Crossing the Rubicon: Brexit will impact Britain, India and the world
June 23, 2016 could well become a defining moment in the history of the European Union as well as a definitive moment in the history of the UK. On this historic day, the British electorate will decide in a deeply divided referendum how European they wish to be. The tragic murder of Labor Member of Parliament, Jo Cox has further polarized the public sentiment. As Prime Minister Cameron said yesterday, once the Rubicon has been crossed there is no turning back. Britain may never be the same again.
Britain’s membership in the European Union (EU) had to be carefully negotiated since some EU founder members, including France, had not been in favor of UK joining the EU because of its anti-European stand on many issues. UK’s applications to join in 1963 and 1967 were vetoed by the then President of France, Charles de Gaulle. A third application was successful under the Conservative Government of Prime Minister, Edward Heath. Prime Minister Cameron must have had ample time to regret his hasty announcement in January 2013, that a Conservative Government, if elected in 2015, would hold a referendum on EU membership before the end of 2017, on a renegotiated package. A referendum to decide on such a complex issue was not required under the British Constitution. Cameron could not back down on this issue after his election. It would be an irony of history if a decision by the electorate to quit EU could cost him his Prime Minister-ship.
Since the result is expected to be very close, there is media speculation that Cameron may make a statement outside 10, Downing Street at around 7a.m. GMT on June 24. It seems unlikely at this moment that he would immediately announce his decision to quit. What is possible is that internal turmoil within the Conservative Party, headed by those in favour of Brexit, and notably Boris Johnson, would result in a leadership challenge to Cameron before autumn. It would be difficult for Cameron, given his negative approach to Brexit, to continue as Prime Minister and negotiate Britain’s exit from the EU. A vote for Brexit may therefore mean the effective end of Cameron’s political career.
What would be the impact of the Brexit on markets worldwide, including India? As most financial markets still believe Britain will vote to remain, the impact of a Brexit vote is likely to be considerable. The pound will almost certainly fall significantly, as will share prices, with banking stocks and multinationals witnessing the hardest hit. The International Monetary Fund (IMF) was the latest economic organisation to advise Britain yesterday against leaving the EU. In its annual outlook on the British economy, the IMF stated that “Brexit would be the largest near-term risk to economic growth”. For that reason Cameron, writing in the pro-Bexit Sunday Telegraph, stated “We face an existential choice on Thursday……There is no turning back if we leave”.
Although the Indian government has, correctly, made no political comment on how a Brexit outcome could affect India-UK ties, noting that this is an internal affair of the UK, CII and FICCI, among others, have underlined the importance of continued border-free access to European markets as crucial for outbound Indian business and Indian companies coming to the UK. There are more than 800 Indian companies in UK in crucial sectors of British economy reportedly generating more than 110,000 jobs. India is also deeply concerned for the welfare of the largest Indian Diaspora in Europe, nearly two million strong, as also the interests of a large moving population of Indians who visit UK as tourists, students or as business professionals. There is great concern that given their tough stand on cutting current immigration levels, a Brexit Conservative government would make much more stringent visa curbs, which would negatively impact business and tourist flows from India to the UK.
Invoking Article 50 of the Lisbon Treaty would be the legal mechanism by which Britain would withdraw from the EU. There is media speculation that this could happen as early as June 27 at a meeting of the EU Heads of State when Cameron would be called upon by his peers to explain the implications of Brexit. It will be the first time that all 26 member states will be able to take stock of the decision of the 27th member to pull out.
Whatever be the outcome on June 23, it will surely be a very slim, pyrrhic victory for either side. What is certain is that a Brexit will profoundly impact not just the British economy but also Britain’s position in the world. Can a Permanent Member of the Security Council afford to turn its back on Europe? Will Britain become inward looking as it goes back to its previous status as a small island State, divided from the continent of Europe by the English Channel, profoundly different in its language, cuisine, culture and customs? Will London become less cosmopolitan and less multi-cultural? Will the dark forces unleashed by the Brexit, which resulted in the tragic murder of MP Jo Cox, result in the rise of extreme right-wing racism which would impact our large diaspora, our political and business ties and our perception of the UK as one of our most important strategic partners? While it is for the British to decide how British they wish to be, the rest of the world, barring a few, is praying for a positive outcome and a resounding no to Brexit.