Brexit – Pros & Cons

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Palash Sinha, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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With Prime Minister David Cameron’s government committed to an “in-out” referendum on the UK’s membership in the European Union (EU) before the end of 2017, the consequences of a vote to leave the EU (British Exit, or Brexit) need to be considered. So let us consider the pros and cons of Brexit with perspective of UK.

Pros:

  • Economic Costs:  Some estimates suggest the total economic cost of EU membership is around 11 per cent of our annual GDP – which makes it something like £200billion.
  • Trade: Without the EU, Britain can independently pursue international trade deals with China, India and the US.A particular issue for Brexiters is the Central Agricultural Policy (CAP), which they see as wasteful and expensive.
  • Bureaucracy: Most Brexiters see the EU as an over-regulated, bureaucratic burden. Leaving, they say, would allow the UK’s government and financial authorities to design a regulatory framework that is more suited to our needs.
  • Immigration: This is arguably the most charged issue in the referendum debate. One of the EU’s founding principles is the free movement of people (along with the free movement of goods, services and money).Because of this, the UK has no control over immigration from other EU member states.

Cons:

  • Economic benefits: The EU is one of the world’s largest markets; accounting for 25 per cent of global GDP.It is also our biggest trading partner. Currently, 45 per cent of the UK’s exports are to the EU, while 50 per cent of imports are from the EU.
  • Food, health and animal rights
  • Jobs
  • Travel
  • Immigration
  • Workers’ rights

As a whole, entrepreneurs and business owners in Britain broadly remain in favor of remaining a member – and their enthusiasm may be growing. According to the Financial Times a survey of 3,800 businesses last year found 63 per cent believe that leaving the EU would have a negative impact for Britain, a rise of 4 percentage points since the end of 2014. The sentiment seems to be reciprocated: of 2,600 senior executives in 36 countries across Europe in February, nearly two-thirds of those in the Euro zone said a British exit from the EU would have a negative impact on the European economy.

 

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