Few lifelines before Brexit

Mains Paper: 3 | Economy
Prelims level: Brexit
Mains level: Post brexit consequences

Introduction

•  The moment when Britain would officially exit the European Union (EU) is still some months away.
•  The source of the foreshocks are the unstable machinations of the British Prime Minister Theresa May’s Brexit ‘war cabinet’.
•  Without a clear plan to counter the unsociable environment being created by an increasingly unempathetic EU, Ms. May’s assurances as yet have not been productive.
•  The trade terms that Britain set for the Commonwealth, post-war and post-independence, are not simply there now because some of them are almost ready to supersede the U.K. economically.
•  There are also fears that the U.K. might end up leaving without a final deal in hand.
•  There are whispers from Ms. May’s Brexit camp that she might agree to an extension beyond 2020 in order to assist Britain in establishing transitional arrangements to ensure a hold in the single market as well as the customs union.

The next steps

•  Brexiteers are hoping for a turnaround in negotiations at least by December even as the EU is convoking a special meeting in November to wrap up a final deal.
•  In december will be the time for the final opportunity before which the text of the withdrawal treaty has to be cleared by a supermajority of EU leaders.
•  There are a minimum of 20 out of 27 remaining members of the EU representing at least 65% of their population.
•  The deal will also have to be ratified at a plenary by the European Parliament. If any differential clauses persist.
•  Parliament might refer them to the European Court of Justice.
•  If all this happens before December, the British Parliament will take it over.

Post brexit consequences

•  The vote on which the minority government in London hopes to get the deal through hinges on Northern Ireland’s Democratic Unionist Party.
•  Ms. May’s government might need to unconditionally embrace many, if not all, of Belfast’s predilections.
•  There is also confusion raging in the British Parliament as two-thirds of its MPs are still in favour of remaining in the EU despite a majority of their constituencies having voted to leave.
•  Speculation is rife that angry Tory backbenchers might also press for a leadership change, and that Ms. May may face an exit before Christmas.
•  Border negotiations for custom clearances and travel would also take long despite optimum use of advanced technology.
•  In addition to the chaos which could descend on markets and investors if no deal is reached in December.
•  Ms. May has also rejected the demand for a second referendum.
•  If Brexit happens without a deal, she has now announced, in order to win trust, tax cuts for 30 million citizens, with effect from April next, a year earlier than fixed, amid claims that a deal is almost done. No one believes this.

The Indian angle

•  An independent crossbench life peer and anti-Brexiteer Karan Bilimoria has stated that Indian-run businesses would suffer phenomenally with or without a deal.
•  Tejinder Singh Shekawat, a construction entrepreneur and president of the Indian Chamber of Youth Entrepreneurs attached to the India High Commission in London, says, “The current status is that the Europeans have already started leaving.
•  As a result, the rental and property prices have come down, whereas labour and material prices have gone up by 25%.
•  Almost every business is struggling even before the Brexit happened.
•  A large portion of Indian businesses in the U.K. are dependent on the free European market.
•  They are watching the developments with bated breath.

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Prelims Questions:

Q.1) “Lisbon Treaty” was recently in news with reference to
a) Brexit referendum for leaving European Union (EU)
b) Model Foreign Account Tax Compliance Act (FATCA) to be adopted by G-20 nations
c) Modification of Iran’s nuclear programme under pressure from P5+1 nations
d) Retrospective taxation on foreign investors in WTO member nations
Answer: A

Mains Questions:
Q.1) What are the aftermath consequences of brexit? What are the matter concerns for India?