Financial circles divided over UK move to quit EU
CHENNAI: Looking for a breather from the utterly shocking referendum in Britain voting to leave the European Union (EU), the most tremulous for stock markets since the 2008 global meltdown, financial circles here on Friday remained equally divided on the fallout of Britain’’s decision, severing an over 40-year relationship.
Though the overarching perception is that the referendum decision is a big blow to Europe, UK and the world at large, “it may not be all that bad after all,” opined J. Venkatramana, senior financial analyst of reputed business house of Somayajulu and company and a former president of Madras Stock Exchange (MSE).
Sharing some of his perceptions with DC, Venkatramana felt the Franco-German bloc could get more assertive now, free from the dragging influence of UK all these years. So to see this development, as ‘fortress Europe’ cracking up may not be the full picture, he stressed with caution.
Over 60 years back, the British colonial makeup was such that the “sun never sets over the Empire”, he alluded to on how Britain was a leading economic power earlier in the Commonwealth, lording over its colonies including India. After World War-II, that situation was substantially reversed, thanks to secular, nationalist political struggles. “Now that they (UK) have decided to leave EU, they will have to start working now,” quipped Venkatramana, adding it will not be difficult for Britain to wake up from its economic slumber having been an “imperial power” once.
He pointed out that the ‘leave brigade’ in Britain was concerned about two basic issues- resentment to move towards a common currency (Euro) in EU, which meant giving up sovereignty and prestige of Pound sterling and fears about EU’s growingly liberal outlook on immigration issue. But on both these counts, the British might have been mistaken, he felt.
The EU had got into more trade pacts with other countries, which Britain would now have to contend with. “Will they have to turn towards India and Pakistan?” he asked. Even if Britain feared the kind of immigration buffeting European nations (the new immigrants to the Franco-German bloc as he put it) as a strain on the former’s social infrastructure like health and education and jobs, the UK, to make its economy more competitive, would now have to look to India and be open to more immigration from countries like India, the former MSE chief said adding it might help India that way.
However, another senior market analyst in Chennai, C. Ramamurthy was not that optimistic. “It is going to be a very difficult situation for Britain, Europe and the world.” He was particularly concerned that for about 800 India-linked companies presently in the U.K., market access to EU will now become highly restricted or even stopped for a bigger price to pay with this referendum decision.
And for Ramamurthy, immigration would still continue to be an issue even after Britain quits EU. While both the financial experts agreed that the issue has to be studied in greater detail, Ramamurthy closed with a memorable quote from Edmund Burke’s ‘Reflections on the Revolution in France (1790)’. The “age of chivalry has gone; that of economies and (those) calculated have succeeded and the glory of Europe is extinguished for ever.”