Brexit

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For other uses, see Brexit (disambiguation).

The United Kingdom (UK) intends to withdraw from the European Union (EU), a process commonly known as Brexit, as a result of the June 2016 referendum in which 51.9% of votes were cast in favour of leaving the EU. The term Brexit is a portmanteau of the words Britain and exit.

Prime Minister Theresa May announced that she intended to invoke Article 50 of the Treaty on European Union, the formal procedure for withdrawing, by the end of March 2017, which per the treaty terms would put the UK on a course to leave the EU by the end of March 2019.[1] May has promised a bill to remove the European Communities Act 1972 from the statute book and to incorporate existing EU laws into UK domestic law.[2] The terms of withdrawal have not yet been negotiated within the EU; in the meantime, the UK remains a full member of the European Union.

The UK joined the European Economic Community (EEC), the predecessor of the EU, in 1973, and confirmed its membership in a 1975 referendum by 67.3% of the votes. Historical opinion polls 1973-2015 mostly revealed majorities in favour of remaining in the EEC or EU. In the 1970s and 1980s, withdrawal from the EEC was advocated mainly by some Labour Party and trade union figures. From the 1990s, withdrawal from the EU was advocated mainly by some Conservatives and by the newly founded UK Independence Party (UKIP).

The term "Brexit"

Brexit (and its early variant, Brixit),[3] is a portmanteau of "Britain" and "exit". It was derived by analogy from Grexit, referring to a hypothetical withdrawal of Greece from the eurozone (and possibly also the EU).[4] The term Brexit may have first been used in reference to a possible UK withdrawal from the EU by Peter Wilding in a Euractiv blog post on 15 May 2012.[5][6]

Historical background

Opinion polls taken after EU accession in 1973 until the end of 2015 mostly revealed popular British support for EEC or EU membership. Similarly, in the United Kingdom European Communities membership referendum of 1975, two thirds of British voters favoured membership. A clear exception was the year 1980, the first year of Prime Minister Margaret Thatcher's term of office, when the highest ever rejection of membership was measured, with 65% opposed to and 26% in favour of membership.[7] After Thatcher had negotiated a rebate of British membership payments in 1984, those favouring the EEC maintained a lead in the opinion polls, except during 2000, as Prime Minister Tony Blair aimed for closer EU integration including adoption of the euro currency, and around 2011, as immigration into the United Kingdom became increasingly noticeable.[7] As late as December 2015 there was, according to ComRes, a clear majority in favour of remaining in the EU, albeit with a warning that voter intentions would be considerably influenced by the outcome of Prime Minister David Cameron's ongoing EU reform negotiations, especially with regards to the two issues of "safeguards for non-Eurozone member states" and "immigration".[8] The following events are relevant.

Founding of the EEC in 1957 and British applications for membership

The UK was not a signatory to the Treaty of Rome which created the EEC in 1957. The country subsequently applied to join the organisation in 1963 and again in 1967, but both applications were vetoed by the President of France, Charles de Gaulle, ostensibly because "a number of aspects of Britain's economy, from working practices to agriculture" had "made Britain incompatible with Europe" and that Britain harboured a "deep-seated hostility" to any pan-European project.[9] Once de Gaulle had relinquished the French presidency, the UK made a third application for membership, which was successful. Under the Conservative Prime Minister Edward Heath the European Communities Act 1972 was enacted. On 1 January 1973 the United Kingdom joined the EEC, or "Common Market".[10] The opposition Labour Party, led by Harold Wilson, contested the October 1974 general election with a commitment to renegotiate Britain's terms of membership of the EEC and then hold a referendum on whether to remain in the EEC on the new terms.[11]

1975 referendum

In 1975, the United Kingdom held a referendum on whether the UK should remain in the EEC. All of the major political parties and mainstream press supported continuing membership of the EEC. However, there were significant splits within the ruling Labour party, the membership of which had voted 2:1 in favour of withdrawal at a one-day party conference on 26 April 1974. Since the cabinet was split between strongly pro-European and strongly anti-European ministers, Harold Wilson suspended the constitutional convention of Cabinet collective responsibility and allowed ministers to publicly campaign on either side. Seven of the twenty-three members of the cabinet opposed EEC membership.[12]

On 5 June 1975, the electorate were asked to vote yes or no on the question: "Do you think the UK should stay in the European Community (Common Market)?" Every administrative county in the UK had a majority of "Yes", except the Shetland Islands and the Outer Hebrides. With a turnout of 64%, the outcome of the vote was 67.2% in favour of staying in, and the United Kingdom remained a member of the EEC.[13]

Between referendums

In 1979 the United Kingdom opted out of the newly formed European Exchange Rate Mechanism (ERM) which was the precursor to the creation of the euro.

The opposition Labour Party campaigned in the 1983 general election on a commitment to withdraw from the EEC without a referendum.[14] It was heavily defeated as the Conservative government of Margaret Thatcher was re-elected. The Labour Party subsequently changed its policy.[14]

In 1985 the United Kingdom ratified the Single European Act, the first major revision to the Treaty of Rome without a referendum with the full support HM Government of Margaret Thatcher.

In October 1990 - despite the deep reservations of Prime Minister Margaret Thatcher but under pressure from her senior ministers - the United Kingdom joined the ERM with the pound sterling pegged to the deutschmark. In November 1990 Thatcher resigned as Prime Minister amid internal divisions within the Conservative Party arising partly from her increasingly Eurosceptic views. In September 1992 the United Kingdom was forced to withdraw from the ERM after the pound sterling came under pressure from currency speculators (an episode known as Black Wednesday). The resulting cost to UK taxpayers was estimated to be in excess of £3 billion.[15][16]

As a result of the Maastricht Treaty, the EEC became the European Union on 1 November 1993.[17] The new name reflected the evolution of the organisation from an economic union into a political union.[18]

The Referendum Party was formed in 1994 by Sir James Goldsmith to contest the 1997 general election on a platform of providing a referendum on the UK's membership of the EU.[19] It fielded candidates in 547 constituencies at that election and won 810,860 votes, 2.6% of total votes cast.[20] It failed to win a single parliamentary seat as its vote was spread out, losing its deposit (funded by Goldsmith) in 505 constituencies.[20]

The UK Independence Party (UKIP), a Eurosceptic political party, was also formed, in 1993. It achieved third place in the UK during the 2004 European elections, second place in the 2009 European elections and first place in the 2014 European elections, with 27.5% of the total vote. This was the first time since the 1910 general election that any party other than the Labour or Conservative parties had taken the largest share of the vote in a nationwide election.[21]

In 2014, UKIP won two by-elections, triggered when the sitting Conservative MPs defected to UKIP and then resigned. These were their first elected MPs. At the 2015 general election UKIP took 12.6% of the total vote and held one of the two seats won in 2014.[22]

2016 referendum

Negotiations for EU Reform

In 2012, Prime Minister David Cameron rejected calls for a referendum on the UK's EU membership, but suggested the possibility of a future referendum to gauge public support.[23][24] According to the BBC, "The prime minister acknowledged the need to ensure the UK's position within the European Union had 'the full-hearted support of the British people' but they needed to show 'tactical and strategic patience'."[25]

Under pressure from many of his MPs and from the rise of UKIP, in January 2013, Cameron announced that a Conservative government would hold an in–out referendum on EU membership before the end of 2017, on a renegotiated package, if elected in 2015.[26]

The Conservative Party unexpectedly won the 2015 general election with a majority. Soon afterwards the European Union Referendum Act 2015 was introduced into Parliament to enable the referendum. Cameron favoured remaining in a reformed European Union and sought to renegotiate on four key points: protection of the single market for non-eurozone countries, reduction of "red tape", exempting Britain from "ever-closer union", and restricting EU immigration.[27]

The outcome of the renegotiations was announced in February 2016. Some limits to in-work benefits for new EU immigrants were agreed, but before they could be applied, a country such as the UK would have to get permission from the European Commission and then from the European Council.[28]

In a speech to the House of Commons on 22 February 2016, Cameron announced a referendum date of 23 June 2016 and commented on the renegotiation settlement.[29] Cameron spoke of an intention to trigger the Article 50 process immediately following a leave vote and of the "two-year time period to negotiate the arrangements for exit."[30]

Campaign groups

The official campaign group for leaving the EU was Vote Leave.[31] Other major campaign groups included Leave.EU,[32] Grassroots Out, Get Britain Out and Better Off Out.[33]

A "Vote Leave" poster in Omagh saying "We send the EU £50 million every day. Let's spend it on our NHS instead."

The official campaign to stay in the EU, chaired by Stuart Rose, was known as Britain Stronger in Europe, or informally as Remain. Other campaigns supporting remaining in the EU included Conservatives In,[34] Labour in for Britain,[35] #INtogether (Liberal Democrats),[36] Greens for a Better Europe,[37] Scientists for EU,[38] Environmentalists For Europe,[39] Universities for Europe[40] and Another Europe is Possible.[41]

Referendum result

The result was announced on the morning of 24 June: 51.9% voted in favour of leaving the European Union and 48.1% voted in favour of remaining a member of the European Union.[42][43] Comprehensive results are available from the UK Electoral Commission Referendum Results site. A petition calling for a second referendum attracted more than four million signatures,[44][45] but was rejected by the government on 9 July.[46]

Template:UKEU2016Results Template:UKEU2016ResultsBar

Results by region (left) and by local council district (right)
  Leave
  Remain

Political effects

The political scene in the UK went through substantial change and shock after the referendum. After the result was declared, Cameron announced that he would resign by October.[47] In the event, he stood down on 13 July, with Theresa May becoming Prime Minister. George Osborne was replaced as Chancellor of the Exchequer by Philip Hammond, Boris Johnson was appointed Secretary of State for Foreign and Commonwealth Affairs, and David Davis became Secretary of State for Exiting the European Union. Labour leader Jeremy Corbyn lost a vote of confidence among his parliamentary party and a leadership challenge was launched, while on 4 July, Nigel Farage announced his resignation as head of UKIP.[48]

Outside the UK many Eurosceptic leaders celebrated and expected others to follow the UK example. However, opinion polls a week after the Brexit vote showed strongly increased support for the EU in most of Europe. The right-wing Dutch populist Geert Wilders said that the Netherlands should follow Britain's example and hold a referendum on whether the Netherlands should stay in the European Union.[49] However, opinion polls in the fortnight following the British referendum show that the immediate reaction in the Netherlands and other European countries was a decline in support for Eurosceptic movements.[50]

"Article 50" and the procedure for leaving the EU

Advisory status of the referendum

As was the case with the 1975 referendum, the 2016 referendum did not directly require the government to do anything in particular. It does not require the government to initiate, or even schedule, the Article 50 procedure.[51] The UK government stated that they would expect a leave vote to be followed by withdrawal, not by a second vote.[52] Although Cameron stated during the campaign that he would invoke Article 50 straight away in the event of a leave victory,[53] he refused to allow the Civil Service to make any contingency plans, something the Foreign Affairs Select Committee later described as "an act of gross negligence."[54] Following the referendum result Cameron announced before the Conservative Party conference that he would resign by October, and that it would be for the incoming Prime Minister to invoke Article 50.[55] Quoting the ex-Prime Minister's media release on the UK government's web portal, gov.uk:

A negotiation with the European Union will need to begin under a new Prime Minister, and I think it is right that this new Prime Minister takes the decision about when to trigger Article 50 and start the formal and legal process of leaving the EU.

— David Cameron, "EU referendum outcome: PM statement, 24 June 2016". gov.uk. Retrieved 25 June 2016. 

Article 50

Since 2007, the process of withdrawal from the European Union has been governed by Article 50 of the Treaty on European Union. No member state has ever left the EU.[lower-alpha 1] Article 50 of the Treaty on European Union provides an invocation procedure whereby a member can notify the European Council and there is a negotiation period of up to two years, after which the treaties cease to apply - although a leaving agreement may be agreed by Qualified majority voting.[56] Unless the Council of the European Union unanimously agrees to extensions, the timing for the UK leaving under the article is two years from when the country gives official notice to the EU. The assumption is that new agreements will be negotiated during the two-year window, but there is no legal requirement that agreements have to be made.[57] Some aspects, such as new trade agreements, may be difficult to negotiate until after the UK has formally left the EU.[58] Under Article 50, the withdrawal must be in accordance with the member state's constitution, and uncertainty exists as to the constitutional requirements in the UK.

The EU Parliament debated the planned UK exit, and on 28 June 2016 passed a motion calling for the "immediate" triggering of Article 50. However there is no mechanism allowing the EU to invoke the article.[59] As long as the UK Government has not invoked Article 50, the UK stays a member of the EU; must continue to fulfil all EU-related treaties, including possible future agreements; and should legally be treated as a member. The EU has no framework to exclude the UK—or any member—as long as Article 50 is not invoked, and the UK does not violate EU laws.[60][61] However, if the UK were to breach EU law significantly, there are legal provisions to discharge the UK from the EU via Article 7, the so-called "nuclear option", which allows the EU to cancel membership of a state that breaches fundamental EU principles, a test that will be hard to pass.[62] Article 7 does not allow forced cancellation of membership, only denial of rights such as free trade, free movement and voting rights.

Alan Renwick of the Constitution Unit of University College London argues that Article 50 negotiations cannot be used to renegotiate the conditions of future membership and that Article 50 does not provide the legal basis of withdrawing a decision to leave.[51]

In contrast, the constitutional lawyer and retired German Supreme Court judge Udo Di Fabio has stated[63] that

  • The Lisbon Treaty does not forbid an exiting country to withdraw its application for leaving, because the Vienna Convention on the Law of Treaties (article 56, paragraph 2) prescribes an initial notification procedure, a kind of period of notice. Before a contract under international law [such as the Lisbon Treaty], which had been agreed without specifying details of giving notice, can be effectively cancelled, it is required that the intention to do so is expressed 12 months in advance: in this matter there exists the principle of preserving existing agreements and international organisations. In this light, everything argues for the view that the declaration of the intention to leave would itself be, under EU law, not a notice of cancellation.
  • Separate negotiations of the EU institutions with pro-EU regions [London, Scotland or Northern Ireland] would constitute a violation of the Lisbon Treaty, according to which the integrity of a member country is explicitly put under protection (article 4, paragraph 2).

Negotiating positions

Various EU leaders have said that they will not start any negotiation before the UK formally invokes Article 50. Jean-Claude Juncker even ordered all members of the EU Commission not to engage in any kind of contact with UK parties regarding Brexit.[64] Media statements of various kinds still occur. For example, on 29 June, European Council president Donald Tusk told the UK that they would not be allowed access to the European Single Market unless they accept its four freedoms of goods, capital, services, and people.[65] German Chancellor Angela Merkel said "We'll ensure that negotiations don't take place according to the principle of cherry-picking ... It must and will make a noticeable difference whether a country wants to be a member of the family of the European Union or not."[66]

Immediately afterwards, Cameron declared his belief that the next Prime Minister should activate Article 50 and begin negotiations with the EU.[67] During a 27 June 2016 meeting, the Cabinet decided to establish a unit of civil servants, headed by senior Conservative Oliver Letwin, who would proceed with "intensive work on the issues that will need to be worked through in order to present options and advice to a new Prime Minister and a new Cabinet".[68]

The First Minister of Scotland, Nicola Sturgeon, stated that Scotland might refuse consent for legislation required to leave the EU,[69] though some lawyers argue that Scotland cannot block Brexit.[70]

Newly appointed PM Theresa May made it clear that negotiations with the EU required a "UK-wide approach". Speaking in Scotland on 15 July 2016, May offered the following comment. "I have already said that I won't be triggering article 50 until I think that we have a UK approach and objectives for negotiations – I think it is important that we establish that before we trigger article 50."[71]

Delay in invoking Article 50

Nicolas J. Firzli of the World Pensions Council (WPC) has argued that it could be in Britain's national interest to proceed slowly in the coming months; the British Government may want to push Brussels to accept the principles of a free trade deal before invoking Article 50, hopefully gaining support from some other member states whose economy is strongly tied to the UK, thus "allowing a more nimble union to focus on the free trade of goods and services without undue bureaucratic burdens, modern antitrust law and stronger external borders, leaving the rest to member states".[72]

Prime Minister Theresa May made it clear that discussions with the EU would not start in 2016. "I want to work with ... the European council in a constructive spirit to make this a sensible and orderly departure." she said. "All of us will need time to prepare for these negotiations and the United Kingdom will not invoke article 50 until our objectives are clear." In a joint press conference with May on 20 July, Germany's Chancellor Angela Merkel supported the UK's position in this respect: "We all have an interest in this matter being carefully prepared, positions being clearly defined and delineated. I think it is absolutely necessary to have a certain time to prepare for that."[73]

According to the Daily Telegraph, the Department for Exiting the European Union spent over £250k on legal advice from top Government lawyers in two months and has plans to recruit more people. Nick Clegg said the figures showed the Civil Service was unprepared for the very complex negotiations ahead.[74]

Possible need for parliamentary approval before invoking Article 50

Opinions differ on whether the Prime Minister may invoke Article 50 by royal prerogative, or whether there needs to be an explicit Act of Parliament to authorise its invocation. The Constitution of the United Kingdom is unwritten and it operates on convention and legal precedent: this question is without precedent and so the legal position is arguably unclear. The Government argues that the use of prerogative powers to enact the referendum result is constitutionally proper and consistent with domestic law whereas the opposing view is that prerogative powers may not be used to set aside rights previously established by Parliament.[75]

A week after the result of the referendum was announced on 23 June, a columnist for The Times, David Pannick QC, who has been a member of the House of Lords from November 2008,[76] posed the question whether parliamentary approval is needed before notification is given of the UK's intention to leave, and gave as his answer that an act of parliament is required.[77]

Three distinct groups of citizens – one supported by crowd funding – have brought a case before the High Court of England and Wales to challenge the government's interpretation of the law.[78] Whatever the ruling of the High Court, it is assumed that an appeal will be made to the Supreme Court since the matter (the circumstances in which the royal prerogative may be used) is of great constitutional significance.[79]

Legal challenge: Santos and Miller -v- Secretary of State

Note: Listed in the Administrative Court's daily cause list[80] as "Santos and M.",[81] but published documents in the proceedings have also been headed with the names of the Applicants/Claimants in reverse order: "(1) Miller (2) Santos".[82]

On 19 July 2016, at a preliminary High Court hearing of a challenge to the government's claim that it could issue the Article 50 notification in accordance with the Lisbon Treaty and without Parliamentary approval (Santos and Miller, Applicants -v- Secretary of State for Exiting the European Union, Respondent), lawyers for the government confirmed that the prime minister would not issue any such notification before the end of 2016.[83] In the court proceedings, the government contended that it would be constitutionally impermissible for the court to make a declaration, such as the one then being sought, in terms that, unless authorised by an act of Parliament, the government could not lawfully issue notification under Article 50 to withdraw the United Kingdom from the European Union. In support of this contention, the government referred to the Court's previous decision when rejecting a challenge to the validity of the ratification of the Lisbon Treaty after the passing of the European Union (Amendment) Act in June 2008 but without a referendum,[84][85] and stated that the declaration now being opposed would likewise trespass on proceedings in Parliament.[86]

At the full hearing in October, before three judges sitting as a divisional court (the Lord Chief Justice, the Master of the Rolls and Lord Justice Sales), Lord Pannick argued for the lead claimant (Miller) that notification under Article 50 would commit the UK to the removal of rights existing under the European Communities Act 1972 and later ratification acts, and that it is not open to the government, without Parliament's approval, to use the prerogative power to take action affecting rights which Parliament had recognised in that way.[87] An argument put for the "Expat" Interveners at the hearing was that by the 1972 act Parliament had conferred a legislative competence on the EU institutions, and in that way had changed the constitutional settlement in the UK.[88]

Responding in the opening submissions for the government, the Attorney-General (Jeremy Wright) outlined how the decision had been reached. In support of the contention that when passing the 2015 Act Parliament well knew of the Article 50 procedure for leaving the European Union if that was voted for in the referendum, he said that Parliament had previously dealt with it when the Lisbon Treaty was included in domestic law by the 2008 Act, and he took the court through the legislation dealing with the European Union and its predecessor, namely:

In further submissions for the government, the lead claimant's primary argument was said by Treasury Counsel to be that it is not open to the executive to use the prerogative power in such a way as to affect or change current economic law, principally statute law;[90] but the government contended that the leading case Attorney General v De Keyser's Royal Hotel meant that the question about the use of the royal prerogative depended on Parliament's legislative intention,[91] The treaty ratification provisions of the Constitutional Reform and Governance Act 2010 were in force from 11 November 2010,[92] that is, after the Lisbon Treaty, including Article 50, was ratified for UK on 16 July 2008,[93] and had come into force on 1 December 2009.[94] While the Act describes "treaty" as an agreement between states, or between states and international organisations, which is binding under international law, including amendments to a treaty, and defines "ratification" as including acts (such as notification that domestic procedures have been completed) which establish as a matter of international law the United Kingdom's consent to be bound by the treaty, ratification of an amendment to a European Union treaty may involve compliance with the European Union (Amendment) Act 2008, and there are further provisions under the European Union Act 2011.[95] The Lord Chief Justice described the statutory procedure as "of critical importance".[96]

The hearing concluded on 18 October, when the Lord Chief Justice said the judges would take time to consider the matter and give their judgments as quickly as possible.[97] The Supreme Court of the United Kingdom has scheduled time in December for hearing an appeal after delivery of the divisional court's judgment. [98]

"Great Repeal Bill"

In the October 2016 interview at which Theresa May announced the March 2017 deadline for triggering Article 50, she also promised a "Great Repeal Bill", which would repeal the European Communities Act 1972 and restate in UK law all enactments previously in force under EU law. This bill will be introduced in the autumn 2016 parliamentary session and enacted before or during the Article 50 negotiations; it would not come into force until the date of exit. It would smooth the transition by ensuring that all laws remain in force until specifically repealed.[99]

Such a bill is likely to cause issues constitutionally in terms of the devolution settlements throughout the UK nations. The Scottish Government's approach to the "Great Repeal Bill" is that it would require legislative consent from the Scottish Parliament, as it will legislate on Scottish matters.[100] It is also in the Scotland Act 1998 that any legislation passed by the Scottish Parliament has to comply with European Law. Without an alteration to this, Holyrood will still need to follow European Law, or Westminster will likely follow convention to gain legislative consent from the Scottish Parliament to alter this aspect of the Scotland Act.

Consequences of withdrawal

Relationship with remaining EU members

Political system of the European Union

As a majority of UK voters have supported leaving the EU, its subsequent relationship with the remaining EU members could take several forms. A research paper presented to the UK Parliament proposed a number of alternatives to membership which would continue to allow access to the EU internal market. These include remaining in the European Economic Area (EEA) as a European Free Trade Association (EFTA) member (alongside Iceland, Liechtenstein, Norway and Switzerland), or seeking to negotiate bilateral terms more along the Swiss model with a series of interdependent sectoral agreements.[101] Britain has not negotiated a trade agreement since before 1973, and the government is looking to the private sector for assistance.[102]

Were the UK to join the EEA as an EFTA member, it would have to sign up to EU internal market legislation without being able to participate in its development or vote on its content. However, the EU is required to conduct extensive consultations with non-EU members beforehand via its many committees and cooperative bodies.[103][104] Some EU law originates from various international bodies on which non-EU EEA countries have a seat.

The EEA Agreement (EU and EFTA members except Switzerland) does not cover Common Agriculture and Fisheries Policies, Customs Union, Common Trade Policy, Common Foreign and Security Policy, direct and indirect taxation, and Police and Judicial Co-operation in Criminal Matters, leaving EFTA members free to set their own policies in these areas;[105] however, EFTA countries are required to contribute to the EU Budget in exchange for access to the internal market.[106][107]

The EEA Agreement and the agreement with Switzerland cover free movement of goods, and free movement of people.[108][109] Many supporters of Brexit want to restrict freedom of movement;[110] however, an EEA Agreement would include free movement for EU and EEA citizens, as passport systems allow EEA institutions to access markets in EU Member States, for the most part, without having to establish subsidiaries in each EU Member State and incur the costs of full authorisation in those jurisdiction.[111] Others[who?] present ideas of a Swiss solution, that is tailor-made agreements between the UK and the EU, but EU representatives have claimed they would not support such a solution.[citation needed] The Swiss agreements contain free movement for EU citizens.[112] (The Swiss immigration referendum, February 2014 voted narrowly in favour of an end to the 'free movement' agreement, by February 2017. However, the bilateral treaties between Switzerland and the European Union are all co-dependent, if one is terminated then all are terminated. Consequently, should Switzerland choose unilaterally to cancel the 'free movement' agreement then all its agreements with the EU will lapse unless a compromise is found  – as of July 2016, no such compromise was in sight).[113]

Several thousands of British citizens resident in other EU countries have after the referendum applied for citizenship where they live, since they fear losing the right work there.[114]

The EU roaming regulations limit the cost for using a mobile phone abroad inside the EU. If Britain does not secure an EEA agreement, the cost of using a British phone in the EU is forecast to rise.[115]

Relationship between remaining EU members

A report by Tim Oliver of the German Institute for International and Security Affairs expanded analysis of what a British withdrawal could mean for the EU: the report argues a UK withdrawal "has the potential to fundamentally change the EU and European integration. On the one hand, a withdrawal could tip the EU towards protectionism, exacerbate existing divisions, or unleash centrifugal forces leading to the EU's unravelling. Alternatively, the EU could free itself of its most awkward member, making the EU easier to lead and more effective."[116] Some authors also highlight the qualitative change in the nature of the EU membership after Brexit: "What the UK case has clearly shown in our view is that for the Union to be sustainable, membership needs to entail constant caretaking as far as individual members' contributions to the common good are concerned, with both rights and obligations."[117]

Immigration

A Conservative MEP representing South East England, Daniel Hannan, predicted on BBC Newsnight that immigration from the European Union would not end after Brexit:[118] "Frankly, if people watching think that they have voted and there is now going to be zero immigration from the EU, they are going to be disappointed. ... you will look in vain for anything that the Leave campaign said at any point that ever suggested there would ever be any kind of border closure or drawing up of the drawbridge."[119]

The EU had offered David Cameron a so-called "emergency brake" which would have allowed the UK to withhold social benefits to new immigrants for the first four years after they arrived; this brake could have been applied for a period of seven years.[120] That offer was still on the table at the time of the Brexit referendum but expired when the vote determined that the UK would leave the EU.[citation needed]

In late July 2016, discussions were underway that might provide the UK with an exemption from the EU rules on refugees' freedom of movement for up to seven years. Senior UK government sources confirmed to The Observer that this was "certainly one of the ideas now on the table".[121] If the discussions led to an agreement, the UK – though not an EU member – would also retain access to the single market but would be required to pay a significant annual contribution to the EU. According to The Daily Telegraph the news of this possibility caused a rift in the Conservative Party: "Tory MPs have reacted with fury .... [accusing European leaders of] ... failing to accept the public's decision to sever ties with the 28-member bloc last month."[122]

Economic effects

Prior to the referendum, the UK treasury estimated that being in the EU has a strong positive effect on trade and as a result the UK's trade would be worse off if it left the EU.[123] The International Monetary Fund (IMF) forecasts reduced world economic growth by 0.1% following the referendum, and greater reductions in UK economic growth.[124]

Supporters of withdrawal from the EU have argued that the cessation of net contributions to the EU would allow for some cuts to taxes and/or increases in government spending.[125] However, Britain would still be required to make contributions to the EU budget if it opted to remain in the European Free Trade Area.[106] The Institute for Fiscal Studies notes that the majority of forecasts of the impact of Brexit on the UK economy indicate that the government would be left with less money to spend even if it no longer had to pay into the EU.[126]

On 15 June 2016, Vote Leave, the official Leave campaign, presented its roadmap to lay out what would happen if Britain left the EU.[127] The blueprint suggested that Parliament would pass laws: Finance Bill to scrap VAT on tampons and household energy bills; Asylum and Immigration Control Bill to end the automatic right of EU citizens to enter Britain; National Health Service (Funding Target) Bill to get an extra 100 million pounds a week; European Union Law (Emergency Provisions) Bill; Free Trade Bill to start to negotiate its own deals with non-EU countries; and European Communities Act 1972 (Repeal) Bill to end the European Court of Justice's jurisdiction over Britain and stop making contribution to the EU budget.[127]

On 24 June 2016, the bond and credit rating agency of Moody's, on the basis of the result of the referendum, downgraded the UK's standing as a long-term debt issuer and the country's debt rating outlook from "stable" to "negative," while retaining the overall rating of Aa1.[128] Fitch Ratings degraded the credit rating from AA+ to AA because "uncertainty following the referendum outcome will induce an abrupt slowdown in short-term GDP growth...".[129] Standard & Poor's cut the UK's rating to AA, with the following comment: "In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K. ... The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency." On the other hand, economic analysts have pointed out that the UK, as a fiscally and monetarily sovereign nation, retains the ability to service or retire, at any time, any part or all of the state debt that is denominated in the national currency, and, hence, there is no risk whatsoever of defaulting on that part of its debt.[130]

On 27 June 2016, Chancellor of the Exchequer George Osborne attempted to reassure financial markets that the UK economy was not in serious trouble. This came after media reports that a survey by the Institute of Directors suggested that two-thirds of businesses believed that the outcome of the referendum would produce negative results as well as the dropping value of the sterling and the FTSE 100, which began on 24 June 2016. British businesses had also predicted that investment cuts, hiring freezes and redundancies would be necessary to cope with the results of the referendum.[131] Osborne indicated that Britain was facing the future "from a position of strength" and there was no current need for an emergency Budget.[132] "No one should doubt our resolve to maintain the fiscal stability we have delivered for this country .... And to companies, large and small, I would say this: the British economy is fundamentally strong, highly competitive and we are open for business."[133]

On 15 July 2016, Reuters reported that the value of UK funds' assets under management has dropped by more than $40 billion or 8.2 percent "in the three weeks since Britain's vote to leave the EU", primarily due to the devaluation of the pound according to the EPFR (Emerging Portfolio Fund Research). While the stock market had rebounded, analysts at Société Générale bank in France were not bullish: "The conditions and consequences of Brexit remain unclear" and spoke of a "strong negative bias on the UK domestic economy".[134] In its summary, one month after Brexit, the Guardian noted that the initial effects had been less severe than predicted and there had been some sort of recovery but that initially $2tn had been wiped off world stock markets.[135]

On 22 July 2016, a "flash" (provisional) estimate for July from the Markit Purchasing Managers' Index (a survey of business activity) indicated the worst economic performance since the recession of 2009, with the important service sector being badly affected.[136] The pound fell by one cent against the dollar on the news.[136]

On 29 July 2016, The Guardian reported consumer confidence and confidence of manufacturers had both fallen sharply since the Brexit referendum.[137]

By July 2016 the Senate of Berlin had sent invitation letters encouraging UK-based start-ups to re-locate to Berlin.[138]

IMF forecast revisions and relative growth prospects

In its revised growth forecasts published 19 July 2016, the IMF implicitly recognised it had been excessively pessimistic regarding the economic consequences of Brexit: “After saying that leaving the European Union could trigger a UK recession, the International Monetary Fund now expects the British economy to grow by 1.7 per cent this year and 1.3 per cent next year […] The UK is still set to be the second-fastest growing economy in the Group of Seven industrialised nations this year – behind the United States – and third-fastest next year, behind the US and Canada"[139]

European experts from the World Pensions Council (WPC) and the University of Bath have argued that, beyond short-lived market volatility, the long term economic prospects of Britain remain high, notably in terms of country attractiveness and foreign direct investment: "Country risk experts we spoke to are confident the UK's economy will remain robust in the event of an exit from the EU. 'The economic attractiveness of Britain will not go down and a trade war with London is in no one's interest,' says M Nicolas Firzli, director-general of the World Pensions Council (WPC) and advisory board member for the World Bank Global Infrastructure Facility [...] Bruce Morley, lecturer in economics at the University of Bath, goes further to suggest that the long-term benefits to the UK of leaving the Union, such as less regulation and more control over Britain's trade policy, could outweigh the short-term uncertainty observed in the [country risk] scores."[140]

On 4 August 2016, in response to signs of an historically fast economic slowdown in Britain, the Bank of England took measures including cuts to interest rates and buying debt.[141] The bank also forecasts GDP growth to slow down significantly in the near future, with GDP growth to be cumulatively 2.5% lower than its pre Brexit forecast [142]

On 10 August the Institute for Fiscal Studies published a report funded by the Economic and Social Research Council which warned that Britain faced some very difficult choices as it couldn't retain the benefits of full EU membership whilst restricting EU migration. The IFS claimed the cost of reduced economic growth would cost the UK around £70Bn more than the £8Bn savings in membership fees. It did not expect new trade deals to make up the difference.[143]

On 20 July, a report released by the Bank of England said that although uncertainty had risen "markedly" since the referendum, it was yet to see evidence of a sharp economic decline as a consequence. However, around a third of contacts surveyed for the report expected there to be "some negative impact" over the following year.[144] By September 2016, following three months of positive economic data after the referendum, commentators suggested that many of the negative statements and predictions promoted from within the "remain" camp had failed to materialise.[145][146][147]

Scotland and Northern Ireland, and Gibraltar

Before the referendum, leading figures with a range of opinions regarding Scottish independence suggested that in the event the UK as a whole voted to leave the EU but Scotland as a whole voted to remain, a second Scottish independence referendum might be precipitated.[148][149] Former Labour Scottish First Minister Henry McLeish asserted that he would support Scottish independence under such circumstances.[150] In 2013, Scotland exported around three and a half times more to the rest of the UK than to the rest of the EU.[151] The pro-union organisation Scotland in Union has suggested that an independent Scotland within the EU would face trade barriers with a post-Brexit UK and face additional costs for re-entry to the EU.[151]

With the outcome of the recent 'Brexit' referendum being a majority vote for Britain to leave the European Union, the question of what happens to the border between Northern Ireland and the Republic of Ireland has been raised.[152] Enda Kenny, the Taoiseach of Ireland, has warned that a UK exit from the European Union could damage the Northern Ireland peace process.[153] Northern Ireland Secretary Theresa Villiers denounced the suggestion as "scaremongering of the worst possible kind".[154] It has been suggested by a member of Germany's parliamentary finance committee that a "bilateral solution" between the UK and Ireland could be negotiated quickly after a leave vote.[155] On 24 June 2016, following the UK's vote to leave the EU, Northern Ireland's Deputy First Minister Martin McGuinness called for a referendum on Irish reunification.[156]

In 2015, Chief Minister of Gibraltar Fabian Picardo suggested that Gibraltar, which was ceded to Great Britain under the Treaty of Utrecht, would attempt to remain part of the EU in the event the UK voted to leave,[157] but reaffirmed that, regardless of the result, the territory would remain British.[158] In a letter to the UK Foreign Affairs Select Committee, he requested that Gibraltar be considered in negotiations post-Brexit.[159] Spain's foreign minister José García-Margallo said Spain would seek talks on Gibraltar, whose status is disputed, the "very next day" after a British exit from the EU.[160]

London and Greater London

The majority of those living in London and Greater London voted for the UK to remain in the EU. Scottish First Minister Nicola Sturgeon said she had spoken to London Mayor Sadiq Khan about the possibility of remaining in the EU and said he shared that objective for London. A petition calling on Khan to declare London independent from the UK received tens of thousands of signatures.[161][162] Supporters of London's independence argued that London should become a city-state similar to Singapore, while remaining within the EU.[163][164][165] Khan admitted that complete independence was unrealistic, but demanded devolving more powers and autonomy for London.[166]

Immigration controls between France and the United Kingdom

The Mayor of Saint-Quentin, Xavier Bertrand, stated in February 2016 that "If Britain leaves Europe, right away the border will leave Calais and go to Dover. We will not continue to guard the border for Britain if it's no longer in the European Union," indicating that the juxtaposed controls would end with a leave vote. French Finance Minister Emmanuel Macron also suggested the agreement would be "threatened" by a leave vote.[167] These claims have been disputed, as the Le Touquet treaty enabling juxtaposed controls was not debated from within the EU, and would not be legally void upon leaving.[168] After the Brexit vote, Xavier Bertrand asked François Hollande to renegotiate the Touquet agreement,[169] which can be terminated by either party with two years' notice.[170] Hollande rejected the suggestion, and said: "Calling into question the Touquet deal on the pretext that Britain has voted for Brexit and will have to start negotiations to leave the Union doesn't make sense." Bernard Cazeneuve, the French Interior Minister, confirmed there would be "no changes to the accord". He said: "The border at Calais is closed and will remain so."[171]

Academic funding

UK universities rely on the EU for around 16% of their total research funding, and are disproportionately successful at winning EU-awarded research grants. This has raised questions about how such funding would be impacted by a British exit.[172][173]

St George's, University of London professor and UKIP campaigner Angus Dalgleish pointed out that Britain paid much more into the EU research budget than it received, and that existing European collaborations such as CERN and the European Molecular Biology Laboratory (EMBL) began long before the Lisbon Treaty, adding that leaving the EU would not damage Britain's science.[174]

London School of Economics emeritus professor (and founder of UKIP) Alan Sked pointed out that non-EU countries such as Israel and Switzerland signed agreements with the EU in terms of the funding of collaborative research and projects, and suggested that if Britain left the EU, Britain would be able to reach a similar agreement with the EU, pointing out that educated people and research bodies would easily find some financial arrangement during an at least 2-year transition period which was related to Article 50 of Treaty of European Union (TEU).[175] The UK government promised that a major type of EU research grant, Horizon 2020 funding, will be funded by the UK for their remaining duration after EU exit for UK researchers.[176]

A July 2016 investigation by The Guardian suggested a large number of research projects in a wide range of fields had been hit after the referendum result. They reported that European partners were reluctant to employ British researchers due to uncertainties over funding.[177]

See also

Notes

  1. Greenland left the EU in 1985, prior to the introduction of Article 50, and as an autonomous country within the Danish Realm, not as a sovereign member state.

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Further reading

External links