Brexit

Brexit Explained for Indians

In January 2020, UK Prime Minister Boris Johnson and EU officials signed a formal agreement outlining the basis of the nation’s withdrawal from the bloc.

This is a significant step in the “Brexit” process, over which politicians based in both the UK and Europe have been struggling to come to an accord since the summer of 2016.

But what exactly is Brexit and what were the steps involved in reaching this stage? In this article, the team at Property Solvers explain a little more about this complex matter.

What Is Brexit and What Is the EU?

Brexit – an abbreviation of “British exit” – refers to the process that is currently being navigated by the United Kingdom that will result in the nation departing from the European Union.

The European Union – or EU – is a union of 28 European countries that work collaboratively to manage matters related to politics, law, finance and trade across the continent.

The Referendum

In 2015, following pressure from Eurosceptic politicians, the UK Prime Minister at the time –David Cameron – promised a referendum regarding the UK’s continued membership of the European Union within the Conservative Party’s manifesto.

The referendum was held on 23rd June 2016. Voters hailed from England, Scotland, Wales, Northern Ireland and Gibraltar. The result was close, with just over 48% voting to remain within the EU and a little under 52% voting to leave.

Cameron then resigned the premiership stating:

“I was absolutely clear about my belief that Britain is stronger, safer and better off inside the European Union and I made clear the referendum was about this and this alone – not the future of any single politician including myself. But the British people have made a very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction.”

Action was then taken to find a suitable replacement for Cameron who could successfully negotiate the UK’s departure from the EU.

This Conservative Party leadership contest culminated in Theresa May being named the UK’s next Prime Minister on 13th July 2016.

Article 50

In order to begin the process of departing the EU, it was necessary to trigger Article 50, a piece of legislation that enables a member state of the EU to leave.

Theresa May invoked Article 50 on 29th March 2017. It was then necessary for the European Union and the UK government to agree on terms for the UK’s exit.

The “Chequers Plan”

On 12th July 2018, Prime Minister Theresa May published a proposed agreement regarding the UK’s departure from the EU.

However, this plan was unanimously rejected by EU leaders, who stated that it involved the “cherry-picking” of regulations involving the UK’s presence within the single market – a platform involving the free movement of goods, capital, services, and labour between EU countries.

The deal and its subsequently proposed edits were also heavily rejected in the UK House of Commons.

May’s Resignation

On 18th April 2017, Theresa May announced a “snap election”, citing the need for “certainty and stability” as the country pursued Brexit.

However, the move was considered to be a significant failure. The election took place on 8th June and no party achieved a majority.

On 24th July 2019, Theresa May resigned the premiership. This occurred after the leaders of 70 Conservative Associations signed a petition calling for a vote of no confidence in the Prime Minister.

There followed another leadership contest, resulting in Boris Johnson being named Prime Minister.

Deal or No Deal

Throughout Brexit negotiations, one of the major contentions has been whether or not the UK would be able to depart the bloc with a “deal”.

As a result, a number of “meaningful votes” have been held to attempt to prevent the nation from crashing out.

However, despite a number of attempts to legally prevent a “no deal” Brexit, the possibility would still remain until an official agreement was put in place.

The December Election

On 12th December 2019, the Prime Minister called a general election following an extended period of Brexit deadlock.

The result was a resounding success for the Conservative Party, who achieved a significant majority. Following a lengthy period of economic stagnation prompted by the uncertainty of Brexit, this was considered to be a clear message from the general public that positive action was required.

Almost immediately after the election, the pound surged, possibly demonstrating growing confidence that a Brexit deal would soon be reached.

The Withdrawal Agreement

After it was necessary to extend the Brexit deadline to 31st January 2020, Boris Johnson succeeded in having a withdrawal agreement accepted by both the UK government and the European Union. This agreement was signed on 24th January 2020, and marks the start of a transitional period that will gradually see the finer details of the departure negotiated and organised.

What now?

The UK must now seek to make new arrangements regarding trade, international law and other vital matters with a number of overseas territories in order to ascertain its position as a nation once it is independent of the European Union.

There is no clearly defined deadline for this period, meaning that the UK’s departure may not be complete for several months or possibly over a year. However, as a result of the significant progress that has so far been made, the UK economy is likely to gradually recover to pre-referendum levels.

As there is currently no certainty as to the UK’s future trading status or the type of international arrangements that are likely to be made, the ultimate results of Brexit are difficult to predict.

Few doubt that there will be impacts on important industries including the UK property market, construction, finance, banking, agriculture, healthcare, manufacturing and retail.

In the interim, detailed information about the Brexit transition process can be found here. The UK government’s site will be regularly updated as new information is available.

The future of international investors’ rights in a post-Brexit UK is another matter that will be negotiated throughout the transitional period, and information regarding this issue will also be released on the government website as and when it is ascertained.

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