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Brexit

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    Brexit

    By Benoit | e6 Insights | 56 comments | 28 March, 2019 | 1

    On June, 23, 2016 30 million Britons participated in a referendum to decide whether the UK should leave the EU or stay there. The verdict has fallen, and we can say that the country has never been so torn since then!(51.9% for and 48.1% against).

    To understand, we must go back in history. In 1973, the United Kingdom entered the European Economic Community (formed in 1957 by France, Belgium, Luxembourg, the Netherlands, Italy and West Germany via the Treaty of Rome). Already at the time, this entry was not to everyone’s taste and barely 2 years later, the first national referendum ever created in the United Kingdom stands and the results are without appeal: 67.2% vote to stay in the common market. Since then, the European Union has become an extremely powerful economic and political partnership of 28 European countries allowing goods and people to move, essentially as if the Member States were one country. Throughout this period, the UK has continued to negotiate key aspects to maintain its independence (e.g. refusing to open its borders in 1995 as the rest of the member states or keeping its own currency instead of euro). The Lisbon Treaty ratified in 2009 is one of the moments (we will not talk here about the recession nor the problem of immigration), where the exit of the United Kingdom was initiated! Indeed, this treaty fundamentally changes the constitutional architecture of the European Union and gives less sovereignty to its member states what our British friends have always refused! For the first time, a treaty allows its members to start the long process of exit thanks to the article 50. The UK seizes the opportunity and we are back here with our famous exit voted by the people in 2016 !!

    So, for over two years now, we have been hearing about Brexit, but what is it going to effectuate? What’s the fuss all about? On March 29 2019, the United Kingdom will officially leave the European Union with or without an exit agreement *! A transitional period is planned until the end of 2020 to put in place and allow companies and other actors to prepare when the new post-Brexit rules between the UK and the EU come into force. This will also leave more time for the details of the new relationship to be fully defined. Free movement will continue during the transition period, as the EU wanted. The United Kingdom will be able to conclude its own trade agreements even though they will not come into effect until 1st of January 2021. This transitional period should currently take place only if the United Kingdom and the EU agree to a deal!! And it is far from being won since two agreements have just been rejected!

    So, what about a non-agreement? The United Kingdom would sever all links with the EU with immediate effect, without a transitional period and without guarantee of the right of residence of citizens. This would considerably disrupt short-term activities, particularly in terms of transport with very long wait times at the ports, with drivers facing new checks of their cargo and customs documents. There is also a fear of a shortage of fresh produce and medicines, in case supplies from EU countries are interrupted.

    Ministers and multinationals with factories in the UK have also warned of the long-term impact on the UK economy (customs duties, exchange rates, etc.). The deputies supporting the Brexit, however, say that it would not be as bad and that would allow the United Kingdom to save the 39 billion pounds claimed by the European Union to institute the separation! For euros skeptical, it would conclude any advantageous trade agreements around the world and this the following day of the exit.

    And to top it off, there is the situation of both Ireland!! One from the EU and one from Northern Ireland (attached to Great Britain), which voted against Brexit and whose second largest party, Sinn Féin, regularly called to a vote for Northern Ireland to leave the UK and join the Republic of Ireland!! A return to physical boundaries may well threaten the balance found in this still fragile region after 30 years of civil war. You will understand that a separation of this magnitude will leave traces whatever the outcome ….

    * At the time the article is written, an extension by the European Union has been accepted until the 12th of April 2019. We are still in a chaotic situation and a “no deal”  is more likely to happen. 

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