IMPACTS OF BREXIT
Nearly 45% of the British exports are depending
on the EU. The largest market for UK’s exports is EU and it is also a source
for EU’s imports. Excluding Germany and Sweden, UK has a positive balance of
trade with all other countries of EU. After Brexit, trading with EU markets
would be suffer for UK. Though UK has emerged as major financial hub, post
Brexit it will face a hit. This is the major reason behind the soaring down of
The future of Scotland and Northern
Ireland remains unanswered, because their desire to stay with UK was
precondition on UK remaining a part of EU. In an interconnected world, being a part of multilateral
organizations is a key to influence policy matters. No country can do it alone
in a rapidly changing international environment. UK will lose some of
its power for voting Brexit.
EU whose origin lied in the centuries of
war that ravaged Europe was a transformative idea in international relations,
enmeshing countries in cooperation. With the exit ok UK, there is a possibility
of other countries such as Greece, etc to follow suit. Thus the idea of EU
stands challenged. EU is currently
handling various crises and a financial crisis is one among the important. It
is difficult for the both EU and British to face those crises individually.
immediate impact of Brexit is an increase in risk aversion when it comes to
investing. This will affect the FPI outflows from foreign portfolio investors.
Rupee value may depreciate because of the double effect of foreign fund outflow
and dollar rise.
While on the positive side, Brexit has driven away fears of a
US Fed rate hike and could lead to lower commodity prices. Brexit has become a
new worry for commodity producers, coming on top of concerns about China’s
slowing economic growth. If news flows from both these sources continue to
cloud the outlook for commodities, then prices may turn weak. Brexit’s impact
will then be a fateful one for commodity producers and producing nations