Britain and without Britain must have big
differences. Almost half of UKs global export goes to European countries; it
shows UKs dependency on EU. Many European countries are also heavily
dependent on UK for technology and services.
In a new context where pound is in possibility to come as low as 1.1 against
USD, Britains manufacturing competitiveness will increase. Britain currently
has a trade deficit of more than $163 billion USD which has a great impact
on its economy. Free market mechanism was compensating the deficit. But
without
EU,
UK
has
nothing
to
do
but
emphasizing
on
increasing
economy of EU and UK due to Brexit, it will hit hard Bangladeshi export business. Top economists at
British universities have feared that Brexit would damage UKs economy. They thought that Brexit
would cause uncertainty in the markets and pose other economic risks. Although the Brexit is not
directly related with Bangladesh, the country might have to face its immediate impact. The exit of
Britain from EU would not be positive as integration is important this time for the EU economy.
Bangladeshs exports to the UK totalled US$ 3.20 billion in the financial year 2015-16 with US$ 2.90
billion coming from the readymade garments sector. The president of the World Bank has already
warned a British exit from the European Union could have a negative impact on developing countries
across the globe. Brexit is one of the biggest risks to lower and middle income nations since the UKs
economic grounding has a direct impact on stability around the world. The gap between global
commodity imports and commodity exports, which have grown by 6% and 0% this year respectively,
could get much worse as Britain leaves the EU. And uncertainty in global capital markets is bad for the
world economy. On the other hand, the stability of the British economy is really important for the
stability of the global economy and also uncertainty in global capital markets have very negative
effects even on the poorest countries. It is time that Bangladesh makes serious homework on
ramifications of the Brexit and does the needful.
Brexit will have its way with many things, trade one among them.
Countries that do substantial trade with the EU may all be affected differently, but
Bangladesh is bracing for the worst of it.
Bangladesh runs the risk of losing duty benefits on its annual exports of more than $3 billion
to the UK, as Britons voted to leave the European Union sending shocks across the world in
a stunning turn of events.
Apart from exports to the UK, the third largest export destination for Bangladesh, remittance
income from the European country may come under strain as an impact of its departure
from the EU.
In the long run, Bangladeshs economy might take a hit if the current uncertainty in the
global economy persists further.
Britains exit from the European Union (EU) will hurt Bangladesh exports especially the
RMG sector to its markets as it will cast shadow on the exchange rates, fear the economist
and exporters.
In a referendum held on June 23, the UK people decided to leave EU as 52 percent people
voted for exit while 48 cast vote to stay with the union.
The short-term visible impact of the Brexit is devaluation of currency that has already
witnessed an about 10 percent fall. Bangladesh will bear the brunt of the exit as it is the
third largest single export destination for our products, Bangladesh Garment Manufacturers
and Exporters Association (BGMEA) President Faruque Hassan said recently.
As a result, the buyers will try to cut prices and to some extent even to cancel the orders.
In July-May period of the current fiscal year, Bangladesh exports to the UK stood at
US$3.44 billion, of which $3.18 billion came from the readymade garments sector.
benefit other sectors with a shortage of highly skilled labour. Overall, policy
would shift to be more specifically designed for Britains migration
requirements.
Read this chapter
Trade and manufacturing
Official trade statistics show that the European Union is the destination for
about half of all British goods exports. The trading links are bigger if we
include the countries that the United Kingdom trades freely with because
they have a free trade agreement with the European Union. These
agreements mean that 63% of Britains goods exports are linked to
European Union membership.
It is highly probable that a favourable trade agreement would be reached
after Brexit as there are advantages for both sides in continuing a close
commercial arrangement. But the worst-case scenario, in which Britain
faces tariffs under most-favoured nation rules, is certainly no disaster.
Exporters would face some additional costs, such as complying with the
European Unions rules of origin, if they were outside the single market.
However, these factors would be an inconvenience rather than a major
barrier to trade. In addition, fears that exporters would be left high and dry
the day after the Brexit vote are unfounded. Under the Lisbon Treaty, a
country leaving the European Union has 2 years in which to negotiate a
withdrawal agreement.
In addition, falling tariffs, the decline in manufacturing and Europes
diminishing importance in the global economy mean we doubt that even the
absence of a trade deal with the European Union would hurt the United
Kingdoms overall exports materially. The benefits of being in the European
Union are smaller than they were a few decades ago, when a Brexit would
have been a far bigger deal. However, the effects will vary across sectors.
Brexit would give Britain a crucial opportunity by allowing it to broker its
own trade deals with non-European Union countries; indeed Britain could
even have a unilateral free trade policy. Non-European Union countries
may find negotiating with Britain easier and quicker than dealing with the
European Unions bureaucratic machine, as Switzerland has shown.
The more extreme claims made about the costs and benefits of Brexit
for the British economy are wide of the mark and lacking in evidential bases
Executive summary
Introduction
Immigration
Trade and the manufacturing industry
Financial services and the City
Regulation, innovation and productivity
Foreign investment
Public sector
Consumption and the property market
Download PDF (3.9MB)
Gains
Losses
Less regulation
Introduction
In this section, we review the studies that have previously estimated the
impact of Brexit on the United Kingdom economy.
Leaving the European Union is a substantial step for any member state to
take. The decision is in many ways a social, cultural and political one, but it
is also one which carries economic implications.
The United Kingdoms potential decision to leave the European Union, or
Brexit, has consumed much debate. The magnitude of the economic costs
and benefits of Brexit cannot be known with certainty before the event. As a
result, a range of estimates have given differing scales and even directions
of the impacts. (SeeFigure 1.)
BREXIT ALL YOU NEED TO KNOW (CLICK HERE)
is time for the British people to have their say. It is time to settle this European
question in British politics.
Who Will be able to vote ?
You are eligible to vote if you are a British, Irish or Commonwealth citizen over the age
of 18 and you are resident in the UK. You may also vote if you are a UK national who has
lived overseas for less than 15 years.
What is the procedure to vote?
It is a similar system to that during other elections. Firstly, if you have registered to vote,
youll have been sent a card telling you when voting takes place and where you should go
to vote on 23 June. On that day, when you go to the polling station you will be given a
piece of paper with the referendum question on it. You then go to a booth, which will
have a pencil in it for your use. You then put a X in the box which reflects your choice
and put the paper into a ballot box
Who wants the UK to leave the EU?
The British public are fairly evenly split, according to the latest opinion polls. The UK
Independence Party, which won the last European elections, and received nearly four
million votes 13% of those cast in Mays general election, campaigns for Britains
exit from the EU. About half of Conservative MPs, including five cabinet ministers,
several Labour MPs and the DUP are also in favour of leaving.
Why do they want the UK to leave?
They believe Britain is being held back by the EU, which they say imposes too many
rules on business and charges billions of pounds a year in membership fees for little in
return. They also want Britain to take back full control of its borders and reduce the
number of people coming here to live and/or work.
One of the main principles of EU membership is free movement, which means you
dont need to get a visa to go and live in another EU country. They also object to the idea
of ever closer union and what they see as moves towards the creation of a United
States of Europe.
Who wants the UK to stay in the EU?
Prime Minister David Cameron wants Britain to stay in the EU. Sixteen members of his
cabinet also back staying in. The Conservative Party has pledged to be neutral in the
campaign but the Labour Party, SNP, Plaid Cymru and the Lib Dems are all in favour
of staying in.
US president Barack Obama also wants Britain to remain in the EU, as do other EU
nations such as France and Germany. As mentioned above, according to polls, the
British public seems pretty evenly split on the issue.
Why do they want the UK to stay?
Those campaigning for Britain to stay in the EU say it gets a big boost from membership
it makes selling things to other EU countries easier and, they argue, the flow of
immigrants, most of whom are young and keen to work, fuels economic growth and
helps pay for public services. They also believe Britains status in the world would be
damaged by leaving and that we are more secure as part of the 28 nation club, rather
than going it alone.
Would Britain be better in or out?
It depends which way you look at it or what you believe is important. Leaving the EU
would be a big step arguably far more important than who wins a general election
but would it set the nation free or condemn it to economic ruin?
Key Arguments for Stay
Foreign affairs:
As part of a 500 million-strong economy, Britain has greater influence over
international matters.
Sovereignty:
Britain has proved that it can opt out of EU policies it considers counterintuitive, such
as the euro, the Schengen Agreement and enforced migrant quotas.
Security:
A union better equips Britain to tackle threats to security, including terrorism and crossborder crime.
Money:
Europe provides Britain with billions of pounds worth of investment each year.
Trade:
Membership in the EU gives us the strength to negotiate favourable trade agreements
with countries around the world.
Business:
Free trade within the EU reduces barriers and enables UK companies particularly
small ones to grow.
Jobs:
Millions of jobs linked to Britains membership would be put at risk.
Consumer goods:
The average person in Britain saves hundreds each year thanks to lower prices of goods
and services facilitated by the EU.
Key Arguments for Leave
Foreign affairs:
EU membership limits Britains international influence, ruling out an independent seat
at the World Trade Organisation.
Sovereignty:
Britain would have more control of its laws and regulations, without risk of having
counterintuitive policies forcefully imposed.
Security:
Britains domestic security would benefit more from greater border control than
political union.
Money:
cultural ties with the UK that India shares along with the fact that the UK proved to be a
gateway into the rest of Europe. Indian companies that would set up their factories in
the UK could sell their products to the rest of Europe under the European free market
system.
However, if Britain exits the EU, it will not be as attractive a destination for Indian FDI
as before. Having said that, Britain would not want to lose out on capital coming in from
India. Thus, one can expect Britain to try extra hard to woo Indian companies to invest
there by providing much bigger incentives in terms of tax breaks, lesser regulation and
other financial incentives. Further, if Britain is leaving the EU due to the latters
complex bureaucratic regulatory structure, Indian companies can expect a deregulated
and freer market in Britain.
3. Another EU partner: If Britain exits the EU, India will lose its gateway to Europe.
This might force India to forge ties with another country within the EU, which would be
a good result in the long run.
India is already trying to build trade negotiations with Netherlands, France, Germany,
and others, albeit in a small way. Netherlands is Indias top FDI destination as of now. A
Brexit could force India to build trading partnership with other EU nations in order to
access the large EU market.
4. The Commonwealth: With Britain cutting off ties with the EU, it will be desperate
to find new trading partners and a source of capital and labour. There have already been
many proponents of the Leave Campaign that suggest that the UK should look towards
the Commonwealth to forge new alliances.
Britain will still need a steady inflow of talented labour, and India fits the bill perfectly
due to its English-speaking population. With migration from mainland Europe drying
up, Britain would be able to accommodate migration from other countries, which will
suit Indias interests.
Further, Britain is one of the most important destinations for Indians who want to study
abroad. Presently, British universities are forced to offer subsidized rates for citizens of
the UK and EU. With Brexit, however, the universities will no longer be obliged to
provide scholarships to EU citizens, which will free up funds for students from other
countries. Many more Indian students may be able to get scholarships for studying in
the UK.