Table of Contents
Executive summary. 2
Procedure for leaving the EU.. 3
Euroscepticism within the UK. 4
Immediate and long-term consequences of Brexit on Britain and EU.. 5
Brexit is the abbreviation for ‘British exit’, this refers to the referendum held on the 23rd of June 2016 whether the United Kingdom should or should not leave the European Union. The result was that 51.9% voted to leave the European Union.
The process of leaving started in March 2017 and will take at least 2 years. This is the first time a country is leaving the European Union and therefore the first time article 50 will be used. In this paper several parts will be explained, firstly how did it come this far? In other words, the Euroscepticism in the United Kingdom will be elaborated.
Next, the procedure for leaving the European Union will be explained, this is based on article 50. And lastly, the immediate and long-term consequences of Brexit on Britain and the European Union will be discussed.
Procedure for leaving the EU
The withdrawal from the European Union is the process where a member state decides to stop being a member of the European Union. The UK is the first member to withdraw from the European Union.
Before the Treaty of Lisbon that went into force in 2009, there was no provision of being able to voluntarily withdraw from the European Union, making it very difficult to leave before that time.
When the treaty of Lisbon went into force they added the rules for the exit. These are to be found in Article 50, which is now being used for the first time in history.
The process for negotiating the withdrawal is a process that takes minimum 2 years with possible extension and goes as follows, first the European Council consents to the guidelines for the negotiation (Although the United Kingdom is a member of the European Council, they will be excluded from the decision-making process). After this, the European Commission will possibly give recommendations to the council and the council of the EU. Secondly, the European Commission will begin the negotiations. Thirdly the European Parliament should agree to the withdrawal with a simple majority. And lastly, the Council of the EU should agree to the withdrawal with majority voting.
People in favor of the Brexit generally dislike this procedure, as this is without the participation of the United Kingdom. Giving the European Union more negotiating power compared to the United Kingdom.
The withdrawal agreement will consist multiple issues such as trade agreements, cross-border situations, Citizens of the UK living in the EU and citizens of the EU living in the UK, regulatory responsibilities etc.
For as long the withdrawal process is ongoing, the United Kingdom will remain a full member, and if after this period with a possible extension no deal would be reached, the United Kingdom will no longer be a member and the membership will cease to exist.
Euroscepticism within the UK
The definition of Euroscepticism is to have criticism on the European Union, however, in other cases this can also mean to oppose and total reject the European Union. The Euroscepticism in the United Kingdom is something that has been there for a long time, this had multiple reasons.
Two of these problems began in the 1950s, firstly when the European Coal and Steel Community was created the United Kingdom decided not to join. Secondly, when the European Economic Community, also known as the EEC was formed which is one of the predecessors of the now European Union, the United Kingdom decided once again not to join. This alliance was made to strengthen Europe after the second world war. However, when The United Kingdom did apply to become a member in 1963, the president of France Charles de Gaulle vetoed this application due to not wanting that English became the main language in the community instead of French.
Eventually, they joined the EEC in 1973 but only to almost leave a few years later, in 1975 the United Kingdom held its first referendum with the question whether the United Kingdom should remain in the EEC. Resulting in a 67% vote to stay in the EEC.
In the 1980s former prime minister, Margaret Thatcher negotiated a rebate regarding its contribution for the EEC, because it was receiving a lot fewer subsidies than other countries and paying more towards the budget. Resulting in reducing the contribution from over 20% to approximately 12%. This was also known as the UK rebate.
These and other problems kept going throughout the years when David Cameron vetoed a treaty in 2011 to protect the United Kingdom. After this, he gave a speech where he promised to negotiate the membership of the United Kingdom and create a better settlement before organizing a referendum before 2017 if his party won in the next election. This caused Euroscepticism to grow.
The immigrant crisis didn’t help things, when David Cameron was reelected in 2015 he kept to his word and started renegotiating the relationship between the EU and the UK. After he announced the results of these negotiations he set the date of the referendum.
The result was a vote of 51,9% in favor to leave the EU and 48.1% to remain in the EU.
Immediate and long-term consequences of Brexit on Britain and EU
After this huge step that Britain lead by leaving the European Union, a lot of consequences will derive from this act in wish some of them will be immediate and others will take effect in the future. And its effect will be on large scale for both parties and in many areas.
Concerning the economic point of view, starting with the trade relationship between the European Union and the United Kingdom, in this area the UK is more dependent on the EU than the other way around since the EU is linked to a high percentage of the UK’s GDP, and that 44% of total UK’s export is to the EU which is higher than the percentage of other European countries combined. So, after the Brexit the tariff-free trade will be lost with other EU members thus raise on costs of exports and imports prices. In addition, the UK hosts a high number of Foreign Direct Investment from EU.
A lot of scenario’s and assumptions have been made to analyze the UK’s future economic growth even when using a very optimistic scenario and assuming that the UK maintain quite a high level of access in the single market, the scenarios shows that in the future the UK might have a little bit of growth but still this is a very optimistic point of view. In other terms, if the UK does not find an alternative they could end up losing a lot of investments in which it will terribly affect their GDP and their Growth becomes negative. In this case, they must open the trade with other countries like China, USA, and India markets. Some of the sectors that are affected: Insurance, Automobile, Food, and beverage etc.
The city the most affected with the Brexit is London since it was the leader in the international financial center. Using and attractiveness indicator London was ranked 1st in the European list followed by Dublin and Luxembourg. The main reason that gave London the success of being an international financial center is its access to the single market across the EU. In this case, some experts are showing that in order for London and also the whole UK to continue the benefits of trading in European countries they have to enter the EEA when it leaves the EU. The EEA is the European Economic Area in which the parties enrolled have the agreement of the free movement of goods, free movement of persons, free movement of services, free movement of capital and others. This relationship could, later on, restore orders in the UK and help maintain its trading and markets in the EU countries.
Even more, The Brexit is affecting also the migration rates to and outside the UK since the immigrants are living there paying taxes and some of them owning their own business. For example, the UK immigrants who are living in the EU where they are entitled to health care from the UK and have the right to live, work and own property al that will be lost after the Brexit. Even the other way around the European citizen who lives in the UK will also lose the right to work and live there since there will no freedom of movement anymore. If wanted, the UK can prohibit the free movement thus regaining power over the immigrants controlling who gets inside the kingdom.
On another hand let’s focus on the financial market and how they are affected. Since the Brexit, the British pound (sterling) has sunk to its 30-year low wish made a huge impact on the currency market and a lot of people and business lost a huge amount of money and investments. Not only the sterling but even the euro itself sunk to a very low position the currency market but in this case the eurozone were prepared and had the political will and public support for the strengthening of the monetary union. But this crisis happened directly after the Greece incident which also contributed the euro currency to get low, so in the era after the decision of the Brexit, in some European countries, their market will be intensively examined to try and keep the risk at a minimum or even avoid it.
Finally, let’s talk about some possible scenarios outcome concerning the security and defenses of the Brexit. As a member of the EU, the British defense facilities benefited from it’s membership to the EU, and it was the biggest spender on research and development in Europe. And mainly relies on the EU research funds more than other member states.
But after the Brexit, the UK will unlikely retain its access to the Europol and other databases, which also means the loss of EU research funds in the field of R&D. The act of losing the access could have a major impact on the security of the UK citizens. Also, it will make it very difficult for the UK government alone to keep their citizens safe, and hard to pursue criminals activities and terrorists who leave their country and hide in European states, since no longer in the EU, other EU states could not help the UK under any circumstances.
Upon looking at the various causes and events through time, we realize that the exit of the United Kingdom just was a matter of time. This however, will carry an enormous political and economic cost. We believe the Brexit will cause the United Kingdom to have less influence in the world. That’s why we conclude that the Brexit is a big mistake in the history of the United Kingdom, a mistake where the effects of it will last for quite a while and will have a longstanding impact on the United Kingdom.
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