Video: Brexit explained - what will happen if the UK leaves or remains in the EU?

Thu 28 Mar 2019 09:29 AM GST
ABTV's Shruthi Nair explains why Brexit is happening, what will happen if the UK decides to leavs or stay in the EU, and its global implications.

Today, we will look at the biggest and probably the worst divorce the world has seen. Just like a typical divorce, there have been talks, finger-pointing, custody disputes – just that it has a national, no, a global impact.

But have the husband and wife reached an agreement so they can finalise the split?

Now that you know what I’m talking about, let me start with the basics for those who aren’t exactly aware of what’s going on.

The two parties involved here are the UK, which consists of England, Scotland, Wales, and Northern Ireland and the EU, which is currently a political and economic union of 28 countries. Now, the UK and been a part of EU since 1973 i.e. the marriage had lasted for 46 odd years.

The UK will be the first bona fide country to leave the EU, although Greenland, which is a part of Denmark now, left EU back in 1985.

Now let’s look into the questions that are popping up in your mind.

Why is this UK leaving EU?

This didn’t come out of the blue. The issue has long divided both of the UK’s major political parties, the Conservatives and Labour. And in 2016, then Prime Minister David Cameron decided to settle the question by just asking it.

Cut to June 23rd 2016, when a referendum (public vote) was held where people were asked whether the UK should leave or remain in the EU.

I am going to refrain from commenting on how informed these voters were – but I’m just saying that it was after the polls closed that searches for “what is Brexit” and “what is EU” started climbing across Britain, according to Google Trends.

Anyway, contrary to what Mr Cameron had expected 52% i.e. 17.4m people of the country voted to leave.

They didn’t leave immediately and instead it was decided 29th March, just a couple of days away from now, will be the day. But since no solid agreement was made, there are two new important in the picture.

Oh wait, did I just say deal?

Enter the much debated withdrawal agreement.

Much like in any divorce, a bunch of things need to be settled before the final split. Here it was:

  • An alimony of wait-for-it £39bn, which the UK has to pay to the EU
  • Custody of children – What’s going to happen to the UK citizens living elsewhere in EU and vice versa
  • And how to avoid the return of a physical border between Northern Ireland and the Republic of Ireland when it becomes the frontier between the UK and the EU. This is one of the major sticking points for the countries in the past as sectarian violence had left over 3,500 dead. Peace only returned when the 1998 Good Friday peace accord was signed.

So coming back to the two new important dates

One is 22 May. If MPs approve Mrs May's deal, which has already been rejected twice btw, this will be the date when the UK leaves with the deal. It gives the UK enough time to ratify the deal.

The other date is 12 April. If Mrs May's deal does not get passed by MPs, the UK will need to tell the EU what it wants to do next by the 12 April.

The options as far as we can see is to either leave without a deal or ask for another extension. But the problem with that is that election season is close by, which would mean that the UK will have to take part in the European Parliamentary elections.

How will it impact the people in this part of the world?

The impact on Britain and the EU will be stark with food prices going up, stricter cross border travels, short supply of drugs, expensive imports, delays at ports and motorways and so on.

However, the effects on GCC and MENA aren’t going to be that grave. For some industries, such as real estate, the British currency’s depreciation is a boon because it means investors buying in dollar-pegged currencies such as the dirham can pick up discounted deals.

Businesses in the Mena region say it was either too early to predict the effect of Brexit on their operations, or that there would be little or no impact, because their trade with the UK is through direct relationships over which the EU has no bearing.

A 2016 report by Moody’s forecast that the value of GCC investments in the UK may be affected by asset price and exchange-rate movements as a result of Brexit. However, this would have only a negligible effect on GCC sovereigns, given their large investment buffers and limited trade volumes.

(Source: Arabianbusiness.com YouTube channel)