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Brexit: What next?

Brexit: What next?

After the referendum result less than 4 weeks ago, we’ve seen political upheaval, a plummeting pound and a new Prime Minister. One crucial part of the conversation has surrounded article 50, how long it would take us to leave the EU, and what sort of deal we could get.

The conflicting statements from politicians have left most of us thoroughly confused, with misinformation everywhere and rolling news coverage that changes every hour!
Here at Class, we’re working on new research in the aftermath of the Brexit vote, but to find meaningful solutions and put together a progressive wish list after Brexit, we need the facts.

Is the vote binding, or could we have another referendum?

The vote itself is not legally binding. However, like many issues involved in Brexit, there are disagreements on even this basic point. Some leading lawyers have insisted that there should be a vote in the UK parliament before Article 50 is triggered, although the likelihood of MPs voting to block a Brexit is very low considering the majority result in the referendum.Now that Theresa May is PM and has appointed key Leave campaigners to her cabinet, there is no chance of a second referendum - as the new PM herself put it, “Brexit means Brexit”.There have been suggestions that the result of a Brexit renegotiation should be put to a public vote, but to offer a vote would imply that the deal could be changed, which is unlikely considering the instability that other EU countries are experiencing after the vote. EU leaders are looking for a quick resolution, and won’t want to wait for another UK referendum.

What is article 50 and how does it work?

Article 50 is the legal procedure for a country leaving the European Union, and refers to a section in the Lisbon treaty. It must be ‘invoked’ or triggered, by the country leaving. The procedure in Article 50 gives two years for the leaving country to renegotiate its relationship with the remaining EU countries. Some have suggested that we would have much longer than this, but in order to extend the period for renegotiation, we would need to secure unanimous agreement from the remaining 27 EU countries. Unfortunately, this seems unlikely, with leading EU figures including French President Francois Hollande and European Commission President Jean-Claude Juncker keen to finalise the details of the UK exit and bring back some stability to their own economies.

So what kind of Brexit deal can we expect?

There are number of different Brexit deals the UK can get, but these possibilities fit into two headline options:

1. Access to the single market and freedom of movement

This has also been referred to as “soft Brexit”, modelled on Norway’s relationship with the EU and maintaining many of the key parts of our membership. The EU single market is the biggest trading bloc in the world, with 500 million consumers and no tariffs on trade between members. Over 40% of our trade is with the rest of the EU, by far our most important trading partner, and thousands of jobs in the UK depend on tariff free trade. In order to stay part of the single market, we would most likely have to keep freedom of movement. No other country has been able to secure full single market access without it – Switzerland, not an EU member state, held a referendum on freedom of movement in 2014 and voted to renegotiate their position and possibly impose quotas on migration. The EU response was clear: single market access and freedom of movement are a package deal. The EU has taken a strong stance on the Swiss position, and it is likely that the UK would be given the same terms.

2. Exiting the single market and no freedom of movement

This has been referred to as “hard Brexit”, a fundamental change in our relationship with the rest of Europe. If the UK doesn’t negotiate access to the single market, the government can stop freedom of movement. As immigration became a big feature in the referendum campaign, many Leave voters would feel short changed if there was no change to EU immigration. As such, Theresa May's new government will be under pressure to secure changes to free movement. The downsides of this approach are potentially substantial, especially in the short term. In the absence of stronger trade partners beyond the EU, losing access to the single market would have a big impact on the UK economy, our trade and our businesses. In addition, without freedom of movement some of our industries would struggle to function – over 50,000 NHS staff are from elsewhere in the EU, including 10% of doctors and 4% of nurses. To ease a shift to less immigration the government would need to think about how to fill potential skill gaps.

What next?

Theresa May has appointed key Leave campaigners to her cabinet, including Boris Johnson as Foreign Secretary, Liam Fox on International Trade, and David Davis to lead Brexit negotiations. There has been no single vision from the Leave side on a Britain after Brexit, and leading figures have been vague. After his appointment, David Davis updated a recent blog on his vision for Brexit. Davis wants to trigger Article 50 before the end of the year and has an optimistic vision of quickly negotiated trade deals with the US, Canada and China, although the feasibility of this and the quality of deals we could get is questionable. However, Davis has stated that he would not consider cutting employment rights – we will have to hope that he keeps his word.  The vision of a UK outside the EU is still murky, with regulations on everything from paid holiday to consumer protections on the line and economic uncertainty for the foreseeable future. The government should be taking time to set out the options for a post Brexit UK. With such fundamental issues on the agenda, we need a strong progressive wish list for Brexit; with a new PM and Brexit Minister pushing to trigger Article 50 this year, we need to start now.