A day like today is not a day for, sort of, soundbites, really – we can leave those at home – but I feel the hand of history upon our shoulders, I really do. Former British PM, Tony Blair (in a 1997 interview)
Early this morning, it was announced that the British electorate had voted in favour of leaving the European Union. Described by some as a seismic decision, for many it has certainly been an earth-shattering night.
Perhaps for none more so than incumbent Prime Minister David Cameron, who this morning tendered his resignation to the British people in front of a crowd of journalists gathered at Number 10. He will officially handover his role at the conservative conference in October, when a new leader will take his place.
Cameron’s replacement will most likely come from within the Conservative party given their parliamentary majority and many feel that former Mayor of London, Boris Johnson is in pole position. Whoever moves into Downing Street in autumn will certainly have their work cut out for them.
The new leader will have to decide whether or not to trigger article 50 – the legal process of leaving the EU, as defined by the Lisbon Treaty – and negotiations that Cameron made in February will have all been for naught.
The FTSE 100 this morning tumbled 530 points (8.4%) not long after trading began at 8am GMT, and the pound sterling is currently at its lowest since 1985. Mark Carney, the governor of the Bank of England swiftly made a statement in an effort to reassure the markets, by promising that the BoE would not hesitate to step in to bolster the markets and will make an extra £250 billion available to British banks.
It’s important to remember however, that referenda in the UK do not legally bind the parliament into following the wishes of the people, unless there is a specific provision written into the terms of each referendum. The Remain/Leave referendum had no such provision.
However, not following through on the referendum result would be political suicide, so in the next two years, Cameron’s successor will have to hammer out the terms of the exit agreement.
SNP (Scottish National Party) leader and First Minister of Scotland, Nicola Sturgeon has already raised the prospect of a second Scottish Independence Referendum, given that Scotland voted 62% in favour of remaining within the EU.
On the other side of the coin, as Scotland may strive to stay within the EU, many people fear that a successful Brexit in the next two years will spur on other countries to consider a similar decision.
Angela Merkel is meeting her party and heads of parliament for an emergency meeting this morning to discuss the consequences of the vote. She will deliver a statement around lunchtime.
But What Happens Now?
For a more detailed view of the process that will follow, please check out my previous article “What the ‘Brexit’ Could Mean for European Workers”. I’ve answered some more specific reader questions in “23 Days Later: Your Questions About the Brexit Referendum”.
Cameron stated in his speech this morning that he would “reassure Brits in European countries and EU citizens living here that there will be no immediate changes in your circumstances. There will be no initial change in how we can travel, how our services and goods can move. We must now prepare for a negotiation with the EU.”
However, as Patrick Wintour writes for the Guardian, “On the assumption there is no turning back, or collective buyer’s remorse, Britain will live with the political, constitutional, diplomatic and economic consequences for a decade or more.”
But for the time being, what Cameron said is true. The result of the vote doesn’t count as an official notification of an exit from the EU. The succeeding Prime Minister will have to decide if and when to invoke Article 50, and to the present formal notification in Brussels. There will now be a six-week period allowed for any potential legal challenges to the result. In the interim, the civil service and the banks will step in in an attempt to stabilise the country.
After this time, much will depend on who seems likely to take over from Cameron at the Tory conference in October. Either way, by autumn the UK will have a new leader who will make those decisions. And it won’t be an easy ride. Sitting MPs currently lean highly in favour of remaining within the European Union, and have now shown themselves to be at odds with the wishes of the rest of the country.
As mentioned above, the negotiation process for ending the UK’s 43 year relationship will take about two years. The UK will finally step out of the Union once they strike a deal that is ratified by a majority of the 27 remaining member states.
If however, after two years, they have been unable to reach an agreement, the UK will revert to World Trade Organisation rules, meaning that they will be subject to all the usual trading tariffs that apply to countries outside the EU trading bloc. There is also the potential that they could negotiate a deal similar to that of Norway, which allows them some exceptions in terms of trade and people movement.
The EU is unlikely to be overly willing to negotiate much further than the concessions they already made with Cameron in February. Jean Claude Juncker, president of the European Commission, said before the referendum that “Cameron got the maximum he could receive and we gave the maximum we could give. So there will be no renegotiation, not on the agreement we found in February, nor as far as any kind of treaty negotiations are concerned.”
So, in the immediate future, nothing will change until the political machinations run their full course. The UK is likely to face a serious backlash both internally, and within the EU where they will be attempting to negotiate a better deal. However, for the next two years, things are likely to remain much as they are.
What Does This Mean For Your Jobs?
While there will be no immediate impact, within the next few years the real outcome of the referendum result will begin to be seen. It is highly likely that the UK will negotiate a deal for the free movement of people for the benefit of its economy, but given the anti-immigration bent of the Leave supporters, this will probably be one of the most contentious issues and is hard to predict.
If the UK are unable to strike trade agreements with the EU, there are potentially severe economic consequences. As the financial centre of Europe, the City of London may lose out as international banks could move their headquarters elsewhere in an effort to avoid sanctions.
Small business too could face increased taxation and tariffs, meaning that entrepreneurial activity could take a hit. However, this is all subject to series after series of meetings with the EU, within the Commonwealth, with NATO, with WTO etc etc ad nauseum.
If you’re currently working within an EU member state as a British citizen, barring a free movement negotiation, you may soon have to deal with visa applications and paperwork. However, if you’re already living in the EU, you’re not at any risk of being ‘sent home’ as many scare-mongers would have you believe. The real complications will come with regard to health insurance, NHS use, and pension payments – all pending negotiations of course.
If you’re an EU citizen currently living within the UK, it will be a similar story. There’s likely to be a lot more paperwork, and immigrants who move to the UK in future will be unlikely to be able to transfer their health insurance, and will likely face cuts in benefits. It’s also unlikely that you will be able to claim child benefit for children still resident in your home country. Those who would now wish to move to the UK would now likely face a much shoddier deal in terms of in-work benefits than their British colleagues
But as I said, the unfortunate overarching feeling right now is uncertainty. So much will depend on Cameron’s successor, and how they manage to comport themselves in the next two years of negotiations. Whatever happens, we’ll do our best to keep you updated on progress.
I’ll leave you by following Douglas Adams’ sage advice from one of the finest works of British literary sci-fi, The Hitchhikers Guide to the Galaxy by writing in large, friendly letters…