BREXIT

• The possibility of withdrawal of the United Kingdom from the European Union is being widely referred to as BREXIT. A referendum on the country's membership of the EU will be held on 23 June 2016.
• A European Union Referendum Bill was introduced into the House of Commons on 28 May 2015, approved by the House of Lords on 14 December 2015, and was given the Royal Assent on 17 December 2015 to pass the European Union Referendum Act 2015.
• Under the provisions of the European Union Referendum Act 2015, UK will hold a referendum, not later than 31 December 2017 on whether the United Kingdom should remain a member of the European Union (EU).
• On 20 February 2016 it was announced by the Prime Minister David Cameron that the referendum would take place on Thursday, 23 June 2016.

Background Information

• A regional organisation, called the European Economic Community (EEC) was created by the Treaty of Rome in 1957. The aim of this organisation was to bring about economic integration amongst its member states.
• The UK was not a signatory to the Treaty of Rome and subsequently applied to join the organisation in 1963 and 1967. However, both applications were vetoed by the then President of France, Charles de Gaulle.
• Finally, on 01 January 1973, UK gained entry into the EEC, while the Conservative Party was in power under Prime Minister Edward Heath.
• The opposition Labour Party, led by Harold Wilson, contested the October 1974 general elections with a commitment to renegotiate Britain's terms of membership of the EEC and then hold a referendum on whether to remain in the EEC on the new terms.

Referendum of 1975

• The Labour Party after coming into power held a referendum on whether UK must remain a part of EU on 07 June 1975.
• Most of the administrative county in the UK had a majority of "Yes", except the Shetland Islands and the Outer Hebrides.
• Consequently, as an outcome of the vote, the United Kingdom remained a member of the EEC.

Creation of European Union

• The Maastricht Treaty was signed on 07 February 1992, with the aim to integrate Europe by the European Community and came into effect from 01 November 1993.
• Upon the entry into force of the Maastricht Treaty in 1993, the EEC was renamed as the European Community (EC) to indicate that it covered a wider range of aspects, rather than just economic policy.
• The EC existed in this form until it was abolished by the 2009 Treaty of Lisbon, which incorporated the EC's institutions into the EU's wider framework and provided that the EU would "replace and succeed the European Community".

Treaty of Lisbon

• The Treaty of Lisbon was signed by the EU member states on 13 December 2007, and entered into force on 1 December 2009.
• The Treaty of Lisbon amended the Treaty of Maastricht and greatly formalised the functioning of the European Union, to include:

• Creating a more powerful European Parliament, with a bicameral legislature alongside the Council of Ministers.
• Consolidated legal personality for the EU and the creation of a long-term President of the European Council and a High Representative of the Union for Foreign Affairs and Security Policy.
• The Treaty also made the Union's bill of rights and the Charter of Fundamental Rights, legally binding.
• The Treaty for the first time gave member states the explicit legal right to leave the EU and a procedure to do so.
• Opponents of the Treaty of Lisbon (Labour Party of UK) argued that it would overly centralize the EU, and weaken democracy by "moving power away" from national electorates.
• Supporters argue (Conservative Party of UK) that it brings in more checks and balances into the EU system, with stronger powers for the European Parliament and a new role for national parliaments.

Referendum of 2016

• British Prime Minister David Cameron, who belongs to the Conservative Party after coming into power in 2012, had announced that a Conservative government would hold an in-out referendum on EU membership before the end of 2017.
• The provisions to leave the EU have been cited in Article 50 of the Treaty of Lisbon.
• PM Cameron has said that he would trigger the Article 50 process immediately following a ‘leave vote’. Once the proceedings of Article 50 have been initiated, there is a two-year time period to negotiate the arrangements for exit.
• Process of Referendum
• The referendum will be held across all four countries of the United Kingdom, i.e. England, Scotland, Wales and Northern Ireland as well as in the Overseas Territory of Gibraltar on 23 June 2016.
• There are to be 382 local voting areas which are grouped into twelve regional counts and there will be separate declarations for each of the regional counts.
• Only British, Irish and Commonwealth citizens over 18 who are resident in the UK or Gibraltar will be able to vote in the Referendum. British citizens who have lived abroad for less than 15 years will also be eligible to vote.
• The final result of the referendum (combining all 12 regional counts from across the UK and Gibraltar) will be announced in Manchester on 24 June 2016.

Consequences of United Kingdom Exiting European Union - BREXIT

• A report suggests that withdrawal of UK from EU "has the potential to fundamentally change the EU and European integration.
• On the one hand, a withdrawal could tip the EU towards protectionism, worsen existing divisions, or unleash centrifugal forces leading to the EU’s unravelling. Alternatively, the EU could free itself of its most awkward member, making the EU easier to lead and more effective”.
• Britain will have to secure bilateral Free Trade Agreements (FTA) with the existing trading partners of the EU. The United States has indicated that it is not keen on pursuing a separate FTA with Britain if it leaves the European Union.
• The leave campaigners argue that a reduction in red tape associated with EU regulations would create more jobs and that small to medium-sized companies who trade domestically would be the biggest beneficiaries. Those arguing to remain in the EU, claim that millions of jobs would be lost.
• In February 2016, half the companies on the FTSE 100 Index, “including Shell, BAE Systems, BT and Rio Tinto" as well as supermarket chains Asda and Marks and Spencer, officially supported staying in the EU.
• The possibility that the UK's constituent countries (England, Scotland, Wales and Northern Ireland) could vote to remain within the EU, but find themselves withdrawn from the EU has led to discussion about the risk to the unity of the United Kingdom.
• UK universities rely on the EU for around 16% of their total research funding, and are disproportionately successful at winning EU-awarded research grants. This has raised questions about how such funding would be affected by a British exit.
• The supply of workforce will get adversely affected as the movement of migrant labour from the other European nations will get restricted due to control on free movement within Euro zone.
• Those who propose that UK must remain a part of EU claim that taxes from immigrants boost public funding, while the leave campaigners believe that reduced immigration would ease pressure on public services such as schools and hospitals, as well as giving British workers more jobs and higher wages.
• EU exit is considered to be the 'biggest domestic risk' to the UK economy. In the week following conclusion of the negotiations on the referendum, the pound fell to a seven-year low against the dollar.
• In June 2015, the credit rating agency, Standard & Poors, altered its outlook for the UK economy from 'neutral' to 'negative', saying that the referendum "represents a risk to growth prospects" for the country's economy.

Implications of BREXIT on India

• It is believed that BREXIT, if it happens, may have positive implications for India. Existing from EU will compel UK to develop closer bilateral economic ties and Free Trade Agreements with emerging economies of Asia, like India and China.
• United Kingdom is believed to be relatively more flexible and commercially open when compared with the highly regulated EU. Thus, bilateral trade will have greater scope and lesser encumbrances.

Conclusion

• The opinion polls held in June 2015, showed that those in favour of Britain remaining in the EU were 43%, versus those opposed to it were 36%.
• Analysis of polling suggests that young voters tend to support remaining in the EU, whereas those older tend to support leaving. Also, big businesses are broadly behind remaining in the EU, though the situation among smaller companies is less clearly defined.
• Finally, to my mind, it may be fair to predict that the referendum will go in the favour of United Kingdom remaining as a part of the European Union.