BREXIT WINS

BREXIT WINS

Posted on Posted in Economy, News

Britain has voted to leave the European Union, with the Leave campaign securing around 51.9 per cent of the vote. While England voted overwhelmingly for Brexit, Scotland and Northern Ireland backed Remain.

S&P says UK may lose top credit rating. The Bank of England is monitoring developments closely. It has undertaken extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks.The Bank of England will take all necessary steps to meet its responsibilities for monetary and financial stability.

The pound crashed to the lowest level since 1985 as sterling fell below $1.35. Complacency about a Brexit outcome will come clear this morning, as out of hours trading suggests that the FTSE 100 will drop by 8.8pc, or by some 560 points. The fall would be the third worst in history if stocks ended the day down as sharply. Trading in Nikkei futures was halted briefly as fears of Brexit began to rise. At least $700 billion of value was wiped of Asian markets, according to some estimates.

Brexit and Economy

In the short run, uncertainty about Britain’s future relationship with the EU, its largest trading partner, could push the UK into a recession. In the long run, the situation could be worse. If Cameron’s government falls, Britain’s prospects of negotiating a favorable deal with the EU could be weakened. The EU may decide to strike a hard bargain to discourage other countries from leaving the EU.

How Brexit impacts on Indian Economy

The biggest risk to the key equity indices stems from Britain’s possible exit from the Eu. There might be far-reaching effects on global stock markets, as well as the international currencies, if Brexit materialises.

Both Brexit and Rajan’s decision not to seek a second term might flare up volatility in the Indian equity markets in the upcoming week. India invests more in the UK than in the rest of Europe combined, emerging as the UK’s third largest FDI investor. Access to European markets is therefore a key driver for Indian companies coming to the UK .

As per data with the Commerce and Industry Ministry, India’s bilateral trade with Britain was worth $14.02 billion in 2015-16, out of which $8.83 billion was in exports and $5.19 was in imports. The trade balance thus was a positive $3,64 billion. Also, if Britain does leave the EU, it could lead to volatility in the pound, which would increase the risks for Indian businesses.

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