Brexit Stage Left: The Possibility and Consequences of a No-Deal Brexit

Brexit Stage Left: The Possibility and Consequences of a No-Deal Brexit

By: Victoria Wunder

On 23 June 2016, a referendum was held that asked voters a single question: should the United Kingdom remain in the European Union, or should they leave it?[1] Of the 72.2% of U.K. voters who participated in the referendum, 51.9% voted in favor of the U.K. leaving the E.U., and 48.1% voted to remain.[2] This outcome was a shock to many, and the split—dubbed “Brexit”—will impact both the U.K. and the E.U. in a number of ways, even more so if no deal is reached.[3]

The European Union is a coalition of twenty-eight countries that trade with each other as a “single market” and allow the citizens of member states to cross borders with no restrictions, amongst other benefits.[4] The United Kingdom, made up of England, Scotland, Wales, and Northern Ireland, has been a member of the E.U. since 1973, when it was still known as the “European Economic Community.”[5] The 2016 referendum was just the start of the U.K.’s split from the E.U.[6] To leave the E.U., the U.K. had to invoke Article 50 of the Treaty of Lisbon, which allows the pair two years to come to an agreement as to the terms of their separation.[7] The U.K.’s Prime Minister, Theresa May, invoked Article 50 on 29 March 2017, which means that the U.K. will officially leave the E.U. at 11p.m. on 29 March 2019.[8] Though there are campaigns within the U.K. to abandon Brexit altogether, politicians in the country are currently focusing on how, not whether, the split will happen and what the relationship between the E.U. and the U.K. will look like when it does.[9]

Brexit negotiations commenced a year after the initial referendum, on 19 June 2017.[10] A 585-page withdrawal agreement has been created to govern how the U.K. will leave the E.U., but not what will happen once it does.[11] The deal sets forth how much the U.K. will have to pay to divorce from the E.U. (some 39 billion pounds), how U.K. citizens abroad will be treated, how E.U. citizens living within the U.K. will be treated, and how to avoid the return of a physical border between Northern Ireland and the Republic of Ireland (an issue that has featured prominently in the negotiations thus far).[12] The deal would also institute a transition period to allow the U.K. and E.U. to hammer out a trade deal and allow businesses the opportunity to adjust to the impending changes, which would last from the time the U.K. formally exits the E.U. on 29 March 2019 until 31 December 2020.[13] Included with this deal is a non-binding, 26-page “statement of future relations”—an aspirational document meant to paint a rough picture of the U.K. and E.U.’s future relationship in a number of areas, notably trade and defense.[14] The leaders of the 27 remaining E.U. countries have signed off on the agreement, which now needs to be passed in both the European and U.K. Parliaments, respectively.[15]

However, at this time, it looks the deal that the Prime Minister and the E.U. leaders have created may not pass through the British Parliament.[16] It is unclear whether the Prime Minister will be able to garner enough support from members of her own Conservative party or those of other parties to ensure the deal’s passage.[17] If the deal does not pass through Parliament, a no-deal Brexit is the most likely scenario (and likely the worst scenario for Britain).[18] It is also possible that a new way forward could be suggested by Parliament members, that the deadline could be extended (so long as all 27 E.U. member states agree), or that Brexit could be cancelled altogether.[19] Due to the Prime Minister’s invocation of Article 50 of the Treaty of Lisbon, U.K. law right now requires that the country exit the E.U. on 29 March.[20] However, with no deal, the U.K.’s exit from the E.U. could bode ill for the country.

The European Union’s President, Donald Tusk, has called the current deal “the best possible, in fact the only possible one,” signaling that the entity is unwilling to negotiate the Brexit deal further, and certainly is unwilling to negotiate a new deal from scratch.[21] This means, that if the current deal fails to pass, a no-deal Brexit is the most likely outcome, or, perhaps, the only outcome, if a new deal is not approved by the 29 March deadline (a deadline that draws nearer each passing moment). On 29 March 2019 the U.K.’s membership in the E.U. expires, and 3 million E.U. citizens living in the U.K. and 1 million U.K. citizens living in member states lose their automatic rights and protections at the stroke of eleven.[22]

The effects on the U.K. (and to some extent, the E.U.) will be vast and complicated. Everything from fisheries to health care to higher education (not to mention free trade and foreign policy) stands to be impacted by a no-deal Brexit. A number of the U.K.’s doctors and nurses—some 122,000 of them—are leaving the country: as E.U. nationals, their future is uncertain, and they are off in search of greater stability.[23] Fewer E.U. nationals are applying to positions the medical field in the U.K., whereas before they could have made up 1/3 or more of the applicant pool.[24] There simply are not enough British doctors and nurses to cover the need.[25] It is not only the healthcare industry that is struggling to recruit: businesses from construction companies to coffee shops are struggling to hire new employees, and top universities fear they may not be able to keep those that they have.[26]

One of the major issues that has presented itself over the course of the Brexit negotiations is how the border between Northern Ireland and the Republic of Ireland will be handled. At the moment, both the Republic of Ireland and Northern Ireland (as part of the U.K.) are part of the E.U., and the border between the two is open and features no checkpoints, allowing people and goods to move across it easily.[27] Once the U.K. leaves the E.U., the border between the two Irelands will necessarily change, and how and to what degree that change will occur has been the focus of intense debate.[28] There is an argument as to whether the border should be a “hard border” or a “soft border.”[29] The E.U. argues that it must protect the single market from tainted goods, and fears that without adequate checks, unwanted or low quality products could slip into the market “via a Britain-Northern Ireland route.”[30] Unless this issue can be resolved in some other, less formal way between the E.U. and the U.K., once the U.K. leaves the Union the border between Northern Ireland and the Republic of Ireland will rise to that of a full customs border, a situation which would likely be practically and politically untenable for Irish citizens.[31] In the agreement as it stands now, there is a “backstop” provision regarding the Irish border.[32] If an alternative agreement cannot be reached, Northern Ireland will remain in the single market and there will be no customs checks at the Irish land border; instead, there will be customs checks between Northern Ireland and Britain, a situation that both Northern Ireland and Britain are obviously in opposition to, as it would place a customs check within the U.K. itself.[33]

The greatest consequence of Brexit will be economic, and will affect both the U.K. and the E.U. Most experts believe that the U.K. will actually be economically worse-off post Brexit, at least at first break.[34] A number of economic projections have also been made, however, that show that the U.K.’s economy will be negatively affected by Brexit well into the future.[35] Brexit’s stunting of economic growth and overall negative affect on the economy will be due in large part to the barriers to trade that will be in place upon the U.K.’s adieu.[36] It is impossible to predict to what extent these barriers will affect the U.K. and E.U. economies, as the meat of the trade deals and much of the two entities future relationships will be worked out in the future, when (and if) the current Brexit deal is cemented (additionally, new deals will likely need to be inked with member countries individually).[37] Exactly how the economy fairs will depend upon Brexit’s impacts on related sectors, such as productivity, migration, and foreign investment.[38]

In all, the impacts of Brexit upon the United Kingdom, European Union, and the world are as of yet unknowable, but certain to be profound. If Brexit does occur, and the current deal is accepted, a long road must still be traveled to stabilize the relationship between the U.K. and E.U. member states. If the current deal is not accepted, the road grows significantly longer, and, perhaps, more perilous. As we stand by and witness history, we can only wonder what its consequences may be for the future.

 

[1]Alex Hunt & Brian Wheeler, Brexit: All you need to know about the UK leaving the EU, BBC News (Nov 26, 2018) https://www.bbc.com/news/uk-politics-32810887.

[2] Brexit: Impact Across Policy Areas, House of Commons Library, 18 (2016), http://dera.ioe.ac.uk/27171/1/CBP-7213.pdf.

[3]  Id.

[4] Alex Hunt & Brian Wheeler, Brexit: All you need to know about the UK leaving the EU, BBC News (Nov 26, 2018) https://www.bbc.com/news/uk-politics-32810887.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Brexit: Your simple guide to the UK leaving the EU, BBC News, (Nov 26, 2018) https://www.bbc.com/news/uk-46318565.

[12] Id.

[13] Id.

[14] Alex Hunt & Brian Wheeler, Brexit: All you need to know about the UK leaving the EU, BBC NEWS (Nov 26, 2018) https://www.bbc.com/news/uk-politics-32810887.

[15] Brexit: Your simple guide to the UK leaving the EU, BBC News, (Nov 26, 2018) https://www.bbc.com/news/uk-46318565.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Jen Kirby, EU to UK: Take the Brexit Deal or Else, Vox, (Nov 30, 2018) https://www.vox.com/2018/11/30/18119620/brexit-deal-uk-european-union-g20-may.

[22] Id.

[23] Katrin Bennhold, Where Brexit Hurts: The Nurses and Doctors Leaving London, The New York Times (Nov 21, 2017) https://www.nytimes.com/2017/11/21/world/europe/nhs-brexit-eu-migrants.html.

[24] Id.

[25] Id.

[26] Id.

[27] Samantha Hawley, Brexit: The Irish Border Issue that Could See the U.K. Crash Out of the European Union, ABC News (Dec 2018), https://www.abc.net.au/news/2018-10-19/explainer-brexit-and-the-irish-border-issue/10393818.

[28] Id.

[29] Lisa O’Carroll, Brexit and the Irish Border Question Explained, The Guardian (Sept 2018), https://www.theguardian.com/uk-news/2018/sep/19/brexit-and-the-irish-border-question-explained.

[30] Id.

[31] Id.

[32] Id.

[33] Id.

[34] Examining Economic Outcomes After Brexit, Rand Corporation https://www.rand.org/randeurope/research/projects/brexit-economic-implications.html.

[35] Gemma Tetlow and Alex Stojanovic, Understanding the Economic Impacts of Brexit, Institute for Government (Nov 2018), 4 https://www.instituteforgovernment.org.uk/sites/default/files/Economic%20impact%20of%20Brexit%20summary.pdf.

[36] Id. at 7.

[37] Id.

[38] Id. at 10.