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British exit from European Union 2016

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Withdrawal of the United Kingdom (UK) from the European Union (EU), often shortened to Brexit is a political aim of some political parties, advocacy groups, and individuals in the United Kingdom.
In 1975 a referendum was held on the country's membership of the European Economic Community (EEC), a precursor to the EU.
The outcome of the vote was that the country continued to be a member of the EEC.
More recently the European Union Referendum Act 2015 has been passed to allow for a referendum on the country's membership of the EU, with a vote to be held on 23 June 2016.

Published in: Economy & Finance
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British exit from European Union 2016

  1. 1. BREXIT UNTED KINGDOM WITHDRAWAL FROM THE EUROPEAN UNION
  2. 2. INTRODUCTION 1. Withdrawal of the United Kingdom (UK) from the European Union (EU), often shortened to Brexit is a political aim of some political parties, advocacy groups, and individuals in the United Kingdom. 2. In 1975 a referendum was held on the country's membership of the European Economic Community (EEC), a precursor to the EU. 3. The outcome of the vote was that the country continued to be a member of the EEC. 4. More recently the European Union Referendum Act 2015 has been passed to allow for a referendum on the country's membership of the EU, with a vote to be held on 23 June 2016.
  3. 3. 1975 REFERENDUM In 1975 the United Kingdom held a referendum in which the electorate was asked whether the UK should remain in the EEC. All of the major political parties and mainstream press supported continuing membership of the EEC. However, there were significant splits within the ruling Labour party, the membership of which had voted 2:1 in favour of withdrawal at a one-day party conference on 26 April 1975.
  4. 4. 1975 REFERENDUM Since the cabinet was split between strongly pro- European and strongly anti-European ministers, Harold Wilson suspended the constitutional convention of Cabinet collective responsibility and allowed ministers to publicly campaign on either side. Seven of the twenty-three members of the cabinet opposed EEC membership.
  5. 5. 1975 REFERENDUM On 5 June 1975, the electorate were asked to vote yes or no on the question: "Do you think the UK should stay in the European Community (Common Market)?" Every administrative county in the UK had a majority of "Yes", except the Shetland Islands and the Outer Hebrides. In line with the outcome of the vote, the United Kingdom remained a member of the EEC. Yes votes Yes (%) No votes No (%) Tur nou t (%) 17,378,5 81 67. 2 8,470,073 32.8 64.5
  6. 6. FURTHER DEVELOPMENT The opposition Labour Party campaigned in the 1983 general election on a commitment to withdraw from the EEC. It was heavily defeated as the Conservative government of Margaret Thatcher was re-elected. The Labour Party subsequently changed its policy. As a result of the Maastricht Treaty, the EEC became the European Union.
  7. 7. FURTHER DEVELOPMENT Ahead of the adoption of the Maastricht treaty, Labour MP Jeremy Corbyn thought the treaty would not take EU member states in the direction of democratic United States of America, saying that European Central Bank, which is independent of sovereign governments' economic policies, would undermine member countries' democracy. He argued that ECB's first policy priority is to maintain price stability, and ECB is staffed by bankers, adding that the creation of the euro would impose a "bankers' Europe" on EU members.
  8. 8. FURTHER DEVELOPMENT The Referendum Party was formed in 1994 by Sir James Goldsmith to contest the 1997 general election on a platform of providing a referendum on the UK's membership of the EU. It fielded candidates in 547 constituencies at that election and won 810,860 votes. It failed to win a single parliamentary seat as its vote was spread out, losing its deposit (funded by Goldsmith) in 505 constituencies. The United Kingdom Independence Party (UKIP), a Eurosceptic political party, was also formed in the early 1990s.
  9. 9. FURTHER DEVELOPMENT It achieved third place in the UK during the 2004 European elections, second place in the 2009 European elections and first place in the 2014 European elections. This last was the first time since 1906 that any party other than the Labour or Conservative parties had taken the largest share of the vote in a UK-wide election.
  10. 10. 2016 REFERENDUM In 2012, British Prime Minister David Cameron rejected calls for a referendum on the UK's EU membership, but suggested the possibility of a future referendum "to ensure the UK's position within an evolving EU has 'the full-hearted support of the British people'". In January 2013, Cameron announced that a Conservative government would hold an in-out referendum on EU membership before the end of 2017, on a renegotiated package, if elected in 2015. UKIP gained their first elected MP in October 2014, as Douglas Carswell won a by-election after defecting from the Conservatives. Mark Reckless, another defector from the Conservatives, subsequently won another by-election for UKIP in the autumn of 2014. However, UKIP won only a single seat (held by Carswell) in the 2015 general election, although they finished third in the popular vote.
  11. 11. 2016 REFERENDUM The Conservative Party, led by David Cameron, won the 2015 general election. Soon afterwards the European Union Referendum Act 2015 was introduced into parliament to enable the referendum. Despite being in favour of remaining in a reformed European Union himself,Cameron has announced that Conservative Ministers and MPs may campaign in favour of remaining in the EU or leaving it, according to their conscience. This decision came after mounting pressure for a free vote for Ministers within the party. Additionally, in an exception to the usual rule of cabinet collective responsibility, Cameron will allow cabinet ministers to publicly campaign for EU withdrawal.
  12. 12. 2016 REFERENDUM In a speech to the UK House of Commons on 22 February 2016 Prime Minister Cameron set out the legal framework for withdrawal from the European Union in circumstances where there was a referendum majority vote to leave, citing Article 50 of the Lisbon Treaty. Prime Minister Cameron spoke of an intention to trigger the Article 50 process immediately following a leave vote and of the 'two-year time period to negotiate the arrangements for exit'.
  13. 13. BREXIT REASONS
  14. 14. REASONS FOR BRITISH EXIT FROM THE EUROPEAN UNION 1. British wants reforms in European Union 2. Link between immigration and EU membership 3. The British press is far more Eurosceptic now than it was in 1975. 4. The relative health of the UK economy
  15. 15. BRITISH WANTS REFORMS IN EUROPEAN UNION 1. In the last forty years there have been five major treaty amendments, two name changes and 19 new members. 2. The introduction of Free Movement, the formation of the Eurozone, the trauma of Maastricht and the ignominious exit from the European Exchange Rate Mechanism (ERM) have all occurred in the intervening period. 3. Now, new voting rules have raised the prospect of a “tyranny of the qualified majority”, in which the EU is gerrymandered to the interests of the Eurozone whilst the UK agenda is side-lined. 4. What in 1975 was presented as a trade bloc stands today as an increasingly integrated political project, to the dismay of many voters.
  16. 16. LINK BETWEEN IMMIGRATION AND EU MEMBERSHIP This is encapsulated in the first point, but took on a life of its own following the eastward expansion of the EU in 2004. Today immigration leads voters’ list of concerns, ahead of the economy and the NHS, with 45 per cent naming it among the “important issues facing Britain”. The current refugee and border control crisis looks likely to reinforce existing concerns. And while not all eurosceptics are opposed to immigration (Douglas Carswell springs to mind) it is likely that the ability to “regain control of Britain’s borders” will form a key plank of the Leave campaign.
  17. 17. LINK BETWEEN IMMIGRATION AND EU MEMBERSHIP Of course, even in the event of Brexit it is questionable whether Britain could place strict limits on EU migration without risking its access to EU markets - Non-EU member Switzerland has been faced with just such a dilemma. But whether such nuances will cut through in the campaign is another matter.
  18. 18. THE BRITISH PRESS IS FAR MORE EUROSCEPTIC NOW THAN IT WAS IN 1975. It seems strange to imagine the Daily Express or Daily Mail exhorting their readers to vote in favour of EU membership, but at the last referendum, all national newspapers, with the exception of the Communist- supporting Morning Star, joined the pro-European consensus. Today of course, things look very different. The Express and Star newspapers will almost certainly campaign to leave. The Mail, Telegraph and Rupert Murdoch’s Sun, Britain’s most popular paper, could potentially join them. In an era of declining readerships and online news outlets the positions of the press may seem less important. But most online traffic still goes to the major newspapers and UK impartiality rules allow newspapers to punch above their weight, as the positions they take become news fodder for the broadcasters.
  19. 19. THE RELATIVE HEALTH OF THE UK ECONOMY The 1975 referendum took place against the backdrop of the UK’s second consecutive year of recession. British commentators looked enviously across the Channel, one Times editorial reading “How much better off Britain would be if we had followed the same disciplines on inflation as Germany throughout, or more recently France”. The sense that, in Europe, Britain had found a potential solution to its endemic structural problems was pervasive. Now, as much of Europe lies in stagnant repose, punctuated by the occasional political convulsion, UK growth chugs along at an annual rate of 2.8 per cent. The risk of “going it alone”, if you believe it exists, is not the looming shadow it was in 1975.
  20. 20. THE RELATIVE HEALTH OF THE UK ECONOMY Adding to these factors is the apparently negligible willingness among other EU member states to make concessions to the UK agenda. David Cameron has shelved hopes to win concessions on free movement and looks likely to have to abandon plans to limit in- work benefits for foreign EU nationals too. As a negotiating strategy it might be summed up in a phrase familiar to early users of Facebook: taking what we can get. Wilson’s negotiations achieved little as well of course, but in the absence of press criticism (a typical Times headline reading simply, “Wilson lists his achievements”) they were presented to the public as an unqualified triumph.
  21. 21. THE RELATIVE HEALTH OF THE UK ECONOMY It was left to historians to provide a withering verdict: “an enormously hollow exercise in political spin” in the words of Dominic Sandbrook. David Cameron is unlikely to have to wait for the verdict of history for similar criticism. The government may yet eke out a close victory, particularly if it can leverage its “status quo” advantage. But there is a clear risk that a narrow victory, based on the fear of change rather than a compelling positive case, neither silences the eurosceptics nor settles the issue for the wider public.
  22. 22. BREXIT PROS & CONS
  23. 23. PROS & CONS FOR BRITAIN FROM EXITING EU Perhaps the greatest uncertainty associated with leaving the EU is that no country has ever done it before, so no one can predict the exact result.
  24. 24. TRADE One of the biggest advantages of the EU is free trade between member nations, making it easier and cheaper for British companies to export their goods to Europe. Some business leaders think the boost to income outweighs the billions of pounds in membership fees Britain would save if it left the EU. The UK also risks losing some of its negotiation power internationally by leaving the trading bloc, but it would be free to establish trade agreements with non-EU countries. Ukip leader Nigel Farage believes Britain could follow the lead of Norway, which has access to the single market but is not bound by EU laws on areas such as agriculture, justice and home affairs. But others argue that an "amicable divorce" would not be possible.
  25. 25. TRADE The Economist says Britain would still be subject to the politics and economics of Europe, but would no longer have a seat at the table to try to influence matters. A study by the think-tank Open Europe, which wants to see the EU radically reformed, found that the worst-case "Brexit" scenario is that the UK economy loses 2.2 per cent of its total GDP by 2030. However, it says that GDP could rise by 1.6 per cent if the UK could negotiate a free trade deal with Europe and pursued "very ambitious deregulation".
  26. 26. INVESTMENTS The general view is that inward investment could slow in the lead up to the vote due to the uncertainty of the outcome and its consequences, following the precedent set ahead of the Scottish independence referendum in 2014. Longer term, there are diverging views: pro-Europeans reckon the UK's status as one of the world's biggest financial centres will come under threat if it is no longer seen as a gateway to the EU for the likes of US banks, while Brexit campaigners argue London's unique appeal will not be diminished. Barclays has put forward a different view, which will be seen as positive by those advocating a vote to leave.
  27. 27. INVESTMENTS It reckons the departure of one of the union's most powerful economies would hit its finances and also boost populist anti- EU movements in other countries, the Daily Telegraph says. This would open a "Pandora's box" that could lead to the "collapse of the European project". In this event, the UK could be seen as a safe haven from those risks, attracting investors, boosting the pound and reducing the risk that Scotland would "leave the relative safety of the UK for an increasingly uncertain EU".
  28. 28. JOBS Free movement of people across the EU opens up job opportunities for UK workers willing to travel and makes it relatively easy for UK companies to employ workers from other EU countries. Ukip says this prevents the UK "managing its own borders". But, writing for the LSE, Professor Adrian Favell says limiting this freedom would deter the "brightest and the best" of the continent from coming to Britain, create complex new immigration controls and reduce the pool of candidates employers can choose from.
  29. 29. REGULATIONS Eurosceptics argue that the vast majority of small and medium sized firms do not trade with the EU but are restricted by a huge regulatory burden imposed from abroad. However, others warn that millions of jobs could be lost if global manufacturers, such as car makers, move to lower-cost EU countries, while British farmers would lose billions in EU subsidies.
  30. 30. INFLUENCE Britain may lose some of its military influence – many believe that America would consider Britain to be a less useful ally if it was detached from Europe. On the plus side, The Economist says Britain would also be able to claim back its territorial fishing waters, scrap caps on limits to the number of hours people can work per week, free itself from the EU's renewable energy drive and create a freer economic market. This would turn London into a "freewheeling hub for emerging-market finance – a sort of Singapore on steroids", it says.
  31. 31. INFLUENCE But it concludes that the most likely outcome is that Britain would find itself "as a scratchy outsider with somewhat limited access to the single market, almost no influence and few friends. And one certainty: that having once departed, it would be all but impossible to get back in again."
  32. 32. SECURITY Work and Pensions Secretary Iain Duncan Smith, who has come out in favour of Brexit, believes we are leaving the "door open" to terrorist attacks by remaining in the European Union. "This open border does not allow us to check and control people," he says. However, a dozen senior military figures, including former chiefs of defence staff Lord Bramall and Jock Stirrup, say the opposite. In a letter released by No 10, they argue that the EU is an "increasingly important pillar of our security", especially at a time of instability in the Middle East and in the face of "resurgent Russian nationalism and aggression".
  33. 33. SECURITY Defence Secretary Michael Fallon has also said the UK benefits from being part Europe, as well as Nato and the United Nations. "It is through the EU that you exchange criminal records and passenger records and work together on counter-terrorism," he said. "We need the collective weight of the EU when you are dealing with Russian aggression or terrorism." In contrast, Colonel Richard Kemp, writing in The Times, says these "critical bilateral relationships" would persist regardless and that it is "absurd" to suggest the EU would put its own citizens, or the UK's, at greater risk by reducing cooperation in the event of Brexit. "By leaving, we will again be able to determine who does and does not enter the UK," says Kemp, a former head of the international terrorism team at the Cabinet Office. "Failure to do so significantly increases the terrorist threat here, endangers our people and is a betrayal of this country."

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