Brexit past, present and future

At 11:00 on the evening of January 31, Britain finally formally left the European Union, ending the “European journey” that lasted nearly half a century. Three and a half years after the Brexit referendum was held, Britain finally gave an answer on this issue, but the Brexit issue does not seem to be over, and there are still many difficult issues to be resolved in the future.

Difficult Brexit
Brexit starts with the Brexit referendum on June 23, 2016. The then Prime Minister David William Donald Cameron decided to hold this referendum in order to fulfill his previous campaign promises. This decision caused widespread discussion at home and abroad, and the word “Brexit” has since Come. Before the referendum, most analysts believed that Britons were more likely to choose to stay in the European Union; as a result, 52% of voters chose to leave the EU, which was surprising and exposed the lack of preparation from all walks of life.

After the referendum results were announced, Cameron soon announced his resignation. Since then, why the British have to leave the European Union and what it means for the United Kingdom, the European Union and the world has aroused great concern and discussion. But people soon discovered that the result of the referendum did not necessarily mean that Britain would leave the European Union, because legally speaking, the result of the referendum was not legally binding. Whether or not to leave the EU depends on how politicians treat the issue. It was not until March 2017 that the British government activated Article 50 of the Lisbon Treaty and notified the European Union that Britain had chosen to leave the European Union before Brexit officially entered legal proceedings.

Unfortunately, “love is easy to break up and difficult.” Since the United Kingdom has been a member of the European Union for more than 40 years, they are very close to each other, and it is not easy to cut off the relationship. At this time, negotiations between the Theresa Mary May government and the European Union on the Brexit agreement have progressed very hard; it was not until November 2018 that the two parties barely reached an agreement. However, before people could relax, this hard-won agreement was rejected three times in the lower house of the British Parliament. At that time, the deadline for Brexit was still “end of March 2019”, and the three previous vetoes raised the possibility of “no-deal Brexit”, raising a wide range of concerns.

The Bank of England had previously warned that in the worst case, a disorderly Brexit, UK GDP (gross domestic product) could fall by 8% in one year, the pound would fall by 25%, and house prices would fall by 30%. Fortunately, the United Kingdom and the European Union reached an agreement to extend the Brexit deadline before temporarily avoiding the situation of a no-deal Brexit. However, at this time, the Brexit deadlock did not break, the Brexit agreement could not be accepted by parliament, and then Prime Minister Theresa May also pressured to choose to resign.

In July 2019, May’s successor, Boris Johnson, came to power. He made a tough stance in negotiations with the European Union, saying that even if there is no agreement, he will also lead Britain to leave the European Union. Johnson’s negotiating strategy achieved some results, the EU changed its position of refusing to renegotiate, and the two sides reached a new agreement. However, Johnson’s new agreement also faces the challenges that Theresa May has experienced, which is difficult to pass in the British Parliament.

In this situation, Johnson dismissed the cabinet and held a general election in advance in December 2019. This is also the first time that Britain has held a general election in the Christmas month in nearly 100 years. As a result, the Conservative Party led by Johnson gained an overwhelming advantage, paving the way for the passage of the new agreement in parliament. Johnson fulfilled his political aspirations, ending Britain’s 47-year membership in the European Union and its predecessor, the European Community.

Dreams finally come true
On January 31, 2020, the United Kingdom officially left the European Union. Some domestic groups that support Brexit also celebrated. It can be said that Britain finally broke the deadlock on the issue of Brexit and made substantial progress.

Prior to that, there had been a possibility that Britain might abandon Brexit in some way, such as a second referendum. From an EU perspective, these expectations have been there. In December 2018, the European Court of Justice once ruled that the United Kingdom could unilaterally withdraw its application for Brexit. This can be regarded as the “olive branch” of the European Union to retain the United Kingdom. Unfortunately, the Johnson administration “has decided to decide”.

After January 31, the United Kingdom officially lost its EU membership, withdrew officials from European institutions such as the European Parliament, ceased to participate in EU decision-making, and regained its autonomy in conducting free trade negotiations. This means that the Brexit process is no longer reversible. It is also expected that Britain may one day rejoin the EU, but even if this does happen, it will be in the very distant future.

Many changes have taken place together, but what we see seems to be another matter: Britain’s relationship with the European Union has not changed significantly after January 31. This is because there is still an 11-month transition period after Brexit. During the transition period, the economic and trade relations between the two sides remain unchanged. The United Kingdom remains in the customs union and a single large market. Goods, services, capital and personnel can still move freely between the EU and the UK. In principle, the UK still complies with the EU. Laws and regulations.

This may raise questions-has the UK really left the EU? For most people, Brexit will not bring about immediate changes, and the economic and trade and personnel exchanges between Britain and the EU will remain the same. At present, key changes will occur after the end of the transition period at the end of 2020; as for how to change, it depends on the negotiations between the two parties during the transition period.

At present, the two parties are expected to start negotiations in March, and at the end of June, a very important time node will be ushered in. According to the agreement reached between the United Kingdom and the European Union, the transition period can be postponed, but it must be agreed by both parties before the end of June, and it does not expire. This means that the two sides will soon decide whether to postpone the extension or not, and preparations may not be sufficient. In particular, Johnson has clearly stated that the transition period does not need to be extended and has been approved by the British Parliament. It can be seen that it will be quite difficult to obtain an extension of consensus at that time.

If it cannot be postponed, the two parties will need to complete negotiations before the end of 2020. With reference to other international free trade agreements, negotiations usually take several years, and the EU has repeatedly expressed concerns over time constraints. If neither party agrees to an extension or reach an agreement before the end of the year, Brexit will still face “disorder” risks. Some people liken the process of Brexit to a soap opera, which is also appropriate. The commonality between the two is that the follow-up plot is unpredictable and can only be taken step by step.

“Freedom” confusion
Looking ahead, although it is difficult to speculate on the specific results of the transition negotiations between the two sides, the general trend of Brexit has been determined, and Britain will inevitably face the problem of how to develop after leaving the EU. The original intention of Brexit is to reclaim national sovereignty, so that national policies can be more flexible and not bound by the European Union, thereby achieving better development.

This idea looks good, but will Britain really develop better without the EU? Everything starts and ends. Looking at the future development of the United Kingdom, we may first look at the situation before Britain joined the European Community.

In January 1973, Britain joined the European Community. Earlier, compared with the European Community, the British economic development at that time was not satisfactory. The course of more than 40 years proved that integration into Europe did help Britain achieve rapid economic development.

After leaving the European Union, Britain can regain immigration autonomy, but previous studies have shown that immigrants from Central and Eastern Europe have a positive impact on the British economy. Britain can also regain autonomy in free trade negotiations and can begin negotiations with other economies. But don’t forget that trade with the EU occupies half of Britain’s foreign trade. To promote trade with other regions, the EU market has been sacrificed. The pros and cons need to be carefully calculated. At the same time, if Britain wants to promote trade at the global level, it may not face a very favorable international environment. In recent years, the trend of “anti-globalization” shows that the past era of globalization, which seems to be surging, seems to have passed. The downturn in international trade may be the general trend. It may be more difficult for the United Kingdom to “make a difference” in such a larger environment than expected.

In addition, the United Kingdom regards the United States as the key target of the free trade agreement. However, under the dominance of the “United States first” concept, Britain, as a traditional ally, may find it difficult to take advantage of the United States in trade. At the moment, Britain seems more likely to be “taken advantage”. For example, the United States is trying to enter the British universal medical system with the help of a bilateral free trade agreement, which is a difficult problem facing the latter.

It takes a price to return to national sovereignty. This means that Britain needs to face barriers to entering the EU market in the future. Although no new bilateral relationship agreement is known, one thing is certain that it is impossible for the UK to enter the EU’s large market in the future. In the long run, this will weaken the growth potential of the British economy.

At present, the goal of the negotiations between the United Kingdom and the European Union is to refer to the “Canadian model”. According to the European Union and Canada’s Comprehensive Economic and Trade Agreement (CETA), although the two sides have cancelled import tariffs on most commodities, customs inspections and value-added tax are still levied. The problem is that the aforementioned model has limited market access, especially in the service sector, which is exactly where the UK’s strengths lie. If the EU loses its “financial passport” (also known as a “financial pass”) in the future, Britain will need to work harder to maintain London’s status as an international financial centre.

Research by the British think tank “European Reform Centre” shows that since the referendum on Brexit, the UK has lost about 3% of its GDP due to related issues. Data since 2016 also show that the UK economy is in a “deteriorating situation”. On the issue of Brexit, although the British have made clear political choices, they face severe challenges in the transition period and later to reverse the economic situation.

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