EDITORIAL ANALYSIS:Brexit-Britain challenges remain – INSIGHTSIAS


Source: The Hindu, Indian Express, Indian Express

  • Preliminaries:Current events of international importance, Brexit, EU, etc.
  • GS Paper II sector:Bilateral, regional and global grouping involving India or affecting India’s interests, etc.


  • Rishi Sunak claimed several records this week – Britain’s first Asian prime minister, the youngest in two centuries and certainly the wealthiest in living memory.


The context


  • It refers to Britain holding a referendum to decide whether it wants to continue being a member of the EU or not.
  • The referendum took place on June 23, 2016 and 52% voted for BREXITwhile 48% voted to stay in the EU.
  • Lisbon Treaty: The UK must invoke a named agreement Article 50 of the Lisbon Treaty.

Reasons Britain is looking for BREXIT:

  • Sovereignty: Certain policy decisions such as competition policy, agriculture, copyright and patent law were contrary to Britain’s interests.
  • Regulations were becoming a burden: Such as -limiting the power of vacuum cleaners, not recycling tea bags, etc.
  • Immigration: Great Britain was not a signatory to the Schengen Border Free Zone(allows easy travel across Europe) – opposition to migration to the country from within the EU and its effects on wages and public services.

Arguments in favor of the UK leaving the EU:

  • Migration of people: It will stop migration both inside and outside the EU, especially from West Asia (Syria and ISIS issue) and Eastern European countries.
  • Contributions to the EU budget:The United Kingdom’s contribution is not proportional to the benefits it derives from it.
  • EU failure: The EU has failed on several fronts in creating community and identity while resolving differences among its members, including Britain.

Arguments against Britain leaving the EU:

  • Big share:This reflected the great divide between Britain and the EU.
  • Immigrants: The majority of immigrants are young and therefore would have stimulated economic growth and will help pay for public services.
  • Swap: Trade gets a major boost for Britain if it stays with the EU.
    • Selling products to other EU countries becomes easier with EU membership.
  • Security: leaving the EU has affected the ability to fight cross-border crime and terrorism.

What did the referendum indicate?

  • Brexit was not an event:It was a process, and one with a long tail.
  • unravel: of all the commercial, financial, legal, bureaucratic and cultural ties that unite Great Britain to the largest single market in the world.

What should Theresa May (former PM) have opted for?

  • Norwegian-style agreement:
    • This would have allowed Britain to remain in the European Economic Area
    • Pursue a customs agreement with the EU, protecting its most important trading relationship
    • Nominally bring political control back to Westminster.

What did she choose?

  • She pursued a complete break with the EU.

Current affairs:

  • National Health Service (NHS):underfunding and understaffing
  • Accelerated growth: once binding labor laws and EU financial regulations have been abandoned
  • comforting delusionsthat countries would line up to sign trade deals with a ‘free’ Britain, the same

Support Liz Truss:

  • Pushing the Brexit myths to their logical conclusion
  • She persuaded to cut taxes for the wealthy
  • Appeal to bankers and their high-risk strategies.


  • Lack of international investment: International investors do not subscribe to myths.
  • Falling confidence: The long-term outlook for Britain was signaled from 2016 with the fall of the pound.
  • Trade deals in the form of what countries wanted in return: In the case of India, a more favorable visa regime for its workers.

Rishi Sunak’s Manifest Promise:

  • Strengthening the National Health Service (NHS): the publicly funded healthcare system in the UK:
  • Invest in schools: increased funding for schools and teaching staff.
  • A stronger economy: Tax cuts for the working class, pension protection for pensioners, upgrading the skills of British workers and improving their employability.
  • Safer streets:more and better equipped police and more prisons
  • Tighter immigration controls


Stagnant economy

  • Public finances have been derailed.
  • Growing cost of living crisis
  • The stupid bonus:
    • The increase in interest rates is called the “idiot premium”.
    • Truss-Kwasi Kwarteng decided to increase spending (including giving tax cuts to the wealthy) by simply borrowing more.

Key challenge facing the UK economy:

  • Trade shock: an increase in the price of imports relative to exports
  • For households: the impending cost shock will hit those least able to bear it
  • The weak supply side of the UK economy: While production is 2.6% below its pre-Covid trend, current excess demand is around 1.4% of GDP.
  • Unemployment: It should increase in the short term with the drop in demand.
  • Inflation: It should increase further

Three major challenges that he must take up immediately:

  • Contain inflation: while facing the cost of living crisis.
  • Improving the financial health of the government: while preparing the foundations for growth.
  • Political stability: Restoration of political stability.

Implications for India:

  • Swap: India-UK trade got a boost. Strict EU regulations, which were the main obstacle, have been removed.
  • The weakening of the kilos: It will also be advantageous for Indian imports.
    • This will also benefit Indian tourists and students studying in the UK.
  • Indian companies in the UK:Indian companies will not be able to use the UK as a gateway to the European Union.
    • Indian IT companies with high exposure to European markets, particularly the UK, will be affected as there is a risk of slower growth levels in the EU and UK.
  • Tourism: Due to the weakening of the pound, there will be a decrease in the number of tourists flocking to India from Britain.
  • Immigration: India-UK trade deal stalled due to immigration concerns.
  • Indian students in the UK: I have benefited from this since the number of applicants from EU countries to UK universities is likely to decrease after Brexit.
    • The weakening of the pound could lower the total cost of education for Indian students.

The 2030 roadmap:

  • It was launched in 2021, during the Virtual India-UK Summit.
  • Main area of ​​intervention:Free Trade Agreement (FTA) between the two countries.
  • Bilateral relations: He elevated bilateral relations to a “Global strategic partnership.
  • Framework of UK-India relations: in the fields of health, climate, trade, education, science and technology and defence.

Go forward

  • Estimates calculate a 4% drop in productivity in 15 years: Due to Brexit-induced loss of market access and openness to trade
  • Politically sensitive decision: It would involve tough and politically sensitive decisions such as asking nurses, who had risked their lives during the pandemic, to settle for lower-than-promised raises.
  • The Truss government’s attempts to repudiate “economic orthodoxy”: with significant, unfunded tax cuts. Although they have been reversed, the cost of economic folly remains.
  • Rishi Sunak’s current entry bin will have briefings on: soaring inflation, rising mortgages, persistent cost of living crisis, NHS crisis and strikes by several labor unions.
  • Uniting Conservatives: It is the necessary first step for any economic decision to be taken seriously by the markets and the rest of the world.


  1. The objective of Information Technology Agreements (ITAs) is to reduce all taxes and customs duties on information technology products by signatories to zero. What impact would these agreements have on India’s interests? (UPSC 2014)

(250 WORDS, 15 POINTS)


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