Brexit is an abbreviation for “British exit,” referring to the U.K.’s decision in a June 23, 2016 referendum to leave the European Union (EU). The vote’s result defied expectations and roiled global markets, causing the British Pound to fall to its lowest level against the dollar in 30 years. Former Prime Minister David Cameron, who called the referendum and campaigned for Britain to remain in the EU, announced his resignation the following day. Home Secretary Theresa May replaced him as leader of the Conservative party and as Prime Minister. Following a snap election on June 8, 2017, she remains Prime Minister.
The Conservatives lost their outright majority in Parliament, though, and with it – May’s critics argue – a mandate for a “hard Brexit,” in which Britain leaves the EU’s single market and customs union (The alternative is known as “soft Brexit.”)The new Brexit deadline for Britain to ratify the withdrawal agreement is October 31. The deal May negotiated with the EU has been rejected by the House of Commons three times. May has given up on winning the support of hardline Brexit supporters in her own party and is now hoping to reach a compromise with the main opposition party.
What Happens Next? (After Brexit)
Britain has managed to avoid crashing out of the EU without a deal by extending the negotiating period for a second time. Britain can leave the EU before October 31 if it chooses to, either with a deal or without, and it will have to participate in the EU Parliament elections if it hasn’t left by May 22.
May is holding discussions with the leader of the Labor Party, Jeremy Corbyn, to decide what the U.K. should seek in its future relationship with the EU. Since Corbyn favors staying in the EU’s customs union, the agreement is likely to mean a “softer” Brexit than the Conservatives would like. If May and Corbyn agree on a plan, it will be put to lawmakers for approval and taken to the European Council. May has said the plan has to involve Parliament approving the Withdrawal Agreement she negotiated with the EU since the bloc has refused to renegotiate a deal.
If Corbyn and May cannot agree on a plan, then they will put a number of options to the House in a series of votes in order to decide on a course of action. May hinted in the past that she would call for a general election to break the deadlock. The embattled leader is also facing intense pressure to resign.
A second referendum remains one of the Brexit alternatives, but May has been strongly opposed to it in the past. Over 5 million people have signed a “cancel Brexit” petition on the Parliament website. If Britain leaves the EU without the ratification of a deal, there will be no two-year transition period. The U.K and the EU are meant to negotiate a new, long-term trade agreement during the transition period. In the absence of a deal, WTO rules will come into effect.
The Referendum ( Brexit)
“Leave” won the June 2016 referendum with 51.9% of the ballot, or 17.4 million votes; “Remain” received 48.1%, or 16.1 million. Turnout was 72.2%. The results were tallied on a U.K.-wide basis, but the overall figures conceal stark regional differences: 53.4% of English voters supported Brexit, compared to just 38.0% of Scottish voters. Because England accounts for the vast majority of the U.K.’s population, support there swayed the result in Brexit’s favor. If the vote had been conducted only in Wales (where “Leave” also won), Scotland and Northern Ireland, Brexit would have received less than 45% of the vote.
The Article 50 Negotiating Period
The process of leaving the EU formally began on March 29, 2017, when May triggered Article 50 of the Lisbon Treaty. The U.K. has two years from that date to negotiate a new relationship with the EU. Talks began on June 19, 2017. Questions have swirled around the process, in part because Britain’s constitution is unwritten and in part because no country has left the EU using Article 50 before (Algeria left the EU’s predecessor through its independence from France in 1962, and Greenland – a self-governing Danish territory – left through a special treaty in 1985).
On November 25, 2018, Britain and the EU agreed on a 585-page Withdrawal Agreement, a Brexit deal, touching upon issues like citizen’s rights, the divorce. Theresa May survived a no-confidence vote held on January 16 and she unveiled her Plan B on January 21. The plan was criticized for being very similar to the original deal she presented.
May was seeking changes to the controversial Irish backstop provision to win Parliament’s backing. The backstop is intended to be temporary, but Euroskeptic MPs worry it will last indefinitely and compromise Britain’s autonomy. She was also accused by the Labor Party of “recklessly running down the clock” to force MPs to choose between her deal and a no deal outcome.
On March 27, none of the eight Brexit alternatives voted on by Members of Parliament received a majority. May’s deal was rejected again on March 29 by a margin of 58 votes, despite her vow to resign before the next stage of negotiations if it was passed.
European Union (EU)
Britain’s lead negotiator in the talks with Brussels was David Davis, a Yorkshire MP, until July 9, 2018, when he resigned. He was replaced by housing minister Dominic Raab as Brexit secretary. Raab resigned in protest over May’s deal on November 15, 2018. He was replaced by health and social care minister Stephen Barclay the following day. The EU’s chief negotiator is Michel Barnier, a French politician.
Preparatory talks about talks exposed divisions in the two sides’ approaches to the process. The U.K. wanted to negotiate the terms of its withdrawal alongside the terms of its post-Brexit relationship with Europe, while Brussels wanted to make sufficient progress on divorce terms by October 2017, only then moving on to a trade deal. In a concession that both pro- and anti-Brexit commentators took as a sign of weakness, British negotiators accepted the EU’s sequenced approach.
One of the most politically thorny issues facing Brexit negotiators has been the rights of EU citizens living in the U.K. and U.K. citizens living in the EU.
The Withdrawal Agreement allows for the free movement of EU and U.K. citizens until the end of transition period. Following the transition period, they would keep their residence rights if they continue to work, have sufficient resources, or are related to someone who does. To upgrade their residence status to permanent, they would have to apply to the host nation. The rights of these citizens can be abruptly taken away if Britain crashes out without ratifying a deal.
EU citizens have been increasingly leaving the U.K. since the referendum. “EU net migration, while still adding to the population as a whole, has fallen to a level last seen in 2009. We are also now seeing more EU8 citizens – those from Central and Eastern European countries, for example, Poland – leaving the U.K. than arriving,” said Jay Lindop, Director of the Centre for International Migration, in a government quarterly report released in February 2019.
Britain’s Parliament fought over the rights of EU citizens to remain in the U.K. after Brexit, publicly airing domestic divisions over migration. Following the referendum and Cameron’s resignation, May’s government concluded that it had the right under the “royal prerogative” to trigger Article 50 and begin the formal withdrawal process on its own. The British Supreme Court intervened, ruling that Parliament had to authorize the measure, and the House of Lords amended the resulting bill to guarantee the rights of EU-born residents. The House of Commons – which had a Tory majority at the time – struck the amendment down and the unamended bill became law on March 16, 2017.
The “Brexit bill” is the financial settlement the U.K. owes Brussels following its withdrawal.
The Withdrawal Agreement doesn’t mention a specific figure, but it is estimated to be up to £39 billion, according to Downing Street. The total sum includes the financial contribution the U.K. will make during the transition period, since it will be acting like a member state of the EU, and its contribution toward the EU’s outstanding 2020 budget commitments.
The U.K. will also receive funding from EU programs during the transition period and a share of its assets at the end of it, which includes the capital it paid into the European Investment Bank (EIB).
A Dec. 2017 agreement resolved this long-standing sticking point that threatened to derail negotiations entirely. Barnier’s team launched the first volley in May 2017 with the release of a document listing the 70-odd entities it would take into account when tabulating the bill. The Financial Times estimated that the gross amount requested would be €100 billion; net of certain U.K. assets, the final bill would be “in the region of €55bn to €75bn.”
Davis’ team, meanwhile, refused EU demands to submit the U.K.’s preferred methodology for tallying the bill. In August, he told the BBC he would not commit to a figure by October. Foreign Secretary Boris Johnson, who campaigned for Brexit, called EU estimates “extortionate” on July 11, 2017 and agreed with a Tory MP that Brussels could “go whistle” if they wanted “a penny.”
In her September 2017 speech in Florence, however, May’s spokesperson said the U.K. would “honor commitments we have made during the period of our membership.”
Who Will Be Next to Leave the EU? (After Brexit)
Political wrangling over Europe is not limited to Britain. Most EU members have strong eurosceptic movements that, while they have so far struggled to win power at the national level, heavily influence the tenor of national politics. In a few countries, there is a chance that such movements could secure referendums on EU membership. In May 2016, global research firm IPSOS released a report showing that a majority of respondents in Italy and France believe their country should hold a referendum on EU membership.
The fragile Italian banking sector has driven a wedge between the EU and the Italian government, which has provided bailout funds in order to save mom-and-pop bondholders from being “bailed-in,” as EU rules stipulate. The government had to abandon its 2019 budget when the EU threatened it with sanctions. It lowered its planned budget deficit from 2.4% of GDP to 2.04%.
Marine Le Pen, the leader of France’s eurosceptic National Front (FN), hailed the Brexit vote as a win for nationalism and sovereignty across Europe: “Like a lot of French people, I’m very happy that the British people held on and made the right choice. What we thought was impossible yesterday has now become possible.” She lost the French presidential election to Emmanuel Macron in May 2017, gaining just 33.9% of votes.