INTRODUCTION

Brexit, short for "British Exit," refers to the United

Kingdom’s decision to leave the European Union,
marking a historic shift in European and global
economics. The process began with a 2016 referendum in
which 52% of British voters chose to leave the EU.
Following years of political negotiations, legal challenges,
and two changes in the UK’s Prime Ministers, the UK
formally left the EU on January 31, 2020. Brexit proved
to be a complex and divisive process, as it involved
disentangling a 47-year economic, political, and legal
relationship with the EU. This separation led to
significant adjustments, not only within the UK and EU
but also globally, affecting trade policies, market stability,
and economic growth forecasts. Brexit’s impacts rippled
across global supply chains, labour markets, and financial
sectors, challenging established economic norms and
creating new realities for international trade and
investment.
MEANING
Brexit is a portmanteau of "Britain" and "exit." It signifies
the UK's withdrawal from the EU and encompasses the
complex process and negotiations that followed. 1 page
Important/Related Terminologies
 Referendum: A direct vote in which an entire
electorate is invited to vote on a particular
proposal.
 EU: The European Union, a political and
economic union of 27 European countries.
 Single Market: An integrated market allowing
free movement of goods, services, capital, and
labour.
 Customs Union: An agreement between
countries to remove tariffs on goods traded
between them.
 Hard Brexit: A complete break from the EU
with no agreements on trade.
 Soft Brexit: A scenario where the UK remains
closely aligned with the EU, retaining some
benefits of membership. 1 page
 HISTORY AND TIMELINE
1. UK Joins the European Economic Community
(EEC) - 1973
On January 1, 1973, the UK joined the European
Economic Community (EEC), aiming for economic
stability and greater trade benefits. While membership
provided access to a broader market, it sparked concern
over economic sovereignty, as many feared that EEC
regulations could limit the UK's control over its own
economy.
2. First Referendum on EEC Membership - 1975
In 1975, the UK held its first referendum on EEC
membership. 67% voted to remain, largely due to the
economic advantages of free trade and reduced tariffs,
despite fears of losing economic independence and
regulatory control.
3. Maastricht Treaty and Increased Integration - 1992
The Maastricht Treaty transformed the EEC into the
European Union, aiming for economic and political unity.
Many in the UK opposed this deeper integration, fearing
it would weaken their financial sector’s competitive edge
and limit economic flexibility.
4. Opting Out of the Euro - 1999
 When the euro launched, the UK chose to retain the
British pound, ensuring control over its monetary policy.
This allowed the UK to protect its financial sector and
maintain economic flexibility, highlighting its cautious
stance on EU integration.
5. Rise of Euroscepticism - Early 2000s
Public opposition to the EU grew in the early 2000s,
driven by concerns over economic restrictions and
immigration’s impact on public services. Eurosceptic
groups like UKIP gained popularity, questioning whether
the EU limited the UK’s economic potential.
6. David Cameron’s Referendum Promise - 2013
To address growing Euroscepticism, Prime Minister
David Cameron promised an EU membership
referendum. His aim was to renegotiate the UK’s position
within the EU, seeking to reduce economic restrictions.
However, his efforts failed to fully satisfy Eurosceptics.
7. EU Referendum and Vote to Leave - June 23, 2016
On June 23, 2016, 52% voted to leave the EU, largely due
to economic concerns and regulatory limits on the UK’s
economy. This decision led to Cameron’s resignation and
triggered the complex process of Brexit.
8. Article 50 Triggered - March 29, 2017
 Prime Minister Theresa May triggered Article 50,
beginning formal exit negotiations. Businesses faced
uncertainty as both sides worked to balance trade
continuity with economic independence.
9. Deal Rejections and Brexit Delays - 2018-2019
Parliament rejected May’s Brexit deals multiple times,
leading to political stalemate and economic uncertainty.
Delays impacted currency stability and business
investment, especially for sectors reliant on EU trade.
10. Official Brexit - January 31, 2020
On January 31, 2020, the UK formally left the EU,
entering a transition period. During this time, businesses
prepared for potential shifts in trade and regulation, as the
future economic relationship with the EU was still being
negotiated.
11. Trade and Cooperation Agreement - December 24,
2020
The UK and EU finalized a Trade and Cooperation
Agreement on December 24, 2020, enabling tariff-free
trade on goods but introducing new customs checks and
regulatory barriers. The deal increased trade friction,
impacting industries dependent on EU markets and
reshaping the UK’s economic landscape.
 REASONS FOR BREXIT
1. Sovereignty: Many voters believed that EU
membership compromised UK sovereignty, with
laws and regulations imposed from Brussels.
Leaving the EU was seen as a way to regain
control over national legislation.
2. Immigration Control: Concerns over
immigration were significant, with many feeling
that EU policies allowed for uncontrolled
migration. Any EU citizen can work in any
member nation of EU. Approximately, 1 million
people migrated to Britain in large numbers.
3. Economic Independence: Proponents believed
that the UK could better negotiate its own trade
deals outside the EU, reducing financial
contributions to the EU budget and establishing
regulatory standards tailored to its economy.
4. Loss of Employment: As due to immigration of
low skilled people who will work for less salary,
Britain’s citizens lost their employment and also
resulted in reduction of salaries for British people.
5. Political Factors: The rise of populism and
internal divisions within the Conservative Party
played a role, with UKIP (UK Independence
 Party) highlighting anti-EU sentiments that gained
traction in the electorate.
6. Global Trade Opportunities: Advocates argued
that Brexit would allow the UK to pursue trade
agreements with non-EU countries, enhancing its
global economic position and fostering new
partnerships.
7. Security Concerns: Some linked EU membership
to limitations on the UK’s security policies,
believing that leaving would enable more effective
management of national security.
8. Regulatory Burdens: Some viewed EU
regulations as overly restrictive, hindering
business growth. Leaving the EU was perceived as
an opportunity to simplify regulations and foster a
more business-friendly environment.
9. Economic Discontent: Regions facing economic
decline felt neglected by EU policies. Brexit was
seen as a chance to address local needs and
stimulate economic growth.
 IMPACT OF BREXIT ON UK
### **1. Economic Impact**
Brexit increased trade barriers, causing a **15% drop in UK-EU
goods trade** and leaving the UK’s GDP an estimated **4%
lower** by 2023, costing around £100 billion annually. Sectors
like finance saw **7,000 jobs** move to EU cities, while
customs checks and trade friction raised costs for businesses and
consumers, impacting supply chains and inflation.

### **2. Social Impact**

The end of free movement reduced EU immigration,
contributing to labour shortages in key sectors like agriculture
and healthcare. By 2021, EU nationals working in the UK
dropped by **25%**, intensifying skill shortages and
inflationary pressures. Brexit also deepened social divides, with
**40% of Britons** feeling it had harmed societal unity.

### **3. Political Impact**

Politically, Brexit redefined the UK’s global role and fueled
internal divisions. Efforts to establish new trade deals included
agreements with Australia, while Brexit renewed calls for
**Scottish independence** (62% of Scots had voted to remain).
Northern Ireland also faced tensions over the Northern Ireland
Protocol, complicating UK-EU relations.
 IMPACT OF BREXIT ON EU
1. Economic Impact
Brexit disrupted EU-UK trade, with a €40 billion drop in trade
during the first year, affecting industries like automotive,
agriculture, and finance. The EU faced a €10 billion annual
budget shortfall due to the UK’s departure as a major net
contributor. Financial hubs like Paris and Frankfurt gained some
of London’s business as banks relocated, but the overall EU
economic impact was modest, estimated at 0.5% lower GDP by
2023.
2. Social Impact
Socially, Brexit shifted labor dynamics, with many EU nationals
returning from the UK, easing skill shortages in some EU
sectors but increasing labor competition in others. Public
sentiment toward the EU improved post-Brexit, with 62% of
Europeans viewing EU membership favorably in 2022, marking
a rise in support and reinforcing perceptions of the EU’s
importance.
3. Political Impact
Politically, Brexit prompted the EU to strengthen internal
solidarity and increase self-reliance in defense and trade, with
France and Germany assuming larger roles. The UK’s exit set a
precedent for leaving, but rather than weakening unity, it
bolstered pro-EU sentiment, increasing support for the union
across member states. However, Brexit also highlighted
challenges within the EU, prompting ongoing reforms in areas
like governance and strategic autonomy.
 IMPACT OF BREXIT ON INDIA
 UK always has been an access point for the
business for Indian companies, being able to do
business in UK also provide access to the
European companies. After Brexit this window
will get close.
 India exports to Britain at 17.66% of the total
exports, which includes textiles, clothing,
machinery, jewellery, etc. this export rate might
decrease after Brexit.
 Indian companies that have an exposure to UK
may get temporary hit because of Brexit
 Government of India(BJP) has allowed 100%
FDI in India, this step can help India to become
a major global finance market.
 Indian markets delivered consistent returns over
the years.
BREXIT’S IMPACT ON INDIAN
ECONOMY
Indian rupee become weaker: The rupee became
50 paisa weaker at 66.60 per dollar by the end of
the fiscal year.
 BREXIT’S IMPACT ON SECTORS
Precious Metals (Gold/Silver) prices increased 3%
overnight in the local market, as Britain decided to
leave the European union. With the sterling
undergoing the biggest one-day drop of over 10%
against the dollar, international investors turned to
safe-haven assets, thus increasing the gold price
5.3% to over $1,326 per ounce in one day.
Trade and Finance were among the hardest-hit.
Leaving the EU single market led to increased
tariffs, customs checks, and regulatory barriers,
resulting in a 15% drop in goods trade between the
UK and EU. For the financial sector, Brexit meant
the loss of "passporting" rights, which allowed UK-
based firms seamless access to EU markets. This led
to the relocation of 7,000 finance jobs and billions in
assets to EU cities, challenging London’s standing
as Europe’s primary financial hub.
Agriculture also felt strong repercussions,
particularly in labor availability. With the end of free
movement, seasonal workers from the EU dwindled,
leading to severe labor shortages during harvests.
This drove up the production costs and limited
output in agriculture, putting pressure on both small
farmers and the wider food supply chain.
UK stock market was significantly impacted by
Brexit, causing initial volatility. After the 2016
referendum, the FTSE 100 fell 8% before recovering
due to the weaker pound, while the domestically-
focused FTSE 250 dropped more sharply, reflecting
economic concerns. By 2020, UK stocks lagged
behind global markets: the MSCI World Index rose
30% from 2016 to 2020, while the FTSE 100
increased only 5% amid Brexit uncertainty.
Sectors like banking and real estate faced slow
growth due to reduced EU market access. By 2023,
London saw fewer IPOs as companies increasingly
opted for listings in New York, indicating Brexit's
lasting effects on the UK's financial markets.
 ADVANTAGES
1. Increased Sovereignty: The UK can enact its laws
without EU oversight, a central argument for many
"Leave" voters.
2. Independent Trade Deals: The UK can negotiate trade
agreements with countries outside the EU, potentially
enhancing economic growth. For instance, the UK
signed a trade agreement with Australia in June 2021.
3. Reduced Immigration: The UK can establish stricter
immigration controls, addressing public concerns about
population pressures.
4. Regulatory Freedom: The UK can amend or repeal
EU regulations that are viewed as burdensome,
potentially benefiting local businesses.
5. Economic Independence: The UK can set its monetary
policies, free from EU constraints.
6. Support for Local Industries: Opportunities to
promote and protect local industries against foreign
competition.
7. Control Over Fishing Rights: Regaining control over
territorial waters to prioritize local fishing industries.
8. Budget Savings: The UK can redirect funds previously
allocated to the EU budget towards domestic priorities.
 DISADVANTAGES
1. Economic Uncertainty: Brexit has led to volatility in
markets, with the pound dropping significantly against
the dollar post-referendum.
2. Trade Barriers: New tariffs and customs checks may
hinder trade with the EU, affecting supply chains. For
instance, exports to the EU fell by 40% in January 2021
due to new customs regulations.
3. Loss of Single Market Access: UK businesses face
challenges in exporting to the EU without tariff-free
access.
4. Labor Shortages: Industries relying on EU labor, such
as agriculture and hospitality, have reported significant
labour shortages.
5. Complicated Border Issues: The Northern Ireland
Protocol has created a de facto customs border in the
Irish Sea, complicating trade between Northern Ireland
and the rest of the UK.
6. Reduced Foreign Investment: Uncertainty around
Brexit has led some investors to reconsider their
positions in the UK.
7. Impact on Financial Services: The City of London
risks losing its status as a leading financial hub if firms
relocate to the EU for easier access to markets.
8. Social Division: Brexit has deepened political and
social divisions within the UK, leading to increased
tensions in communities.
 SYRIAN AND IRAN ECONOMIC CRISIS
One of the reasons for BREXIT is that the Britain
does not handle well the economic and humanitarian
crisis of Syria and Iran. The Syrian refugee crisis in
2015 brought a surge of refugees into Europe,
intensifying discussions about EU immigration
policies. This fueled public concern in the UK over
border control and immigration, issues that played a
major role in the Brexit referendum.
The Iran crisis, on the other hand, had less direct
impact on Brexit. However, it underscored broader
geopolitical concerns, like the EU’s shared foreign
policy approach and the UK’s autonomy in
international relations.
Increase of terrorist activities and attacks over all the
EU member nations has resulted in slowdown of
industrial growth. Being a member nation in EU,
Britain cannot take its own decision regarding any
important problems; it cannot change some laws etc.
without the majority in EU parliament. So this
limited its scope of functioning towards what is
needed in Britain, by the British parliament. It
resulted in a slowdown in Britain’s economy.
 COMPARISON AND CONTRAST
(Brexit and Greenland’s Exit)
Motivations for Exit
 Greenland:
o The primary motivation for Greenland's exit

from the EEC was dissatisfaction with the

impact of EU policies on its fishing industry,
which is vital for its economy. Greenlanders
sought to regain control over their natural
resources and fisheries.
 Brexit:
o The motivations for Brexit included a desire for

greater sovereignty, control over immigration,

and dissatisfaction with EU regulations affecting
various sectors, including trade, finance, and
agriculture. Concerns about losing control over
borders and laws were significant driving factors.
Economic Impacts
 Greenland:
o Following its exit, Greenland experienced

challenges in maintaining its fishing industry’s

viability. The loss of EEC market access led to
adjustments but allowed Greenland to implement
its fishing regulations and control resources.
 Brexit:
o Brexit has resulted in significant economic

disruptions for the UK, particularly in trade,

finance, and labor markets. The introduction of
tariffs and non-tariff barriers has affected various
sectors, leading to a 15% drop in UK-EU goods
trade initially. The financial services sector also
faced challenges due to loss of passporting
rights.
Exit Process
 Greenland:
o Greenland’s exit was relatively straightforward.

After the referendum, it negotiated its

withdrawal, and the transition was smooth, with
the country retaining access to the EEC's single
market through a special agreement.
 Brexit:
o The Brexit process was complex and

contentious, marked by lengthy negotiations,

political upheaval, and uncertainty. The UK
government faced challenges in defining the
future relationship with the EU, culminating in
the Trade and Cooperation Agreement
reached at the end of 2020.
 Key Government Decisions During Brexit
During the Brexit process, the UK government made several
important decisions. First, they decided to hold a referendum in
2016, which resulted in a narrow vote to leave the EU. In March
2017, they triggered Article 50, starting the formal process to
exit the EU with a strict two-year deadline. In 2018, they
proposed the Chequers Plan, which tried to find a middle ground
on trade but was rejected by both sides. The government also
took a tough approach in negotiations, even suggesting a "no
deal" exit, which created uncertainty for businesses. In October
2019, they reached a new withdrawal agreement that included
the controversial Northern Ireland Protocol, leading to more
tensions. After leaving, they focused on getting new trade deals,
resulting in the Trade and Cooperation Agreement (TCA) with
the EU, which kept some trade relations but also introduced new
barriers.

Critical Appraisal
The government’s decisions during Brexit have been criticized
for not being well-prepared or clear. Holding the referendum led
to deep divisions in the UK. The negotiation strategies often
seemed unplanned and led to compromises that did not achieve
their goals, especially concerning Northern Ireland and
Scotland. By focusing more on gaining control than on
economic issues, the government has left many businesses
struggling to adjust to new rules and barriers. These mistakes
have resulted in ongoing challenges for the UK’s economy and
politics after Brexit.
CONCLUSION
In conclusion, Brexit represents a significant turning point not
only for the United Kingdom but also for the European Union
and the broader global landscape. Through our exploration of its
historical context, from the UK's entry into the EU to its
eventual departure, we have seen how complex political,
economic, and social factors intertwined to shape this
momentous event. The timeline of key events highlights the
intricacies of negotiation, the challenges of aligning diverse
interests, and the impact of shifting public sentiment.
The ramifications of Brexit extend far beyond the borders of the
UK, affecting trade dynamics, investment strategies, and labor
markets across the EU and even influencing relationships with
countries like India. The analysis of various sectors, from
finance to agriculture, illustrates the multifaceted nature of
Brexit's impacts, revealing both opportunities and challenges.
Ultimately, Brexit serves as a reminder of the complexities
involved in global governance, trade relations, and national
identity. It raises critical questions about the future of
international cooperation and the balance between sovereignty
and economic interdependence. As the UK forges its path
forward, it must navigate the delicate balance between
maintaining its interests while fostering constructive
relationships with its neighbours and partners around the world.
The lessons learned from Brexit will undoubtedly shape the
future of international relations and economic policies for years
to come, making it a pivotal study in the field of economics.