What is Brexit and why is it important?

The UK on Thursday (June 23) will decide in a referendum whether to stay in the European Union (EU) or not. The episode is being termed as Brexit. But why is a section of Brits wanting their country to pull out of the EU?

Here are a few things to know before the crucial event that could change the future of the EU:

What is Brexit?

The term Brexit comes from the combination of two words: Britain and exit. It means the Brits may leave the EU by voting. There is an equally strong opinion against doing so and it will all ultimately come down to the referendum which UK Prime Minister David Cameron had promised during the general election last year. The potential exit of Greece from Eurozone was given a similar name of Grexit. [Will India gain if UK exits EU?]

What is Great Britain and what's its difference with UK?

Though we use the names interchangeably, but the UK and Great Britain are not the same. Great Britain is the island that includes England, Scotland and Wales. The UK, on the other hand, includes Northern Ireland besides Great Britain. England is the biggest of all and the most populous part of the UK. [Could Brexit see a Domino effect in Europe?]

Why is Brexit important?

For a European country: A Brexit will change the world. Economically, half of the UK's exports go to the EU while over half of its imports come from the rest of the Union. A Brexit will mean all that will undergo a fresh negotiation. In external affairs, too, the UK has been a big player in the EU. Its exit will mean the EU loses a heavyweight.

For a Nato member country: The UK is a country which makes major military expenditure after the US. Without it, the EU will be a less powerful entity.

For the US: The US is a major partner of the UK---be it in terms of trade or military. The UK's exit from the EU and the subsequent weakening of the EU will not be a great news for the US and its scheme of things like war against terrorists and tyrants.

For other countries: The UK is the fifth largest economy in the world and its exit from the EU could leave the market uncertain. Some countries could face advantage in exporting goods to the UK for the strict EU laws will not be applicable any more but what if the post-Brexit government in the UK pursues strict immigration laws and import policies?

What is EU?

The EU is a regional body which comprises 28 nations. Under the EU, members of any of these states can travel to each other's territory and trade with each other without facing any legal hurdle. The idea started taking shape after the Second World War which had left the continent devastated.

The countries, despite being enemies in the past, started forming partnerships to revive their economy and through a number of bodies, the EU finally surfaced in the 1990s. Its economic integration has been one of the biggest success stories of regionalism in international relations.

What's UK's problem with the EU?

The UK has always had some problems in the EU. One, for instance, the use of a common currency, the Euro which the UK doesn't use. Moreover, the pro-leave camp is not okay with the amount of money (it paid $16.3 billion in 2014) it pays to the EU saying it is too high a fee and can be used for other purposes.

The pro-leave camp also has reservations with the EU's rules and regulations. Cameron got a special status for his country earlier this year which exempts the UK from many of those rules. But it hasn't satisfied all quarters.

The Brits did not have any say since 1975 when it had decided to stay in the EU in a referendum

The UK also has problem with the immigration laws of the EU. Since citizens of the EU country can live and work in any member state, the UK has turned out to be the biggest crowd-puller and that many Brits feel, is putting pressure on basic services like healthcare and education and affects employment prospects. The ongoing Syrian refugee crisis has also given birth to worries and the leave camp favours the exit so that the UK can manage its own borders.

A Brexit will, however, be not have smooth repercussions as it could affect the economy and currency, jobs and security.

Moreover, if the UK exits the EU today, Scotland, one of its member states which saw its bid for independence in 2014 failing, could again call for a referendum seeking independence so that it could join the EU. UK PM Cameron himself is in the stay camp because of all these possible challenges in the post-Brexit era.

Has any country left EU earlier?

No, the UK will be the first if the referendum goes in that direction. Greece has also thought of it but for different reasons. But the UK's departure could see a domino effect as more members might think of leaving the EU, paving way for its collapse.