UK: Brexit And Beyond

Last Updated: 5 October 2016
Article by Andrew Cheung and Stuart Hopper

Brexit overview

This June, when asked "Should the United Kingdom remain a member of the European Union or leave the European Union?", 52 per cent of those who voted said they wanted to leave: for "Brexit". Although, technically, the referendum was only advisory, the British Parliament appears committed to acting on the "will of the British people". It is poised to walk away from a 43-year-long relationship with the politico-economic bloc and no one is clear what will replace it. How did the UK arrive at this unprecedented juncture? And what does the future hold? The UK's membership of the EU has been a historically divisive issue within both mainstream political parties. During the 1975 EEC referendum campaign, both parties were split, leading to the situation where the individual members of the Labour Cabinet were allowed campaign on each side of the question. Throughout the long Conservative hegemony of the 1980s and 90s, Europe continued to prove a simmering point of contention for both Prime Ministers Thatcher and Major. Conscious of a growing tide of Conservative Euroscepticism and the rising popularity and influence of the pro-leave UK Independence Party (UKIP), during his first term as prime minister, David Cameron pledged an in-out referendum. His bid to unite his party (and ward off UKIP) exceeded expectations, winning him a small Conservative majority in the 2015 election. However, this meant that Mr Cameron could not renege on his earlier promises for a referendum. Internal political manoeuvring culminated in the biggest political gamble of Mr Cameron's career. It was not a gamble that paid off.

Net migration from the EU to the UK has spiked over the past two decades, which can be attributed in large part to the accession of several new members to the EU and the deepening Eurozone crisis. In the lead-up to the June referendum, fears of mass immigration and of an apparent erosion of national sovereignty converged with general anti-establishment feeling and a sense amongst some that they had missed out on the prosperity that a global, financially integrated Britain has enjoyed. Brexit became a broadbrush solution to a disparate group of the disaffected, all of whom had a different vision for a post-EU Britain. Reports of terrorism, the refugee crisis and economic malaise on the continent drove national feeling even further from identifying Britons as "European". Vote Leave's catchall slogan – "take back control" – tapped into this frustration and, by a narrow margin, the UK as a whole voted to divorce from the EU, although when the results were broken down, Scotland and Northern Ireland voted overwhelmingly to remain. It is now widely accepted, and confirmed most recently by the Electoral Reform Society in its report, that the referendum was a study in how not to run referenda . In an accompanying statement, they noted "glaring democratic deficiencies in the lead up to the vote" with a largely negative campaign by parties that generally were not trusted leaving "far too many people [feeling] they were ill-informed about the issues".

With the sudden resignation of Mr Cameron, volatile markets and fresh calls for a second referendum on Scottish independence, the need for immediate stability stood as paramount in the wake of the vote. A new prime minister, Theresa May, the former Home Secretary (and an actual Remainer) was invited to form a government much earlier than anticipated. This avoided a more protracted leadership debate through which ideas for the mode of exit and new relationship might have been refined. Instead, it now falls to Mrs May and her Cabinet to identify a Brexit strategy that reconciles the demands of a divided nation – and then sell it to (and buy it from) Europe as well as British industry, international investors and the rest of the world.

The UK Government has undertaken to the UK High Court that it will not invoke the Treaty provision for exit, Article 50 of the Treaty of the European Union (TEU), before the beginning of 2017. Several challenges to the Government's power to trigger the two-year formal exit process under the Royal Prerogative have been joined in a judicial review case set down for hearing over two days commencing 15 October. There is little doubt that the case will progress to the Supreme Court. Indeed, emphasising the need for expediency and the fact that the case concerns "issues of constitutional importance", a High Court judge has suggested that when handed down, the decision of that Court could be referred directly to the Supreme Court, leapfrogging the Court of Appeal. It is commonly accepted that, as a matter of international law, the UK cannot conclude, or even negotiate, new trade agreements with other countries whilst it retains its status as an EU member. Hence, uncertainty lingers as to precisely when the exit will happen, the parameters of a new relationship with Europe and what a post-Brexit UK will look like.

Article 50 and the process for withdrawal from the EU

Could a post-Brexit EU-UK relationship be based on an existing model?

EU partners do exist outside of the EU and an examination of a range of these alternatives to membership may offer some insight as to which characteristics could be viable for a post-Brexit UK, when and if a government chooses to invoke Article 50.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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