The European Union (EU) as we knew it, has changed. One of its major constituents, the United Kingdom (UK) is set to leave the EU as results of a referendum to decide on the country's continuance in the union come in, with the ‘Leave’ campaign ahead with 51.7% of the vote, as compared to 48.2% for ‘Remain.’
Although the final results are still a few hours away, major British networks like the BBC and ITV are forecasting the ‘Leave’ campaign to win. According to the BBC, the ‘Leave’ campaign is expected to win 52% of the vote.
While the UK’s exit could trigger an imminent political crisis in that country, it could also mean that demands for similar referenda could crop up in other EU countries, leading to the possible collapse of the EU sometime in the next few years, analysts are saying.
This historic result, triggered a global sell off in global markets, with Asian bourses slipping in the red. In India too, both the BSE Sensex and the Nifty were down by more than 3% in early morning trade.
Beyond the markets, the UK’s exit could mean that the 800 odd Indian companies that are exposed to the UK, may have to renegotiate their business relationships both with the UK and the EU. Several Indian business houses, including the Tata Group, operate in the UK. In fact, Tata Steel is looking to sell its assets in the country, which could be impacted, said observers. The Tata group also owns Jaguar Land Rover, the largest carmaker in the UK.
As far as bilateral trade goes, the UK ranks 12th in terms of India’s trade partners, with close to $8 billion in exports and more than $5 billion in imports. Moreover, a sixth of India’s $100 billion software exports go to the UK.