The Brexit- All You need to know. - Seeker's Thoughts

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The Brexit- All You need to know.

Rising nationalist sentiment eventually drove Britain out of the European Union - in what became known as Brexit - but not without some controversy and difficulty.

Photo by Dylan Bueltel:

Voters cast their vote at a time when immigration levels had grown increasingly contentious and economic growth had stagnated, prompting protests about immigration from a host of parties in Parliament and dissatisfaction over its slow pace of expansion. 

Proponents of leaving suggested that leaving would allow Britain to regain sovereignty while spurring more vibrant growth.

What is the Brexit?

The Brexit referenda held by Britain in June 2016 were held to determine their membership or nonmembership of the European Union. 

A narrow vote in favor of leaving was cast and negotiations have now started in order for Britain to officially leave the European Union. Negotiations agreements could last at least one year while creating economic implications that ripple through multiple sectors in Britain as well as raising alarm over nationalist movements worldwide and possibly leading to the breakup of its nation into smaller states.

Many British politicians, such as Prime Minister David Cameron, supported remaining a member of the EU. Prime Minister Cameron led an organization known as Britain Stronger in Europe that advocated membership; their "remain" campaign claimed the benefits outweighed costs; on the other hand, former London Mayor Boris Johnson led Vote Leave and their movement, which claimed that Brussels bureaucracy had crippled Britain's economy and was hindering Britain's progress economically.

Cameron pledged to hold a referendum on EU membership shortly after winning election in 2015. But his plans proved complex; initially seeking concessions from the EU in order to address concerns from those wanting to exit, which ultimately failed. Furthermore, his own Conservative Party was deeply divided over this issue with some lawmakers believing full withdrawal would harm its global standing and diminish military strength.

Cameron ultimately decided on a hard Brexit plan, withdrawing from EU institutions and drastically decreasing immigration. However, he left open the option for another referendum, while Theresa May campaigned on an anti-EU platform during her candidacy for prime minister.

Parliament took control of the government agenda early 2017 to conduct "indicative votes" on alternatives to May's plan; none received majority support and on March 27 she narrowly survived a vote which stripped away control from her and gave it to Parliament instead.

What is the Transition Period?

Transition periods provide 11 month window following Britain's exit from the European Union and before any trade deals commence, during which most EU rules continue to apply in their entirety, giving time for leaders to reach an agreement about future relations between Britain and EU states.

During the transition period, the UK will remain bound by many EU regulations related to free trade and workers' rights; however, it won't have the power to make decisions within the European Union or influence laws from other member states.

This agreement was reached as part of negotiations between the U.K. and EU in 2017. European negotiators wanted a divorce deal finalized before moving forward with details for their trade relationship; while Britain believed they were linked.

Boris Johnson's Conservative Party eventually came together on an agreement which provided for a transition period and protocols regarding Northern Ireland, Gibraltar, and sovereignty of islands surrounding Britain.

On October 22, Parliament voted in favour of the EU settlement, but that wasn't enough for Prime Minister Theresa May to get it through to Europeans, forcing her to ask that Brexit be postponed until January.

European leaders endorsed Britain's separation deal negotiated with them despite several cabinet ministers who opposed it resigning their posts in opposition. Now, Britain is preparing to leave the EU and begin discussing trade agreements with non-EU nations. At this stage, it remains uncertain how this will play out; however, some form of an even playing field - in which the UK adheres to certain rules without discrimination against other countries - and freedom to negotiate its own standards are likely. Furthermore, data sharing and financial services must be agreed upon otherwise disputes may ensue which result in tariffs imposed against products that don't conform with EU standards.

What is the Trade Deal?

Proponents of Brexit claimed that leaving the EU would help Britain control immigration, ease onerous regulations, and stimulate more robust growth. Critics, such as Adam Posen of Peterson Institute for International Economics, counter that EU membership allows Britain to "punch above its weight" in trade deals while opening access to foreign markets that it could never access on its own.

Early 2017, British Prime Minister Theresa May called snap elections in June 2017 in order to increase her parliamentary majority and change her government's policy platform. She pledged her withdrawal from EU institutions, along with drastic immigration reduction. Furthermore, she expressed support for "no deal" Brexit rather than accepting an inferior deal.

After winning election, she revised her plan for withdrawal from the EU to incorporate elements of a free trade agreement. Over the next several months, British and European negotiators struggled to agree upon a separation agreement; but in September 2019, Parliament voted against new elections, prompting Prime Minister May to ask the EU for an extension until January. In the interim, U.K. is currently negotiating transition period agreements which are set to start on March 29, 2021.

An important component of Britain's future relationship with the EU will be a trade deal, which will determine its cost for accessing its massive single market and striking trade agreements independently with other nations. Free trade agreements often include provisions designed to prevent either side from having an unfair advantage over one another; such as setting common standards on workers' rights and environmental protections.

An absence of trade agreements would likely cause the pound to decline, creating higher costs for imports from Europe and lower profits from exports. Some sectors might benefit from having weak currencies because this makes their goods and services more cost-competitive on global markets - financial services are likely to feel this pinch the hardest in absence of an agreement between Britain and Europe.

What is the Future Relationship?

By December 2020, when Brexit talks reached their conclusion, Britain would still be part of the European Union, though under an interim arrangement until they could negotiate a long-term deal with it. Under its "Chequers plan", Britain pledged to uphold most EU rules in return for access to its single market worth about $18 trillion - or roughly half the global economy.

This agreement, although non-permanent, would have required Britain to pay an exit fee and comply with several of the EU's existing rules, such as free movement across borders and continuing to use Euro as currency. Furthermore, Britain would need to recognize and abide by European Court of Justice jurisdiction over its citizens as well as allow European Investment Bank and European Central Bank operations in London.

During the referendum campaign, Leave supporters claimed that exiting would allow Britain to regain sovereignty and avoid being subject to "ever-expanding regulations" created by politicians from other nations that it cannot overturn. They also believed leaving would unleash economic dynamism by freeing Britain from "extraordinarily slow, extraordinarily bureaucratic" EU institutions allowing it to cut taxes and regulations and negotiate trade deals with emerging economies such as China and India.

The two-year long Brexit negotiations caused havoc in Britain's political life. Members of Parliament switched parties and faced accusations of antisemitism from Labour leader Jeremy Corbyn's opponents; there was also division within the Conservative Party itself as some lawmakers supported a hard line approach and others advocated for a soft one.

In March 2019, Theresa May was unable to gain Parliament's approval for the separation agreement she negotiated with the EU, forcing her to step down as prime minister and be replaced by Boris Johnson who pledged to withdraw without an exit deal despite legal challenges by Parliament and his inability to secure support among his own party members. His attempts fell flat.

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