Business, Government & Society

Presentation on

Brexit and latest developments

Presented by

Name Roll No.

SAMEER SUBODHKUMAR PRASAD 82

SAMSON SELVAM NAIDU 84
SANDEEP DATTATRAY BHOSALE 85
SAMSON SALVI GLORY 83
SABA BASHIR KAZI 81

Under the Guidance of : Prof. Avinash Darbare

& latest developments
 WHAT IS
BREXIT?
• The United Kingdom (UK) intends to withdraw from the European
Union (EU), a process commonly known as Brexit, as a result of a
June 2016 referendum in which 52% voted to leave the EU.
• The separation process is complex, causing political and economic
changes for the UK and other countries.
• The term "Brexit" is a portmanteau of the words "British" and
"exit".
• What is the European Union
• The European Union is a politico-economic union of 28
member states that are located primarily in Europe.
 Reasons For Brexit

• Britain did not get their money back. In cash

terms, Britain is the second biggest contributor to the
EU budget after Germany.
• Britain could decide who comes into the country.
• Britain could make their own laws again

• Britain wouldn’t have to accept decisions

forced on us by other countries
• Britain could set their own tax rates
• Britain could have blue passports again instead red one.
• Britain wouldn't have to fund EU foreign aid
 BACKGROUND

• The country subsequently applied to join the

organization in 1963 and again in 1967, but both
applications were vetoed by the President of France,
Charles de Gaulle, ostensibly because "a number of
aspects of Britain's economy, from working practices
to agriculture" had "made Britain incompatible with
Europe“
• The UK made a third application for membership,
which was successful. Under the Conservative Prime
Minister Edward Heath the European Communities Act
1972 was enacted. On 1 January 1973 the United
Kingdom joined the EEC
 • 1975 REFERENDUM

• In 1975, the United Kingdom held a referendum on whether the UK

should remain in the EEC or not.

Choice Votes %

Yes 17,378,581 67.2

No 8,470,073 32.8

Valid votes 25,848,654 99.79

Invalid or blank votes 54,540 0.21

Total votes 25,903,194 100.00

 2016 REFERENDUM
• Cameron announced a referendum date of 23 June 2016 and
set out the legal framework for withdrawal from the European
Union in circumstances where there was a referendum
majority vote to leave, citing Article 50 of the Lisbon Treaty.
Cameron spoke of an intention to trigger the Article 50
process immediately following a leave vote and of the "two-
year time period to negotiate the arrangements for exit.
Choice Votes %

Leave 17,410,742 51.89

Remain 16,141,241 48.11

Valid votes 33,551,983 99.92

Invalid or blank votes 25,359 0.08

Total votes 33,577,342 100.00

Registered voters and turnout 46,500,001 72.21

 Impact On India If they Exit
 Sensex and Nifty will tumble in the short-run.

 India is presently the second biggest source of FDI (Foreign Direct

Investment) for Great Britain. But, if Britain exits the EU, it will not be as
attractive a destination for Indian FDI as before.

 UK has always acted as a gate pass for Indian companies to access the
European companies, The total trade stood at $14.02 billion in FY16,
out of which $8.83 billion was in exports and $5.19 was in imports.
 Cont….

 So on the event of Brexit, the pound rate might fall against

the dollar and thus, the rupee.

 the companies which have income from UK and Europe

are going to be hit, at least for shorter term.

 Indian pharma industry which has more exposure

towards Europe, will also be affected.
 UK EXPORTS AS % OF TOTAL INDIAN
EXPORTS
% Contribution
40%

34%
35%

30%

24%
25%

20%

15%

10% 8%
6% 6%
5% 5% 5%
4%
5% 3%

0%
Textiles Machinery Jems & Jwells Auto Footwares Pharma Electric Iron & steel Lether Others
Appliances Products
Source:Capitalmind
 Indian Firms to look out for on the event of
Company Impact of Brexit

Has turnover more than GBP 2 billion from UK Steel Plants. Has 12 production plants
Tata Steel
spread across UK.

Tata Motors (Jaguar &Land Rover) Jaguar and land Rover are UK based and are UK’s largest automotive
manufacturers

Have major Automotive Clients in Europe and derives more than half of its income from
Motherson Sumi
Europe

Kitex Garments Kitex Garments client Mothercare derives 20% of revenue from UK

For FY16, its Europe operation grew by 12.9% and UK by 8.23%. Europe and UK
Tata Consultancy Services
together are major contributors to its revenue.

Bharat Forge Caters European automotive clients, Has 3 plants in Germany and 1 in UK

Tech Mahindra Has Banking and Financial Clients from UK, and acquired UK based firm Fintech

Bharat Airtel Has been rated by Grant Thornton as fastest growing Indian company in UK

Marksans Pharma UK and Europe market account for 60% of their revenue.

Emcure Pharma Has acquired UK based Tillomed Laboratories and still expanding
What If…. Britain Exits Or Stays

 If Britain remain with EU Real GDP growth of 2.3%

per annum over the period to 2030.

 If Britain leave Stock market falls, Debt interest

rate rise.

 Brexit could cost UK economy 100 billion Euro which

is equivalent to 5% of GDP by 2020.

 9,50,000 Job losses and Unemployment would

increase by around 5,00,000.
 Global Impact
• To forecast the consequences of the UK leaving the EU, assumptions
about
how trade costs change following Brexit because there is a lack of
clarity
over the consequences of Brexit for trade costs between the UK and
the EU.
• There would be two scenarios: an optimistic scenario in which the
increase
in trade costs between the UK and the EU is small, and; a
pessimistic scenario with a larger rise in trade costs.

(i) Higher tariffs on imports;

(ii)Higher non-tariff barriers to trade (arising from different
regulations, border controls, etc.)
(iii)The UK may not participate in future steps that the EU takes towards deeper
integration and the reduction of non-tariff barriers within the EU.
 Global Impact cont.
• Trading freely with EU allows UK business to grow and create
jobs. Therefore leaving EU might pull this at risk.
• Small markets saying access to EU is important to their future
growth, therefore leaving the EU may suffer losses to them. Even
also 70% major business also think they might suffer loss if UK
leaving EU.
• As per TTIP and CETA deal between US-UE and UE-Canada will
not benefit UK if they leave EU.
• All EU members are worse off: Ireland suffers the largest
proportional losses from Brexit, alongside the Netherlands and
Belgium. Countries that lose the most are those currently trading
the most with the UK. Some countries outside the EU, such as
Russia and Turkey, gain as trade is diverted towards them and
away from the EU.
 Impact on Currency

• The Sterling Pounds is falling against

all major currencies.
• Down by 2% against US dollar and hit
the lowest since 2009.
• Dropped 1.3% lower against the Euro.
 Economic Impact

• One in Every ten UK jobs are linked to the trade with the EU.
Therefore Brexit might affect jobs directly or indirectly.
• 61% of UK small business exports go to the EU. Being able to
trade freely with EU countries, with no tariffs, helps small
businesses in the UK grow and create jobs. This might be
affected.
• Impact of Brexit could lead into lower trade between EU and
UK generating complications.
• It could also affect FDI, immigration and economic regulation
of UK.
 Impact on Society

• Being in EU means lower prices for UK families – because

it’s cheaper to trade and there’s more choice. If UK left
the EU, the cost of imports could rise the prices – leaving
UK families out of pocket
• Independent experts estimate the benefits of being in the
EU are worth pound of 3000 a year to the average UK
household- Due to lower prices and more jobs, trade and
investment. This will be all lost if UK leave the EU.
 Impact on India

• This will make dollar stronger thus lead to inflation.

• Negative impact on the Indian firms in UK(TATA).
• It will negatively affect the markets by hike in crude oil
and gold.
• Scope for increased investment in India firms by
foreign nations.
 Conclusion

• As form this discussion on Brexit and its impacts on Global

terms will lead us to the conclusion that as every coin have
both side same as Brexit will give advantages to UK
somewhat but as its impacts may also damage or lower
the economy of UK and other countries as well who
currently trading with them being in EU member.
• As Britain imports more than exports and they have low
resources hence they are depended on China , Europe and
India for its imports. Europe providing free trade area to
Britain till now. So, Exit from EU is somehow risky for the
Britain in long term.
 Y O U
A NK
T H