What is Brexit? How Has it Affected Trade, Politics, & People?
Brexit, one of the most significant geopolitical events in recent European history, marks the United Kingdom’s departure from the European Union. Stemming from a divisive 2016 referendum, its journey has been punctuated by leadership turnovers and multifaceted reintegration hurdles, reshaping the political and economic landscape of the region.
Table of Contents
What Is Brexit?
Brexit refers to the UK’s decision to leave the European Union (EU), which was officially completed on January 31, 2020. The name “Brexit” is a combination of “British” and “exit.”
UK’s Historic Decision and Subsequent Challenges
On June 23, 2016, a referendum saw 52% of participating British voters choosing to depart from the EU. This marked a historical move as the UK was the first nation to make this decision. The following years were dominated by intricate negotiations regarding the exit terms.
After Britain formally indicated its intention to leave in March 2017, then-Prime Minister Theresa May undertook the task of navigating these discussions. However, May’s tenure faced challenges as she struggled to secure Parliament’s endorsement for her negotiated deal with the EU, leading to her resignation in July 2019. It was under Boris Johnson, her successor, that Brexit was finally realized.
David Cameron’s Response to Growing Euroskepticism and the Brexit Referendum
In 2013, British Prime Minister David Cameron, facing increasing Euroskeptic sentiments within the Conservative Party, committed to holding a referendum to decide the UK’s EU membership status. Prior to the 2015 surge in immigration due to instability in the Middle East and Africa, many UK citizens were already concerned about the number of migrants arriving from other EU countries, facilitated by the EU’s open border policies.
The United Kingdom Independence Party, under Nigel Farage’s leadership, capitalized on these anti-immigration feelings, resulting in significant electoral gains, primarily at the Conservatives’ expense. Additionally, the financial burdens from the EU’s handling of the euro-zone debt crisis and the Greek bailout (2009-2012) heightened concerns about the loss of British sovereignty and dissatisfaction with extensive EU regulations affecting consumers, businesses, and environmental practices.
1. The Political Landscape and Cameron’s EU Negotiations
The Labour and Liberal Democratic parties were predominantly pro-EU, and some Conservatives, including Cameron, were supportive of staying in the EU, contingent upon securing certain reforms from the UK’s 27 EU partners. Following the Conservatives’ victory in the 2015 UK general election, Cameron, honoring his pledge, proceeded with plans for an EU membership referendum, aiming to achieve beforehand certain EU concessions to address the grievances of those leaning towards leaving.
In February 2016, the European Council agreed to several of Cameron’s demands, including a temporary ability for the UK to limit benefits for new migrant workers and exemptions from the EU’s aspirations for closer integration, while allowing the UK to keep the pound sterling and providing compensation for euro-zone bailout contributions.
2. The June 2016 Referendum: Campaigns and Outcomes
Cameron set the referendum for June 2016, leading the “remain” campaign alongside Britain Stronger in Europe, emphasizing the benefits of the EU single market. The “leave” campaign, spearheaded by former London Mayor Boris Johnson, a potential rival for the Conservative leadership, centered on Vote Leave.
Johnson criticized the EU’s evolution since Britain’s 1973 accession, arguing it hindered the UK’s ability to negotiate favorable trade deals. Both camps made dire predictions about the adverse effects of their opponents’ victory, supported by expert opinions, studies, and celebrity endorsements ranging from influential political figures to renowned actors and sports personalities.
3. Results and Cameron’s Resignation
On the referendum’s eve, polls indicated a tight race; however, 52% of voters ultimately chose to leave the EU. Cameron, advocating for a smooth transition, announced his resignation, stating his belief that he should not be the one to lead the country through the forthcoming changes.
Theresa May’s Leadership and the Brexit Challenge
Despite initial expectations of Boris Johnson’s ascendancy, Theresa May emerged as the Conservative Party’s new leader and assumed the role of Prime Minister in July 2016. Even though May had originally been against Brexit, she committed to fulfilling its mandate upon taking office.
On March 29, 2017, she took a definitive step forward by officially triggering Article 50 of the Lisbon Treaty through a six-page correspondence addressed to European Council President Donald Tusk. This act set off a two-year period dedicated to hashing out the UK’s departure terms with the EU. In her letter, May expressed a desire to approach the negotiations with a spirit of constructive, respectful, and sincere cooperation, expressing optimism for securing a “bold and ambitious” Free Trade Agreement by the end of the discussions.
1. May’s 2017 Election Misfire
In pursuit of a clear mandate for her Brexit strategy, May unexpectedly called for a June 2017 Parliament election. However, rather than reinforcing her stance, the Conservative Party lost its House of Commons majority and had to rely on support from Northern Ireland’s Democratic Unionist Party (DUP). This outcome complicated May’s goals, as there remained significant differences within the Conservative Party concerning the specifics and broader aspects of the Brexit proposal.
2. Cabinet’s Agreement at Chequers and Subsequent Resignations
In July, a prolonged cabinet session at Chequers, the prime minister’s countryside residence, seemed to produce a unified stance on Brexit. The consensus document endorsed sustained alignment with EU guidelines and proposed a shared framework for UK-EU agreements.
While it underscored the UK’s authority over immigration, it also proposed a structure allowing UK and EU citizens to work and study reciprocally. Though initially it appeared May’s softer stance focusing on preserving EU economic ties prevailed, the unity was short-lived. Both David Davis, the chief Brexit negotiator, and Foreign Secretary Johnson resigned, citing concerns about the proposal’s concessions and direction.
3. EU Agreement and the Chequers Plan
By November, EU leaders officially accepted the withdrawal terms encapsulated in the Chequers plan, which May believed resonated with British aspirations and paved the way for the UK’s bright future. The arrangement stipulated that the UK would pay around $50 billion to the EU to meet its longstanding financial commitments. Although the UK’s EU exit was slated for March 29, 2019, the agreement required the UK to follow EU rules at least until December 2020, allowing for extended discussions about the future EU-UK relationship.
What is the Withdrawal Agreement?
The Withdrawal Agreement is a legally binding treaty between the United Kingdom (UK) and the European Union (EU) that sets out the terms of the UK’s exit from the EU. It was negotiated over a period of time following the UK’s decision to leave the EU, as expressed in a 2016 referendum. The Agreement addresses various aspects of the UK’s departure, including
1. Citizens’ Rights
It protects the rights of over three million EU citizens living in the UK and around one million UK nationals living in EU countries. This ensures their right to reside, work, and access social security benefits, among other things.
2. Financial Settlement
Often termed the “divorce bill”, this involves a series of financial commitments the UK agreed to honor, which includes contributions to the EU budget and other liabilities.
3. Transition Period
The Agreement established a transition (or “implementation”) period that lasted until December 31, 2020. During this time, EU law continued to apply in the UK, allowing businesses and governments time to adjust to the new post-Brexit environment.
4. Irish Border (“Backstop”)
One of the most contentious issues was the matter of the border between Northern Ireland (a part of the UK) and the Republic of Ireland (an EU member state). To avoid a hard border, provisions were made that would keep Northern Ireland aligned to some EU rules, unless and until an alternative solution was found.
Obstacles Surrounding the Northern Ireland Backstop
The agreement slated for a House of Commons debate in December faced fierce opposition from various parties, including the Conservatives. Growing momentum for a fresh Brexit referendum emerged, but May firmly dismissed the notion, emphasizing the public had already voiced its decision.
Many detractors took issue with the Northern Ireland backstop plan, aimed at upholding the Good Friday Agreement by ensuring an unobstructed border between Northern Ireland and the EU’s Ireland. Should the UK and the EU fail to finalize an agreement by December 2020, this plan proposed a binding customs protocol between the EU and Northern Ireland.
Critics argued this could inadvertently craft a customs barrier in the Irish Sea, leading to regulatory disparities between Northern Ireland and the rest of the UK.
1. Deep Insights Meet Rising Debates and Tensions
In early December, the full legal counsel from Attorney General Geoffrey Cox on the Brexit agreement was disclosed. Cox highlighted that, without a UK-EU consensus, the backstop’s conditions could perpetually persist, with the UK legally bound and requiring EU consent for termination. As the House of Commons engaged in a five-day discussion leading up to a scheduled vote on December 11, May, anticipating a potential defeat, halted the debate and deferred the vote. She aimed to extract further EU backstop reassurances.
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In response, the opposition hinted at a confidence vote and a potential early election. Yet, a more direct challenge emerged when a staunch Brexit faction within her own party questioned May’s leadership. However, with 200 MPs’ support, May remained leader, safeguarded from further leadership challenges for a year.
2. Brexit’s Grip on British Politics
Brexit’s prolonged uncertainty increasingly became the focal point of British politics. Given that views on May’s Brexit strategy and Brexit itself were divergent and traversed party lines, both major parties faced internal turmoil.
3. May’s Push for Enhanced Support
Seeking reinforced parliamentary backing for her modified Brexit blueprint, May procured renewed commitments from EU leaders concerning the backstop plan. The parties agreed on a legal mechanism allowing Britain to raise a “formal dispute” if the EU sought to bind the UK indefinitely to the backstop.
A subsequent statement aimed at replacing the backstop by December 2020. May also unilaterally emphasized the UK’s right to abandon the backstop if discussions with the EU stagnated. Although Attorney General Cox acknowledged that these additions somewhat mitigated the risks, he also noted that the fundamental legal standing of the agreement remained unchanged.
Which UK Political Parties Want to Rejoin the EU?
1. Liberal Democrats
The Liberal Democrats were the most vocal among the major UK parties in opposing Brexit. After the UK left the EU, they maintained that they would fight for the closest possible relationship with the EU and didn’t rule out campaigning to rejoin in the future, depending on the circumstances.
2. The Scottish National Party (SNP)
The SNP opposed Brexit and has indicated that an independent Scotland might seek to rejoin the EU. They view EU membership as being in Scotland’s best interests.
3. Labour Party
The Labour Party, under the leadership of Keir Starmer by 2022, had shifted its stance from Jeremy Corbyn’s leadership. Starmer had expressed his aim to improve ties with the EU but stopped short of committing to a campaign to rejoin. The priority was more on a closer relationship rather than rejoining.
4. Conservative Party
The party, under Boris Johnson’s leadership, was responsible for finalizing the Brexit process. There was no intention or desire within the mainstream of the party to rejoin the EU.
Impact of Brexit on the EU Economy
Brexit, the withdrawal of the United Kingdom from the European Union, has had notable impacts on the EU economy. While the direct implications on the UK economy have been substantial, the repercussions within the EU have also been significant.
The departure of a prominent member state like the UK from the EU’s economic framework altered the dynamics of the single market and led to adjustments in trade, commerce, and financial interactions. The UK was not only a major contributor to the EU budget but also a significant market for many EU member states, and its exit resulted in changes in supply chains, trade regulations, and investment patterns.
The EU faced disruptions in trade flows due to the new trade barriers and customs checks introduced between the UK and the EU. Industries relying on just-in-time manufacturing and those deeply integrated with the UK market encountered challenges, leading to supply chain disruptions and increased costs. Sectors such as fisheries and agriculture experienced changes due to altered trade agreements.
The departure of a financial hub like London had an impact on the EU’s financial landscape. While some financial activities shifted to EU cities, the fragmentation of financial services between the UK and the EU impacted the efficiency and ease of conducting cross-border financial operations.
The full extent of Brexit’s impact on the EU economy is still evolving as new trade agreements are established and market adjustments continue to unfold, with both positive and negative consequences for various sectors and economies within the European Union.
10 Important Brexit Subsequent Challenges
Brexit, the UK’s decision to leave the European Union, brought about a host of challenges in its aftermath. Here are ten significant subsequent challenges that arose
1. Trade Disruptions
The transition period’s end saw disruptions in trade between the UK and EU, with new customs checks and paperwork causing delays, especially at major ports like Dover.
2. Northern Ireland Protocol
Ensuring no hard border between Northern Ireland and the Republic of Ireland led to the creation of the Northern Ireland Protocol. However, this has caused tensions, with checks on goods moving between Great Britain and Northern Ireland.
3. Loss of Passporting Rights
UK-based financial services firms lost their “passporting” rights, which allowed them to sell their services across the EU without needing separate authorizations.
4. Citizens’ Rights
The status and rights of UK citizens living in the EU, and vice versa, became a significant issue. While many of these concerns were addressed in the Withdrawal Agreement, there remained individual complications and uncertainties.
5. Fishing Rights
While the UK regained control over its waters, there were disputes over fishing rights, quotas, and access to EU vessels, causing tensions, especially with France.
6. Decrease in Labor Mobility
The end of freedom of movement between the UK and the EU affected industries reliant on EU labor, such as agriculture, healthcare, and hospitality.
7. Data Protection and Sharing
The UK needed to ensure its data protection standards were adequate by EU standards to continue data flows between the entities.
8. Loss of Erasmus Program
The UK decided not to continue participation in the Erasmus student exchange program, which impacted students’ opportunities to study abroad.
9. Recognition of Professional Qualifications
Professionals faced challenges as qualifications earned in the UK were no longer automatically recognized in the EU and vice versa.
10. Diplomatic and Political Challenges
Beyond the tangible, the UK’s decision to leave the EU brought about diplomatic challenges, with the need to redefine its relationship with the EU and its member states, and potential implications for the unity of the UK, especially concerning Scotland and Northern Ireland.
Conclusion
Brexit stands as one of the most consequential and debated political events in recent European history. Stemming from a deeply divisive referendum, it not only showcased the complexities of leadership and decision-making in the modern age but also underscored the multifaceted challenges of reintegration post-separation. The UK’s journey from casting a monumental vote to navigating its aftermath is emblematic of the ever-evolving dynamics of global politics, serving as a testament to the intricate interplay between national sovereignty and regional cooperation. As nations worldwide watch and learn, Brexit remains a pivotal lesson on the implications of political change and the resilience required to navigate its repercussions.
Accountancy Consultant | Retail Petroleum Sectors
3wSo many PMs lost their jobs due to Brexit.