DAA Daily

The Brexit Breakdown

Image Source: Institute of Economic Affairs

Jessica Loomes

Managing Editor

The Pawprint

The United Kingdom is currently divided by the controversial decision to leave the European Union (EU). Parliament members are urgently trying to approve one of the plans proposed; in order to avoid a no-deal Brexit. The date has been set, and the United Kingdom (UK) are set to leave the Union in March of 2019, with or without a plan.   

Brexit, originating from the words Britain and exit, has headlined every newspaper as of mid 2016.  Whirlwinds of opinions, statistics and statements about the decision that Theresa May’s party have been pushing to pass have surfaced. This is the Brexit breakdown.

The European Union is an economic and political partnership between 28 countries in Europe. Shortly after World War 2, the Union assembled to help with economic cooperation between the countries. All the members states trade goods and allow for free movement of people between them as if they were one country. The European Union itself has its own currency, The Euro, and it’s very own parliament. So why would the British want to withdraw support from a Union that offers the country so much stability and support?

David Cameron became the first British prime minister to veto a treaty in 2011 with the EU, and promised that if his Conservative Party won the majority in the next general election he would renegotiate Britain’s EU membership. Supporters for Brexit rallied together when the United Kingdom faced vast amounts of economic unrest in eurozones in the years to follow. Citizens also faced problems fueled by a migrant crisis occurring across Europe. When winning re-election in May 2015, the Conservative Party began planning changes in migrant welfare payments, financial safeguards and working on ways to block EU regulations. In February 2016, Cameron and his party announced that the referendum would officially be taking place on June 23.

There was a huge voter turnout of over 30 million people, with 48% of voters who wanted to stay in the European Union and 52% voting to leave the union. Both Scotland and Northern Ireland backed staying in the league, whereas Wales pushed the Brexit campaign.

In October 2016, Theresa May assumed position of Prime Minister following Cameron’s resignation. May moved swiftly to invoke Article 50 of the Treaty of The European Union, officially giving notice of the UK’s intent to leave the EU. In March 2017, the order announcing Brexit was delivered to the European Union, officially declaring the two-year countdown to commence until Britain’s departure.

The people raising the Brexit banner are supporting the financial, immigration and sovereignty aspects of the Exit Plan. Leaving the EU will mean that The United Kingdom will no longer be held responsible for contributing to the Union’s budget. It’s hard to determine whether the benefits of membership to the Union (such as free trade) outweigh the upfront costs. In 2016, The UK paid out over 13.1bn Euros to the Union, and only received 4.5bn Euros in payments by the League – meaning the UK was responsible for a contribution of over 8.5bn Euros.

Those in favor of Brexit made a lot of noise about the advantages of being able to determine their own trading agreements. However, that being said, once the Exit Plan has been approved it will loose vast amounts of trade with neighbouring countries as well as negotiating power that still resides amongst European Union members. Despite this, members may be inclined to offering up and sticking to tariff free trading with Britain. The British are responsible for a large trading deficit with its European member trading partners – therefore Europe will to stay in Business with the British.

”If Britain were to join the Norwegian club,“ said The Economist, ”it would remain bound by virtually all EU regulations, including the working-time directive and almost everything dreamed up in Brussels in future.“ Meanwhile it would no longer have any influence on what those regulations said.

A dangerous aspect of the deal includes the investments that may be lost in the United Kingdom. Many investors no longer seeing the UK as a key player in financial centres around the world will withdraw funding from projects. The UK will no longer offer a pathway for investors to all other European Union members.

Discussions around Brexit are focusing on the “divorce deal” that is currently on the table. The deal dictates exactly how Britain will leave the Union, but not what will happen after. In this withdrawal agreement, the governments have established that the United Kingdom will have to pay the EU around 39bn Euro in order to formally leave the Union. European citizens will be able to move and live within the UK until the end of the transition period in 2020. Currently, after Brexit, trade relationship between EU members and the UK will not change. However, beyond the transition period, the new tariffs and regulations have not been established between the UK and members.

The “backstop” agreement has been placed in order to ensure that if no long-term trade deal is agreed, the UK will stay on no tariffs trade, but will consequently have no power to set lower tariffs on trade with other countries who are not members of the EU.

The biggest obstacle Theresa May now faces is passing the agreement through parliament. However, the withdrawal agreement does not seem to have promising prospects. Many opposition parties as well as several of Mays own parties’ MPs (members of parliament) have claimed they cannot back the agreement. If the deal does not get passed through Parliament, the UK will be forced to leave the EU without a deal. The government will have up to three days to agree upon alternative options to MPs.

It is stated in law that the UK will be leaving the European Union on 29 March 2019 at 11pm. So if parliament rejects the withdrawal agreement it is unclear what will happen. Possibilities include that the deadline will be extended to a later date, or Brexit may be cancelled with the support of other nations.

Within the past week; the UK have conducted several votes as a result of Theresa May’s Brexit deal.  On 15 January, politicians voted on the deal May had approved with the EU after almost two years of negotiations, that outlined exactly how the UK would exit the EU on 29 March. Unfortunately for May, the vote lost to historic proportions. The margin rejecting her deal was over 230 votes, and horrifyingly, 118 of the votes were from Mays’ own Consecutive Party. If the deal had been approved; the UK would have settled on an amount to pay the EU to approve their exit and what would happen to EU citizens who were living in the UK.

Opposition leader Jeremy Corbyn called a vote of no-confidence that would allow for the current governing party to be removed from power. However, on 16 January, the vote of no-confidence yielded non-surprising results and May remains in power as Prime Minister of the UK. As of now, the UK will see one of several scenarios unfold. Firstly, a no-deal Brexit may occur; where the UK leaves the EU as scheduled with no deals negotiated and no transition period. Secondly; the the members of parliament may choose to approve May’s current deal at a second vote in parliament (May also has the option to make minor adjustments to her deal before requesting a second-vote.) Thirdly; the government may request a major negotiation for the Brexit deal. However, this may present problems as the time is running out for such a deal to be discussed and approved. The European Court of Justice claims that it would be legal for the UK to revoke article 48 and cancel Brexit altogether – an unlikely event as it would require the change in the current ruling government party who hold a firm stance for Brexit. Theresa May could also decide to hold a general elections that would give her a political mandate for her deal in order to find a way out of the current deadlock situation. Lastly, another referendum may be called, despite it being too late to be completed before March 29.

It is too early to know exactly how Brexit will unfold, with tensions between UK members of parliament rising daily and the brexit clock still ticking. One thing is for sure; if Theresa May cannot pass her deal through parliament a second time – the one thing the UK doesn’t want (a no deal Brexit) may very well occur.

Despite May’s defeat in parliament, her stance remains clear; “I believe it is my duty to deliver on the British people’s instruction to leave the European Union and I intend to do so.”

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