All you need to know about Brexit

Brexit, Britain’s exit from the EU, is set to take effect on Friday, March 29th, 2019. Now is as good time to take a look at Brexit, giving a brief breakdown of what it means, how it came about and what its implication for the future are.

What is the EU?

The European Union (EU) is a political and economic partnership, consisting of 28 European nations, beginning after the Second World War, it’s purpose to nurture economic co-operation, predicated on the idea that countries involved in trade together will likely refrain from warring with one another.
It has grown since its inception, becoming a ‘single market,’ people and goods travelling across it freely, as if it were a single nation. The EU uses the euro, their own currency, employed by nineteen of the member nations. In addition, they have their own parliament, their own set of rules governing a wide array of areas, including the environment, consumer rights and transport.

What does Brexit mean?

The word ‘Brexit’ is a combination of the word ‘Britain’ and the word ‘exit.’ It signifies the UK leaving the EU. This was decided in a referendum, a vote in which everyone of voting age can participate. The referendum took place on Thursday, June 23rd, 2016.

Voting breakdown

The turnout for the referendum to decide whether or not the UK would remain in the EU was 71.8%, translating into over 30 million people casting a vote. The vote to remain in the EU lost by 48.1% to 51.9%. Northern Ireland and Scotland wanted to remain in the EU. In Scotland the vote was 38% to 62% in favor of remaining, while in Northern Ireland it was 44.2% to 55.8%. England and Wales voted in favor of Brexit, the vote in England being 46.6% to 53.4%, and the figure in Wales 47.5% to 52.5%.

Why is the UK leaving?

One main reason why the UK is leaving the EU is that British people want to see immigration reduced. Prime Minister Theresa May wishes to bring the number of people coming into and exiting the country to a sustainable level, which in her view is under 100,000 per annum. A second, closely linked reason for Brexit is economics. Those in favor believe that being a part of the EU comes with great economic cost to the UK. In particular, they don’t approve of UK jobs going to people from outside the UK. There is also a fear in the UK that in times of trouble they may have to bail weaker countries out if they are to remain in the EU, another economic cost that they are unwilling to bear.

‘Brexometer’

‘Brexometer’ is a name coined to gauge the impact of Brexit on the world, on the UK’s economy in particular. Here at Brexometer we publish Brexit related content from different sources all across the board. HSBC has used ‘brexometer’ as a widget on their website, a tool to determine what would happen to the pound in relation to the American dollar in the various scenarios of Brexit. State Street Bank has used ‘brexometer’ to refer to their main report concerning the impact of Brexit. Here we take ‘brexometer’ to signify the fallout from Brexit in general.

Transition period

Even though March 29, 2019 is the date that Brexit will officially take place, both the EU as well as the UK want a period of time after March 29, 2019 in which to make arrangements for life post-Brexit. This transition period is meant to help everyone, particularly businesses, prepare for that time when post-Brexit rules become operational. It also gives the EU and the UK more time to devise the details of their new relationship post Brexit. During the transition period, things will likely continue as they are now, including the free movement of people. The EU wishes for the transition period to continue until the 31st of December 2020. The terms have been agreed; EU leaders are set to ratify them. The UK will be permitted to devise their own trade deals, but they won’t be enforceable until January 1st, 2021.

Brexit negotiations

Negotiations concerning the future relations of the EU and the UK will not start until the length and duration of the transitional phase has reached an accord. Both sides want this to be done by March, allowing six months in which to communicate and reach agreements on factors like security, travel and trade. If everything goes according to plan, a deal of this nature could be agreed upon by the EU and the UK in time for March 29th, 2019. Theresa May, on March 2nd, 2018, has already vocalized her ideas on the nature of the UK’s relationship with the EU. She sided against Brexit during the vote, but now is in its favor, since, according to her, that is what the people of the UK want. “Brexit means Brexit,” she says. She was the one to start the two-year journey of exiting the EU on March 29th, 2017. She has detailed her negotiating objectives in a letter, penned to Donad Tusk, president of the EU council.

Hard vs soft Brexit

Any appraisal of Brexit would be incomplete without considering whether the Brexit is hard or soft. These two terms signify the extent to which the UK will sever ties with the EU, with a hard Brexit signifying the complete severance of ties and a soft Brexit signifying only a partial severance of ties. A hard Brexit would give the UK complete control over its borders, and the ability to trade and implement the laws autonomously from the EU. The UK would lose its place in the EU’s customs union, increasing the bureaucratic checks on its goods passing through airports and ports. A soft Brexit would see the UK retain as close a relationship to existing arrangements as possible. They would lose membership to the EU, and their MEPs and European commissioner, but would retain full access to the European single market.