BREXIT is the shorthand for Britain’s split from the European Union, changing its relationship to the bloc on trade, security, and migration. The EU built on the ruins of World War 2 to integrate economic power is now a group of 28 Countries that trade and allow their citizens to move between nations to live and work. On June 23,2016 the Referendum, 51.9% of the British voted to leave while 48.1% voted to remain in the bloc. Young people overwhelmingly voted against leaving while older people supported Brexit. Facing a tough re-election, UK Prime Minister David Cameron promised that if he wins, he’d schedule a public referendum on whether the UK should leave the EU. When he won, he used his victory as leverage to successfully renegotiate a few minor terms of the UK’s membership. Although it changed a little, Cameron hailed it as a victory as it was the 1st time an existing EU member country had been permitted to have its own special deal. In March 2017, the UK government formally declared the country’s withdrawal, starting a 2 -year process that was due to conclude with the UK withdrawing on 29 March 2019. As the UK parliament voted against or didn’t` approve the negotiated withdrawal agreements, the deadline has been extended 3 times and is currently on 31 January 2020.
Reasons to Exit
The 3 main reasons were – economics, immigration, and identity
The economic issue is that the UK is one of the wealthiest countries in the union that contributes too much money to Brussels (HQ of EU), which then gets distributed to the various other member states.
Any member of the EU member state can relocate and work in the UK without needing a work visa. Many economists agree that it is good for the economy, but right-wingers complain that non-UK citizens come and use their already scarce public resources due to immigration.
People in the UK don’t generally see themselves as European, and the British identity within the EU is a complicated one. As a member state, the UK must abide by various policies, some of which may seem ridiculous or overly constricting.
By a narrow vote of 3.8%, the UK decided to leave the European Union. The consequences were immediate. Cameron resigned & the value of the British pound dropped. Theresa May, a member of Cameron’s cabinet had been against Brexit, but in a cunning move chose not to publicly campaign, positioning her perfectly to succeed Cameron as prime minister when Brexit passed. In order to leave, the UK had to invoke article 50 of the EU treaty which outlines for a member state to withdraw.
What is ARTICLE 50?
Article 50 is the plan for any country that wishes to exit the EU. The process of leaving the EU formally began on 29th March 2017 when Teresa May triggered Article 50. It was created as a part of the Treaty of Lisbon- an agreement that was signed by all EU states which became law in 2009. Before the Treaty, there was no formal mechanism for a country to leave the EU. EU is required to “negotiate and conclude an agreement with (the leaving) State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the EU”. Once article 50 is enacted, that country should not participate in the discussions of the European Council or in the decisions concerning it. The negotiation period is limited to 2 years from the date of Article 50 notification to conclude new arrangements, which when extended the treaties will cease to apply unless every one of the remaining EU states agrees to extend the negotiations.
Hard or Soft Deal
There were 2 options that were floated since the Brexit Referendum result of 2016 is whether Brexit will be Hard or Soft Deal. This mainly has to do with trade and immigration. A Soft Brexit Deal would largely keep things the same as they are now, with the continued free movement of goods and people from the continent. But a Hard Brexit Deal would result in import tax on goods and services in both directions and also restrict the migration of EU citizens into the UK. In addition, the complex issue of Northern Ireland has created a problem that if the UK totally withdraws from the Customs Union it would be left with a hard border in Ireland. As a result, Teresa May has accepted that there should be a need for “backstop” which will keep the UK close to EU’s regulation for a period until the long-term solution is agreed. The final deal isn’t yet known and the risk of a no-deal scenario is real. But if May is able to agree with the EU’s withdrawal policy, it is likely to combine both hard and soft Brexit deals. Goldman Sachs says there’s a 50% chance of a Soft Brexit. The brokerage assigned a 40% probability to a Hard Brexit via a second referendum or general election and a 10% probability to a “No Deal” Brexit.
So, what’s a No-deal?
UK would leave the EU without any formal agreement, which means the things that need to be sorted out before the UK leaves won’t be. On July 24,2019, Boris Johnson replaced Theresa May as the UK’s Prime Minister. Johnson promised to execute Brexit by October 31 with or without a deal. On August 28,2019, Queen Elizabeth II approved Johnson’s request to shut down parliament between September 11 and October 14. This made difficult for the Brexit opposition to prevent a No-deal Brexit. No-deal guarantees the rights of UK citizens to EU and vice versa and the money that the UK had agreed to pay to the EU to settle its financial obligations.UK and EU have been unable to reach an agreement on the terms of Britain’s withdrawal from the bloc. If this is the case, there will be no transition period and Britain immediately leaves the single market and customs union as well as other EU institutions. Instead, the rules and regulations that governed the UK’s relationship with the rest of Europe for nearly 50 years would disappear overnight with very much to replace them. For example, the UK’s ability to trade freely with its neighbors would come to an end. The government’s own internal planning documents said there could be very long queues at borders certainly in the short run to shortages of some food and medical supplies. Security links would also suffer, the police would no longer have access to European criminal databases and vice versa. Supporters of No-deal Brexit say that’s fine to leave and that UK would have billions of extra pounds to spend, money which would have been given to EU if the UK left with a deal. But opponents say the shock to the economy of No-deal Brexit would cost far more than any savings. It’s really difficult to predict what could exactly happen in the event of No-deal because no modern industrialized economy has ever tried to do anything quite like this before.
Impacts of Brexit:
Free entry of EU nationals to the UK will be banned which leads to an increase in the cost of business. People who were vendors who used to sell their products by traveling from one country to another will face a big problem because Brexit leads to loss of revenues. Drop-In immigration would mean more jobs for people who remained in the UK, but labor shortages would also hold back the economy by reducing the economic potential for growth.
It will solve the multi-currency problem i.e. it solves the problem in converting euro to pounds or pounds to euro to a single currency will be available. This helps the UK to enjoy its independent monetary policies.
Brexiteers argued that leaving the UK would result in immediate cost-saving, as the country would no longer contribute to the EU budget
It helps the government to reduce taxes on every item as the government doesn’t need to pay an extra 7 billion pounds for the membership. So that new industries will grow and the government will build new industries and plants in order to improve their economy which leads to making every item cheap and households in the UK would be getting richer.
Since the EU is a single market where the exports and imports between member states are exempt from tariffs and other barriers. Financial services can also be offered without restrictions across the continent.
Brexit didn’t create these problems. It exposed them & will certainly make them worse. The decision to whether the UK lives in or out of the EU has been made. The UK will be free to have a partnership with any of the countries. It is hard to say that it is either a good decision or not as a business analyst says that it would be fruitful decisions for the UK in the future as the UK will have positive as well as negative impacts of Brexit on its economy. The choice is whether the people are finally ready to confront the issues and engage with communities they have carelessly ignored.
Official Media Partner: Newswire
Official Promotional Partner: IBS Messenger
Comments