With Brexit frequently making headlines, let’s see what it is and what its implications are. Brexit (British + exit) is the term used to refer to the United Kingdom’s decision to leave the European Union (EU). a group of 27 countries forming a single market zone. The EU countries trade with each other and also allow their citizens to move freely between the countries to live and work. The U.K had been part of the EU, then called European Economic Community, since 1973. Britain formally left the EU early this year (2020), and is now in an 11-month transition period, during which the EU laws apply, to give citizens and businesses time to adapt.
The background
The 2008 recession was one of the factors responsible for Britain wanting to leave the EU. As the EU economies struggled with the global economic downturn, Britain found the EU’S regulatory nature stifling, and its liberal rules governing internal migration endangering its interests. Britain never adopted the euro, the single currency of most EU nations, so as to maintain its economic independence. With the eurozone crisis deepening over the years, there was increasing pressure on Britain to get out of the EU. Hence, David Cameron, the then U.K. PM called a referendum (a public vote) in June 2016 to decide if the country should remain or leave the EU. The leave side won by 52%, which translated to 17.4 million votes. The exit was due to take place on March 29, 2019, but delayed due to negotiations between the U.K. and the EU member countries. The negotiations were about the withdrawal agreement which covers key issues such as how much the U.K. will have to pay the EU to break its partnership, how Brexit will impact the UK citizens living elsewhere in the EU and those of the EU living in Britain, and a transition period to agree upon a trade deal. The Brexit withdrawal agreement was drafted in November 2018, but failed to get the British MPS backing thrice, following which Theresa May, the then U.K. PM, stepped down in July 2019. Her successor, the present PM and Brexit hardliner Boris Johnson, had the draft withdrawal agreement revised in October which was subsequently signed by the U.K. and the EU in December 2019. After several delays, Brexit happened on January 31, 2020.
Cut to the present
Now the U.K. is in a transition period that will last till December 31, 2020. During the time it will continue to follow the EU rules, which include free movement of its citizens across EU nations. The transition period is intended to allow the two entities to agree upon the future of their new relationship. If a new free-trade deal is not agreed upon by the deadline, the UK will have to exit the transition without one. In the absence of the deal, businesses will have to pay taxes or tariffs, which could result in things getting more expensive in Britain. There could be delays on transport of goods and medicines on account of more border checks, as Britain will no longer be under the EU umbrella. Till now, no breakthrough has been reached by the negotiating teams led by EU chief negotiator Michel Barnier and British counterpart David Frost. Both sides signalled their inability to agree on “level playing field governance and fisheries. Meanwhile, Britain has repeatedly ruled out any extension to the negotiations into next year.
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