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A Quick Guide to Understanding Brexit

By Luna Schlör

Financial Times

Britain was scheduled to leave the European Union on March 29, 2019. Long-awaited by some, dreaded by others, the “Brexit” debacle leaves most of us confused. This is a guide to what has happened, why it has happened and what to expect from the future of Brexit.

“Previously on Brexit…”

The island has always had a special relationship to the European Union. The United Kingdom was admitted to the European Economic Communities (EEC), the predecessor of the present-day EU, in 1973. Only two years later, in June 1975, the UK held its first referendum about continuing membership in the EEC. The verdict of the 1975 referendum was clear: two-thirds of voters favored continued EEC membership.

In 1983, the Labor Party ran for general elections on the promise to withdraw from the EEC without referendum. They experienced a historic loss. Nevertheless, some Euroscepticism prevailed in the UK. When the EEC began to increasingly integrate in the 1990s, transforming from a purely economic community into a union with political powers especially under the Treaty of Maastricht in 1992, the UK opted out of a number of European integration projects, most namely the Schengen Area and the European Monetary Union. According to the so-called “Rebate” brokered by former Prime Minister Margaret Thatcher, the UK also pays reduced financial contributions to the EU as compared to other member states.

Around the same time when increased political integration set in in the EU, the EU-critical United Kingdom Independence Party (UKIP) was founded and continuously gained support over the next two decades. In light of UKIP’s political success, then incumbent Prime Minister David Cameron promised another EU-membership referendum to increase his chances for reelection in the 2015 elections. What follows is well-known: Cameron won the elections and stuck to his campaign promise initiating the historic 2016 referendum. Seventy-two percent of the electorate turned out in the EU membership referendum, fifty-two percent of whom voted to leave the union. England and Wales voted to leave, while most Scots and Northern Irish preferred to stay.

Why did Brits vote to leave?

Among Brexit-supporters’ central motives had been two main issues: migration and the economy. Against the backdrop of the European refugee crisis in 2015 and the terrorist attacks across Europe in 2016, immigration had become a sensitive topic in Britain and elsewhere in Europe. As the EU grappled to revisit its refugee and asylum law to distribute the burden equally, some Brits found it easiest to simply leave the EU. Others were more concerned about inner-European migration as they feared immigrants from poorer EU countries competing for British jobs or benefitting from British social security. Some business owners welcomed “Brexit” as an opportunity to eliminate market competition from importing businesses located in other EU countries.

Striking a Brexit-Deal: How Good Things Do Not Come in Threes

Blindsided by the result, Cameron resigned as Prime Minister, leaving the position to be filled by Theresa May, who was determined to make Brexit a success story. On March 29, 2017, Theresa May invoked Article 50 of the Treaty of Lisbon which holds provisions for the withdrawal of member states from the EU and sets a two-year deadline to make withdrawal arrangements after which the UK is due to leave the EU with or without a deal (5).

Over the past two years, May has worked on a “Brexit”-deal with the EU while juggling her highly factionalized parliament. In July 2018, she finally came up with a first proposal, the so-called “Chequers Deal.” Many Brexit-supporters have criticized the proposal as keeping the UK too closely linked with the EU, and the EU eventually rejected the document making clear that members do not get to “cherry pick” their favorite EU policies.

On November 25, 2018, May and the EU agreed on a Brexit-deal consisting of a legally-binding withdrawal agreement and a more ideational statement on future relations. After May had presented the deal twice to her parliament, on January 15 and again on March 12, experiencing a heavy defeat both times, the EU extended the deadline. If May could pass the deal in a third attempt, the exit date would be pushed to May 22, 2019. Otherwise, if the deal would be defeated a third time, as it happened on March 29, the UK should leave on April 12 without a deal.

What’s Next?

In the short run, this leaves the UK with two options for now: It could carry through with a No-Deal-Brexit on April 12 — an undesirable option with potentially severe economic consequences. Estimates for the expected GDP loss from a No-Deal-Brexit range around eight to nine percent. Alternatively, the UK could plead with the EU for a longer extension. In the latter case, Britain would need to participate in the May 2019 European Parliament elections to choose its representatives. However, Brexit-supporters fear that participating in the elections once more could be entangled with a much longer postponement and a further softening up of the final Brexit-deal. The EU for that matter has shown to be open to a further prolongement of the Brexit negotiations and President of the European Council Donald Tusk has called a council meeting for April 10. From a No-Deal-Brexit on April 12 to a second referendum after a second postponement of Brexit, everything is within the range of possible outcomes for the future of UK-EU relations.

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