In June 2016, the United Kingdom (UK) decided to leave the European Union (EU) through a referendum initiated by former Prime Minister David Cameron. After the unexpected result of the referendum, he decided to resign and Theresa May became the new British Prime Minister.
This post follows up a previous one published in this blog before the Brexit referendum, and presents the main issues following the decision of the UK to leave the EU. The post is mainly based on the Statement by the European Council (Art. 50) on the UK, released on 29 March 2017. This statement follows the letter sent by Theresa May the same day, in which she notifies the intention of the UK to leave the EU. This notification starts the withdrawal process under article 50 TEU, which is characterised by much uncertainty.
On the 18 April 2017, the Prime Minister Theresa May announced her decision to call for general elections on 8 June 2017 (The Guardian, 18 April 2017).
Article 50 TEU
Article 50 of the Treaty on European Union regulates the withdrawal of a member state from the EU. Paragraph 1 of Article 50 TEU states that withdrawal from the EU shall be made in accordance with the member state’s constitutional requirements. In January 2017 in the Miller case, the UK Supreme Court ruled that parliamentary approval was needed in order for the Government to invoke Article 50. Such approval was attained after the House of Lords voted on a bill that authorises the Prime Minister to trigger Article 50. The bill was passed into law on 16 March 2017, and as a consequence, the Council of the EU received a letter of notification of withdrawal from the UK Prime Minister Theresa May. In the letter Article 50 TEU is invoked, and with regard to the UK’s objectives for future cooperation and partnership with the EU, reference is made to a UK Government White Paper, published on 2 February 2017.
What will be the effects on the EU?
The Brexit concerns the departure of one of the largest EU member states, which is also one of the biggest economies in the world (see Oliver Patel and Christine Reh, Brexit: The Consequences for the EU’s Political System). The future of the euro represents an important issue. According to Karl Whelan, two points of view exist when discussing this matter. Some think that the departure of the UK would enable an EU with a deeper integration, and therefore, a stronger Eurozone. Others argue that Brexit would be a step towards the end of the euro as a common currency, and perhaps the end of the EU in its actual form. Indeed, the result of the UK referendum represents a strong signal sent by the European citizens that the EU is perhaps less popular than we imagined.
The departure of the UK will also affect the EU’s budget, since the UK is one of the biggest contributors. Furthermore, foreign direct investments will decrease for the EU member states, because the UK is the main recipient of these within the EU (UK Reuters, 24 June 2016).
The balance of powers between the EU member states will be affected by the departure of the UK. After Brexit, the weight of the liberal European countries will decrease due to the loss of one of their main partners, the UK. At the same time, EU member states with a protectionist policy, such as Italy, France, as well as Spain, will rise. None of these two opponent blocs will have a blocking minority in the Council anymore (see Oliver Patel and Christine Reh, Brexit: The Consequences for the EU’s Political System p. 4). Moreover, states supported by the UK will lose some weight, while the role of Germany as a leader within the EU might increase (see Oliver Patel and Alan Renwick, Brexit: The Consequences for Other EU Member States). Furthermore, since a large majority of the UK’s MEPs belong to the right wing and to the Eurosceptic wing of the European Parliament, it seems that the leftist parties might gain some weight. This fact should result in more social democratic politics within the EU (see Patel and Reh).
One of the main risks for the EU is the domino effect that the UK’s exit might cause. (see Patel and Renwick p. 2). France and Germany might be tempted to limit this effect through the adoption of a strict withdrawal deal with the UK, which should discourage other Eurosceptic member states within the EU to follow the same path. Indeed, they may want to seize the opportunity of Brexit to ask for a specific opt-out status for their country or just to leave (see Patel and Reh p. 2).
What will be the effects on the UK?
According to the White Paper, a bill, namely the ‘Great Repeal Bill’ will be drafted to provide legal certainty when the UK exits the EU. It will end the supremacy of EU law and the jurisdiction of the Court of Justice of the European Union in the UK. It will also convert EU law into national legislation. This means that the UK’s earlier obligations during its EU membership will continue to apply, but the legislation can be subject to change on a national level.
According to the UK based independent think thank Institute For Government, it is likely that the Parliament will have to pass an additional 10 to 15 new bills, and a massive amount of secondary legislation before the process of exiting is completed. Since the negotiation process under Article 50 only lasts for two years, there is a risk that such legislation will be rushed, which by extension can affect its quality, and the democratic process.
Economists predicted that leaving the EU would have detrimental effects on the UK’s economy. However, the post-referendum period has so far shown that they were wrong in their forecasts. The UK economy has grown and the Gross Domestic Product has increased by 0.7 % since the last mensuration (BBC News, 28 March 2017).
The UK’s economy is doing well, but as business reporter Tim Bowler points out, the UK has not yet left the EU, and the real change may occur after the exit. However, other sources claim that the UK used to be a great trading nation, and that Brexit could be a perfect opportunity to strengthen the ties with Commonwealth member states and other powerful trade nations such as China and Saudi Arabia (Politics in Britain, 29 March 2017).
Migration was one of the most hotly debated questions prior to the referendum in June 2016. According to the White Paper, immigration is going to be restricted and the Free Movement Directive will be curbed, and will not apply when the UK exits the EU. In June 2016, the net migration to the UK was 335,000. Prime Minister May has repeatedly assured that she would reduce the net migration to below 100,000 a year. On the basis of this, it seems as if migration will be heavily restricted, which will inevitably have an effect on both individuals and the EU (Politico, 14 January 2017).
What do other nations think?
Germany’s official standpoint has been that the UK should stay in the EU. In January 2017, Chancellor Angela Merkel commented on Theresa May’s landmark ”Brexit speech”, stating that she appreciated it for giving more clarity to the circumstances of Brexit. Moreover, Merkel stressed the importance of maintaining a unified Europe and ensured that this would be achieved through intensive dialogue (The Independent, 19 January 2017).
The attitude of the United States (US) has changed quite drastically since 2016, pursuant to this year’s shift of power in the US. Before the referendum, President Obama urged the UK to stay in the EU. This was clearly expressed in an article published in The Telegraph on 23 April 2016, in which the former President argued that staying in the EU would be the most beneficial option not only for the EU but also for UK citizens and for the UK’s relations with the US. Moreover, he stated that the UK would be at the “back of the queue” of trade deals with the US should the country choose to leave the EU (The Guardian, 22 April 2016).
President Trump however has commended the UK for opting out of the EU, since he considers the EU to be dominated by Germany. The President further stated that the US is ready to form a trade deal with the UK as soon as possible. Moreover, President Trump expressed that if the UK “hadn’t been forced to take in all of the refugees” there would not have been a Brexit, and that he believed that other countries would follow in the UK’s footsteps (The Guardian, 16 January 2017). Both the US and the UK have expressed their will to maintain and strengthen the cooperation between the two states, and Theresa May was the first foreign leader to visit President Trump in the US after his inauguration. The EU does not welcome Trump’s positive approach to Brexit. EU Commission President Jean-Claude Juncker has stated that if the US President were to continue to encourage other states to leave the EU, Juncker would promote the independence of states of the US (The Independent, 31 March 2017).
French President François Hollande has expressed his disapproval regarding the UK’s decision to leave the EU. France has on several occasions reiterated its belief that the UK should not be able to keep the advantages of an EU membership after leaving. President Hollande has stated that the UK is making a poor decision in strengthening their relations to the US since the US seems to be alienating itself from the world and adopting a more protectionist foreign policy. “The UK has made a bad choice at a bad moment”, the President stated (The Guardian, 6 March 2017).
Nathalie Holvik, Sahel Noroozi, and Lara Bianchet