The word Brexit has dominated news headlines in the UK for months now. If you still don’t understand what Brexit is all about from the meaning to the process, economic impact, etc., look no further. Let’s begin by defining the term.
What does Brexit mean?
Brexit is a shorthand term defining Britain’s exit from the European Union. On 23rd June 2016, a referendum was held to decide if the UK should remain or exit the European Union. 52% of the UK citizens who voted (30 million people or 71.8% of the population) were in favour of Brexit (the UK leaving the European Union). To understand the impact of Brexit in-depth, it’s important to define the European Union (EU).
The EU is simply a political and economic partnership between 28 European countries. The EU was formed after WW2 to boost economic co-operation among member countries as well as avoid war between member countries. Since then, the European Union has become a single market allowing free movement of goods and people to/from member states as if they were one state/country. The EU has its own parliament and currency used by 19 member states. The EU Parliament sets the rules on a wide range of areas/issues affecting member states from transport and environment issues to consumer rights and mobile phone charges.
Reasons for the UK wanting to leave the EU
Britain wanted to leave the EU because of a number of reasons relating to economic, immigration and identity issues. In regards to economics, some UK citizens were concerned about the money Britain and every member state sends to Brussels (EU headquarters) to fund programs some UK citizens don’t necessarily support.
In regards to immigration, some UK citizens felt that non-UK citizens were immigrating into the UK and using the country’s already scarce resources like welfare.
In regards to identity, some UK citizens felt that they were losing their British identity by continuing to be part of the EU.
England and Wales voted strongly for Brexit by 53.4% and 52.5% respectively while Scotland and Northern Ireland voted to stay by 62% and 55.8% respectively. The final vote was in favour of Brexit i.e. 52% of UK citizens voted to leave the European Union.
Impact of Brexit
Britain exit from the European Union impacts a variety of areas. For instance, it affects how Britain will be conducting business with European Union member states going forward. Before, when Britain was an EU member, Britain could trade freely with EU member states. Brexit introduces some new trade challenges which have an impact on the economy. The British pound has also fallen to record lows (near the 30-year low) increasing the costs of doing business for UK companies operating outside the UK.
Britain has also lost its AAA credit rating making it more expensive for the UK government to borrow money. The Bank of England has however responded swiftly with an interest rate cut (current rate 0.25%) down from 0.5% the lowest levels since 2009 in an effort to stimulate the economy.
Brexit also affects the free movement of UK citizens within the European Union. Before, UK citizens could move freely and work in the EU without the need for visas. This changes immediately.
The Brexit process
The UK will leave the EU fully in 2019. The exit process is supposed to last for two years. It may, however, vary depending on the precise exit agreements made. The UK has to invoke Article 50 (of the Lisbon Treaty) to exit the EU. The article gives the UK two years to leave the EU. It may, however, take longer or shorter depending on final agreements on immigration and trade.
The UK also needs to decide which parts of EU legislation to keep or change via a bill known as the Great Repeal Bill. The UK is in the process of finalising the bill.
A government department has been set up to negotiate Britain’s exit. The department is headed by David Davis, a Veteran Conservative MP and vocal pro Brexit campaigner.
Although the entire exit process is expected to last for two years according to Article 50, it is expected to last longer since Britain is expected to engage all EU member states first.
Meanwhile, Britain is still bound by EU laws and treaties until it finally ceases being an EU member. Britain can’t, however, take part in any EU decision-making processes.
Was Brexit a good decision? Well, it depends on who you ask. Only time will tell.