Britain at the crossroads after having decided to quit the EU
Rare as it may seem Britain is at the crossroads. It was like a political Tsunami that stunned the United Kingdom when the referendum favoured a clean break with the 28-member European Union. It was bewildering as this was not the result a wide cross section of the electorate desired but now had to confront it headlong. There is widespread uncertainty about what is going to happen next in the short to medium term.
Ireland wants to overturn the result. There was anger at the European Union headquarters wanting the UK to pack bags and quit as early as possible rather than dragging its feet. They wanted to begin the process as early as last Tuesday, June 28, even though the charter of the EU stipulates the process of a clean break with the EU takes at least two years to materialise.
Expectedly, British Prime Minister David Cameron immediately put in his papers as it was no longer possible for him to take the country forward. His replacement after six years in office is expected to take place as early as September-October.
Some other smaller European countries are also contemplating getting out of the EU. In all this confusion, nearly three million signed a fresh memorandum seeking another referendum on the subject which was rejected by Cameron.
The markets in this country have shrugged off the impact of Brexit results. Though the market fell sharply during intra day trading last Friday, June 24, both have since recovered from those lows as the Rupee cumulatively shed only 70 paise. This reflects a vastly improved domestic macro economic stability.
What happens outside is beyond any country’s control. Policy makers must stick to domestic fiscal prudence. Reminiscent of Asia in 1947, politicians in Europe in 2016 not in control of things are being assailed by forces they have unleashed and are unable to control. What is staring people in the face is that they do not know what the future holds. Anger between the two camps of “”leave and stay”” is at boiling point.
England will need a new scapegoat. A racial element has been noticed in the voting like “”Britain for Brits”” which holds dangerous portends. Despite murmurs Scotland and Ireland have their own agendas and voted to stay in the EU because thats the logical step for freedom. However, the world at large might not be able to fully insulate itself from the aftermath of June 23 shocker even if the margin of victory was barely four per cent.
The EU finds itself in troubled waters after decades of European integration. Cameron’s decision to go in for a referendum may turn out to be an electoral blunder though he himself voted to remain in the EU.
Be that as it may the outgoing Prime Minister has become his own victim. Even though Indian companies which have seen England as a springboard to Europe are somewhat circumspect at this juncture.
In a highly integrated world with interdependent economic security systems in place, especially in Europe, walking out of EU would entail costs for both the leavers and the 27 countries that remain behind after UK’s departure. As the fifth largest economy in the world with a seat in the Security Council, the UK wields much influence, though Germany being the strongest was the undoubted power in the EU.
The UK has to negotiate its exit under Article 50 of the Lisbon treaty. The Pound suffered its biggest one day fall in history against the Dollar to hit levels last seen three decades back in 1985. The “”out”” is being widely seen to be directed at the British voters fear of the immigrants. The voices of pluralism and tolerance have suffered a setback. It will give a definite fillip to right wing political leaders and outfits in Europe and beyond.
For its part the EU will emerge economically and politically weakened with the departure of its most free market proponent and a member wielding the UNSC veto. In one go the block will lose around a sixth of its total economic output. Britain would largely have been better off staying in the EU. Its heft is limited and diminishing. As the largest single market in the world, it had a lot more clout in trade negotiations. There are apprehensions of Britain becoming irrelevant as a small economy with no big competitive advantage.
It is unclear at this stage what sort of relationship Britain will seek to negotiate with the EU once it has left. However, the young generation wants to remain with the EU but it was not to be. Therefore, it is not entirely inconceivable for the UK to become part of the European Union once again.
(T R Ramachandran is a senior journalist and commentator. The Views expressed are personal.)”