Brexit and global trade
Apropos of the edit “Trade off” (FE, June 25), Brexit represents the birth-defects of the EU, that have become life-threatening in its adulthood. The PIIGS debt crisis led to the dusting up of primordial concepts of “fiscal austerity” that had the common man across EU nations bear the brunt. The UK, too, was not spared. The pent-up disillusionment over this has sprouted Brexit and perhaps other exits in the future too will materialise. Stressed countries having dragged each other down as economies contracted, the popular theory that exports would provide an escape route from the crisis failed. Economic growth has stalled with falling import demand from partners of the eurozone that were trading extensively with each other and the rest of the world. Global trade, indexed at 50 in 1990 improving to 100 in 2000, to 250 in 2008, is today less than half this number. The EU will take time for attaining new equilibrium, as would China in grappling with re-railing growth. The US will have to settle down post elections. Amidst all this, trade across nations and cross-currency valuations will remain unstable for quite a while. Incidentally, given this scenario, our relaxing FDI limits may not attract external investments to the extent we might have estimated.
R Narayanan, Ghaziabad
India’s Brexit concerns
This refers to the front-page report “The verdict is Out” and the thought-provoking edit-page column “EU shouldn’t respond with revenge” (FE, June 25). This will facilitate better focus on decision making and efficient administration. It is a fact that the British people have made the very clear decision to take a different path. It is clear that Brexit will harm Indian companies in Britain since Europe is the best market for them. India is currently dependent on its development model that is based on amplified roles for the Western world, with nations such as the US, UK leading the roster of those doing businesses with us. The drop in the pound is likely to result in an increase in Indian students choosing the UK as a destination for higher education as this will make studying there significantly cheaper. Britain should now make the best use of its membership of every other international club. There is no doubt that it will have to negotiate some sort of a role in the EU in order to rebuild that vital power to improve relations. Our policymakers should consider Brexit as a chance to improve our trade ties with Britain and the EU. On the other hand, Britain will certainly become great in the coming years.
Vinod C Dixit, Ahmedabad