BREXIT 12
Running head: BREXIT 1
Brexit
Student’s Name
Institutional Affiliation
Brexit
Introduction
Etymologically, the term Brexit is a combination of two words, British and exit which is the impending withdrawal from the European Union by the United Kingdom (UK) (Clarke et al., 2017). Brexit follows a referendum held on 23rd June 2016 when 51.9% of the voters chose to leave the European Union whereas 48.1% decided not to stay. Consequently, those who were for leaving the European Union took the day and were the winners as the majority voted to leave the European Union. This paper explores the fundamentals of Brexit. It examines the process that has led to Brexit starting from June 2016 vote, the legal procedure followed until the formal exit which will take place later this month (March 2019). The paper begins by exploring the UK and the EU, their meaning and the countries forming them. The article further discusses the benefits of being an EU member and the privileges that the UK will forfeit once it withdraws itself from the 28 member block. Finally, the article articulates the implications of Brexit for the United States and its relations with the European Union
Background
On Thursday 23rd June 2016, 51.9% of the United Kingdom voters voted in favor of leaving the European Union while the rest (48.1%) voted in favor of remaining a member of the European Union. Which countries form the United Kingdom? The United Kingdom consists of four countries namely England, Wales, Scotland and Northern Ireland. However, the word Britain is sometimes used to refer to the United Kingdom as a whole. The United Kingdom became a European Union member in 1973 (Arnull et al., 2000). It retains links with the parts of its former empire through the commonwealth and benefits from cultural and historical links with the United States of America. The United Kingdom is also a member of the North Atlantic Treaty Organization (NATO) (Clarke et al., 2017).
The European Union ( EU) is an economic partnership involving 28 European Countries. These member states are primarily located in Europe. It was formed after the Second World War in 1951. The member states have developed policies which enable free movement of people, goods and services. They also use a common currency called the Euro (€). The 28 member countries of the European Union are Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark Czech Republic, Estonia, France, Finland, Greece, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom (Arnull et al., 2000). 19 of the 28 countries in European Union use the euro as the official currency. The nine states who have not yet adopted the euro are the ones who joined the European Union after 2002 when the euro was launched. Such countries include Croatia, Bulgaria, Czech Republic, Poland, Hungary, Romania and Sweden. Therefore, Brexit means that the United Kingdom will leave this union of 28 countries, after being a member for more than 40 years (Arnull et al., 2000).
Benefits of being a member of the European Union
Some of the benefits that the United Kingdom will forfeit after the imminent withdrawal from the European Union include. First, the United Kingdom will not be able to trade freely without tax impositions. Members of the EU are free to trade with other members at no additional tax. This helps to keep the prices of goods down in these countries. Thus, by withdrawing from the EU, the United Kingdom stares at forfeiting this essential benefit. Secondly, citizens of the member countries are free to move within the states. There are no barrier restrictions for the movement of people from one country to another in the union. This means that after the withdrawal by the United Kingdom, their citizens will no longer be free to move to other European countries. Thirdly and possibly the most important is that member countries use a common currency. All the member countries of the European Union use a common currency, the euro which makes doing business, buying and selling, travelling and other transactions much simpler. Also, it creates a sense of unity among the member countries.
Additionally, the EU ensures no conflict between nations and peace and harmony are promoted. There are strict guidelines followed for any issues that may arise within the European Union. This creates harmony on the continent. With the union, there are fewer conflicts and wars in the continent (Kierzenkowski et al., 2016)
Benefits of leaving the EU
Those who voted in favor of leaving the EU had their reasons to do so. Some of the ideas include the need for sovereignty and independence. The pro-leave voter’s rationale was based on autonomy and migration. The Britons especially those in London and Scotland were not pleased with the free movement of people across the EU member states. Leaving the EU would make the UK regain control over immigration in its borders. Other reasons included the feeling that the Britons were less integrated with the EU than other European citizens and the quest for English national identity. Those who were against leaving cited economic impacts of leaving the EU (Caporaso, 2018).
The process of leaving the European Union
Brexit follows the procedure laid down by the EU member states for leaving the European Union. The system for leaving is governed by Article 50 of the Treaty on European Union (Oliver, 2017). The article allows that any member state may decide to withdraw from the EU by its constitutional provisions. The section further provides that a member notifies the European Council of its intention to do so. Under the guidelines provided by the council, the Union shall negotiate and conclude with that particular state. As the clock is ticking on UK’s exit from the European Union, the following are the timelines that have led to the imminent withdrawal of UK from the 28-member block (Kierzenkowski et al., 2016).
In June 2016 the UK public vote to leave the European Union. On this day, the people who were for leaving won by 51.9% while those who were against Brexit formed 49.1% of the total votes cast. The breakdown of the election outcome is as follows: Wales voted for Brexit with the Leave getting 52.5%, and the remaining 47.5% voted against leaving. Similarly, for the case of England, the Leave won by 53.4% to 46.6%. On the contrast, both Scotland and Northern Ireland backed staying in the European Union. According to Becker & Novy (2017), Northern Ireland supported Remain by 55.8%, and the Leave got 44.2%. Finally, Scotland backed Remain by 62% to 38% of the Leave. These results meant that generally, the Leave won and this paved the way for the next phase of the process to the UK leaving the European Union (Becker, & Novy, 2017).
March 2017: the government led by the Prime Minister Theresa May invoke Article 50 of the Treaty on European Union with the approval of the government. The government tells the European Union that they are leaving in two years (Clarke et al., 2017).
June 2018: the parliament approves withdrawal Act. It also makes the existing EU law UK law and states that the EU cannot produce future laws for the UK (Caporaso, 2018).
July 7, 2018: after days of the power struggle between “soft” and “hard” Brexiters in the government, Theresa May (Prime Minister) announces that she has united her cabinet to achieve a compromise deal dubbed “Chequers” plan. This would leave the UK in a close relationship with the EU. The compromise deal was however too soft to some leaders including May’s chief Brexit negotiator David Davis and Jonson to resign (Oliver, 2017).
July 19, 2018: the commission of the European Union published a document urging member states to hasten the preparations for a “no deal” Brexit. Some days later, Mark Carney, the governor of the bank of England says that the risk of leaving the European Union without a proper agreement is uncomfortably high.
September 19, 2018: the position of Theresa May is weakened when her “Chequers” plan is rebuffed with the EU leaders dismissing her proposal at an informal summit in Salzburg. They termed May’s proposals as unacceptable (Oliver, 2017).
October 20, 2018: Hundreds of thousands of pro-European Union protesters rally in England’s capital, London calling for a second referendum. The polls at this time were suggesting that “Remain” would win if the election was to be held again at that time.
November 2018: after UK government negotiations with the representatives of the EU in terms of withdrawal, a deal was drafted. The agreement stated that if the parliament voted for the deal then on March 29, the UK leaves the EU and if the parliament doesn’t vote for the deal it leaves the EU with no deal.
March 29, 2019: the United Kingdom is set to leave the European Union, with or without a deal unless the parliament votes to cancel or delay Brexit. A European court ruled that the United Kingdom can decide to halt the leaving process and remain in the EU at any time before the deadline. Also, the process can be extended if all the 28 member states agree but as it is now all sides are focusing on the deadline date as the key one, and it has been put into law by Theresa May. Therefore as things stand at the moment, the United Kingdom is due to leave the European Union on Friday 29th March 2019, regardless of whether there is or there is no deal with the EU.
Is it possible for Brexit to be cancelled? Yes, it is possible for Brexit to be halted, but this would require a change of law in the United Kingdom. The European court ruled that the UK could cancel the Article 50 Brexit process without involving the other 27 member states and remain an EU member provided the decision was passed by the parliament. Again Brexit could be delayed if the EU agrees to extend Article 50 if its leaders thought it would ease the process. UK labour party, the main opposition party, wants to force an election and after winning it go back to Brussels to negotiate its version of Brexit. This party has hitherto wanted another referendum which would need an extension.
The transition period
This refers to the period after the UK exit on 29th March 2019 to December 2020 (or later) to enable both parties to stabilize. Stability is the main aim of the transition period which will keep virtually all the EU law in force until the end of this period. This means that very little will change for both individuals and businesses during this period. The UK will essentially remain in the single market during this transition period. Other significant rules affecting the people’s lives such as freedom of travel to other EU countries without restrictions like visas will remain I force. The free movement of people will stay during this period meaning Britons can continue to work and move to the rest of the EU and the EU citizens can as well move freely to and from the UK. During this period, the current trading arrangements between the UK and the EU will continue (Oliver, 2017).
Who were pro-Brexit and who was against it?
Most of the pro-Brexit voters were older, working-class people from England who were afraid of the free movement of immigrants and refugees. They felt that membership to the EU was changing their national identity. They were against the budgetary constraints and regulations that the EU imposed. They did not see how the free movement of goods and capital with the European Union benefited them. On the other hand, the young voters and those from London, Northern Ireland, and Scotland overwhelmingly voted to stay in the EU. They were however outnumbered by older voters who turned out in large numbers (Becker, & Novy, 2017).
Implications of Brexit for the United States and its relations with the European Union
The Brexit which is scheduled to take effect on March 29, 2019, means a lot to the USA and its relations to the European Union. The results are already evident since the historic June 2016 vote by the UK public vote to leave the European Union. First, just a day after the Brexit vote, the Dow fell by 610.32 points (Dhingra et al., 2016). The euro similarly fell 2% to $1.11. The sterling pound fell by 15% in value against the US dollar, and this automatically increased the value of the United States dollar. The British sterling pound fell to its lowest level against the US dollar in 30 years. This, in turn, makes American shares more expensive for foreign investors than before. The gold prices rose by 6% as a result (from $1,255 to $1,330).
Dhingra et al., (2016) suggested that a weak pound and a stronger dollar makes the United States exports to the United Kingdom more expensive and affects the U.S farming and manufacturing sectors. It is worth noting that the United Kingdom is America’s fourth largest export market. On the contrast, the falling of the pound and euro means vacationing is more affordable for Americans in the European Union. Tourist spending has boomed since the Brexit vote. The cheaper sterling pound and euro mean better prices for European and British exports such as twining’s tea. The weak European currency means more exports to European countries. In other words, Brexit triggers a strong dollar and a weak pound (and euro) which hurts the United States trade. Although a stronger dollar could make imported goods cheaper to the U.S consumers, fears of a stronger dollar outweigh the positives of it.
Secondly, Britain’s investment in the United States is almost equal. This could impact nearly two million US/British jobs (Cumming & Zahra, 2016). For United States companies with nationals from other European Union member states working in the United Kingdom, there is an uncertainty of the rights of those individuals to continue living and working in the UK after the Brexit. The end of the free movement from EU nationals to the UK may as well make it difficult for US companies with operations in the EU to relocate employees from the UK to other member states and vice versa.
Another consequence of Brexit to the US is the fear of the EU falling apart. Being one of the world’s largest political and economic bloc with USA and China being the major trading partners, its break up could lead to global uncertainty, and many trade deals would need to be restructured. It is feared that Brexit could trigger other exits such as Nexit (Netherlands), Grexit (Greece) and Frexit (France). This could adversely affect the trading activities between the European Union and the USA. It is feared that Brexit is the first step to the EU falling apart. Since the UK always used their pound, other countries like France would reintroduce their currency and ditch the euro (Cumming & Zahra, 2016).
According to Cumming & Zahra (2016), Brexit may slow down the economic growth of the USA. This will happen due to the reduced spending by American consumers because of the strong dollar. Slowed spending means slow economic growth. Brexit is causing volatility in global stock markets.
Conclusion
In summary, Brexit is a long process that started with the June 2016 referendum whereby the majority of the UK voters who participated in the election voted in favor of leaving the European Union. The EU is a political and economic bock with 28 member states. The main stage of the process of leaving the EU is the invocation of Article 50 of the Treaty on European Union which was done by Theresa May in March 2017. The merits of being an EU member include the use of a common currency (euro), free movement of citizens and ease trading activities by member states. The leave votes were mainly triggered by old people especially from England and Wales (Becker & Novy, 2017). These people cited reasons such as the need for independence, control of immigrants, need for sovereignty and the feeling of seclusion of Britons from other citizens. On the other hand, those who wanted the UK to remain in the EU were mainly from Northern Ireland and Scotland, and they cited the economic implications of leaving the EU.
The Brexit has many implications for the United States and its relations to the European Union. The most significant one is making the dollar very strong relative to the pound and euro. This has the impact of hurting the United States trade while improving the trading activities in the European Union. The strong dollar is also poised to slow the economic growth of the USA due to reduced spending by the US citizens. Brexit could also trigger other exits such as Greece and Netherlands which could make the EU fall apart eventually. The EU has a lot of trading activities with the USA (Dhingra et al., 2016).
In my opinion, the UK’s decision to leave the EU is a big mistake. As the official withdrawal date is drawing nigh, on the 29th March 2019, the UK has a lot to contemplate. The UK will forfeit all the benefits of being a European Union member. Its currency will fall, and the trading activities will be limited. The United Kingdom is imminently set to exit the EU on 29th March 2019 at 23:00 GMT after which the transition period will follow for at least one year. UK leaves the EU after being a member for over 40 years.
References
Arnull, A., Dashwood, A., Ross, M., & Wyatt, D. (2000). European Union Law (p. 469). London: Sweet & Maxwell.
Becker, S. O., Fetzer, T., & Novy, D. (2017). Who voted for Brexit? A comprehensive district-level analysis. Economic Policy, 32(92), 601-650.
Caporaso, J. A. (2018). The European Union: dilemmas of regional integration. Routledge.
Clarke, H. D., Goodwin, M. J., Goodwin, M., & Whiteley, P. (2017). Brexit. Cambridge University Press.
Cumming, D. J., & Zahra, S. A. (2016). International business and entrepreneurship implications of Brexit. British Journal of Management, 27(4), 687-692.
Dhingra, S., Ottaviano, G. I., Sampson, T., & Reenen, J. V. (2016). The consequences of Brexit for UK trade and living standards.
Kierzenkowski, R., Pain, N., Rusticelli, E., & Zwart, S. (2016). The economic consequences of Brexit.
Oliver, T. (2017). Never mind the Brexit? Britain, Europe, the world and Brexit. International Politics, 54(4), 519-532.