EU Referendum – Frequently Asked Questions
The European Union (EU) is a politico-economic union of 28 member states that are located mainly in Europe. It has an area of over 4 million km2 and an estimated population of over 508 million.
The EU has developed an internal single market through a system of laws that apply in all member states. EU policies aim to ensure the free movement of people, goods, services, and capital within the internal market, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and regional development. A monetary union was established in 1999 and came into full force in 2002, and is composed of 19 EU member states (not including the United Kingdom) which use the euro currency.
Even at the best of times Britain has always been a semi-detached member of the EU and the country has often been called “the awkward partner”. Britain eventually joined what was then called the European Communities under a Conservative government in 1973, as Europe seemed to be doing so well economically. But the next Labour government quickly held a referendum on membership in 1975. The majority, on that occasion, voted to stay in, but over the past few decades British governments have kept their distance as others within Europe pursued "ever closer union". Britain did not join the single currency, and it is not a member of the Schengen passport-free travel zone.
The positive part of being part of the EU was the ease with which member countries could benefit from each other’s relative prosperity. But, conversely, economic downturns in a member country also impact those other countries in the Union. During the 2008 financial crisis, many economists believe that the European Central Bank failed to respond effectively to the crisis, leading to a more severe recession as a result. Seeing the EU in such a crisis made many politicians and the general public concerned that the wealthy countries such as UK would need to bail out less wealthy countries down the line.
Traditional hostility to the EU has increased in recent years with the arrival of hundreds of thousands of east Europeans (quite legally, under EU rules) to find work, which has caused people to reflect that this immigration may have an adverse impact on the UK in terms of access to things such as housing, school-places and health services that should go to Britons rather than these new economic immigrants.
Finally, many ‘Leave’ politicians and supporters feel that the sovereignty of the UK has been undermined as a result of being a member of the EU and control over the laws and destiny of the country, wrestled away from the elected government and people and given to unelected officials in the EU. Many believe that the EU has become unwieldly and overly bureaucratic with the system of legislation and law making by the European court resulting in a significant draw on the UK budget that could otherwise be put to use closer to home.
In the absence of additional parliamentary legislation, a public vote to leave the EU has official weight once the government invokes Article 50 of the EU’s 2007 Lisbon Treaty and initiates the two-year negotiations to agree the terms of our withdrawal. David Cameron, during his resignation speech, indicated that he would not invoke Article 50 and that it should be a new leader that commenced the formal negotiations with the EU on the UK exit. EU leaders have indicated that they would like the UK to start exit procedures immediately to minimize the uncertainty that this shock result has caused. ‘Leavers’ have been fairly muted on the pace at which they would like to invoke Article 50 and would prefer to enter into EU negotiations first before formally commencing the exit. The final agreement with the UK must be ratified by a qualified majority (20/27) of remaining EU states, representing 65% of the population. The European Parliament would also need to approve the deal and this would require a simple majority of its 751 MEPs. During the two-year period, all existing EU legislation remains in place, although the UK has no vote on any EU policy matters.
The two-year deadline under Article 50, which could be extended by unanimous agreement, does not apply to trade negotiations, and the UK could conceivably continue in negotiations on a comprehensive UK/EU trade agreement for many years after Brexit. However, if no agreement on trade is reached within the time taken to agree the terms of Brexit, the UK would begin to trade with the EU as a non-member most likely under the rules of the World Trade Organisation, while continuing trade negotiations. That would imply incurring tariffs on a number of goods, with analysis by the LSE suggesting tariffs on UK exports to the EU-27 of about 3.2% on a trade-weighted basis.
Although recent EU trade deals have taken between four and nine years to conclude, Vote Leave has argued that a UK/EU deal could be completed before May 2020. Its belief is that negotiations would be easier because there is already tariff-free trade between the UK and the EU, and regulations in the UK and the EU are already equivalent. To minimise shock and to create additional stability, the UK and the EU may seek to arrange an extended transitional period beyond two years, as a kind of inverse of what countries joining the EU do. A transitional phase would give more time to introduce and ratify the necessary legislation. It is also worth noting that the EU has sometimes interpreted its own rules flexibly. Some countries joined the euro despite not meeting all the formal criteria and recent euro area bailouts were contrary to EU treaties. Such decisions require political will. Achieving extra flexibility during the UK’s negotiations with the EU would, similarly, require the support of other governments
(Deloitte: EU Referendum Initial Response)