TCC MANAGEMENT SYSTEMS

Home of Crystal Clear Concepts

PROJECT

REPORT

ON

Submitted in the partial fulfilment of the requirement for the

Corporate Presentation.

SUBMITTED

BY

TEAM - MORGAN STANLEY

TEAM MEMBERS:

RONAK SINGODIA

MAHIMA AGARWAL 3

1|Page
Introduction to United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United
Kingdom (abbreviated to UK or U.K.)  or Britain, is a sovereign country located off the northwestern coast
of the European mainland. The United Kingdom includes the island of Great Britain, the northeastern part
of the island of Ireland, and many smaller islands. Northern Ireland is the only part of the United Kingdom
that shares a land border with another sovereign state, the Republic of Ireland. Apart from this land
border, the United Kingdom is surrounded by the Atlantic Ocean, with the North Sea to the east,
the English Channel to the south and the Celtic Sea to the south-west, giving it the 12th-longest coastline in
the world. The Irish Sea separates Great Britain and Ireland. The United Kingdom's 242,500 square
kilometres (93,600 sq mi) were home to an estimated 66.0 million inhabitants in 2017.

The United Kingdom is a unitary parliamentary democracy and constitutional monarchy.  The

current monarch is Queen Elizabeth II, who has reigned since 1952, making her the world's longest-serving
current head of state . The United Kingdom's capital and largest city is London, a global city and financial
centre with an urban area population of 10.3 million.[19] Other major cities
include Birmingham, Manchester, Glasgow, Leeds and Liverpool.

The United Kingdom consists of four constituent countries: England, Scotland, Wales, and Northern

Ireland.  Their capitals are London, Edinburgh, Cardiff, and Belfast, respectively. Apart from England, the
countries have their own devolved governments,  each with varying powers,  but such power is delegated
by the Parliament of the United Kingdom, which may enact laws unilaterally altering or abolishing
devolution. The nearby Isle of Man, Bailiwick of Guernsey and Bailiwick of Jersey are not part of the UK,
being Crown dependencies with the British Government responsible for defence and international
representation.  The medieval conquest and subsequent annexation of Wales by the Kingdom of England,
followed by the union between England and Scotland in 1707 to form the Kingdom of Great Britain, and
the union in 1801 of Great Britain with the Kingdom of Ireland created the United Kingdom of Great Britain
and Ireland. Five-sixths of Ireland seceded from the UK in 1922, leaving the present formulation of the
United Kingdom of Great Britain and Northern Ireland.  There are fourteen British Overseas Territories,  the
remnants of the British Empire which, at its height in the 1920s, encompassed almost a quarter of the
world's landmass and was the largest empire in history. British influence can be observed in the language,
culture and political systems of many of its former colonies.

The United Kingdom is a developed country and has the world's sixth-largest economy by nominal GDP
and ninth-largest economy by purchasing power parity. It has a high-income economy and has a very
high Human Development Index rating, ranking 14th in the world. It was the world's first industrialised
2|Page
country and the world's foremost power during the 19th and early 20th centuries.  The UK remains a great
power, with considerable economic, cultural, military, scientific and political influence internationally.  It is
a recognised nuclear weapons state and is sixth in military expenditure in the world.  It has been
a permanent member of the United Nations Security Council since its first session in 1946. It has been
a leading member state of the European Union (EU) and its predecessor, the European Economic
Community (EEC), since 1973. A referendum in 2016 resulted in 51.9% of the turnout being in favour of
leaving the EU, which is scheduled to take place on or before 31 January 2020. The United Kingdom is also
a member of the Commonwealth of Nations, the Council of Europe, the G7, the G20, NATO,
the Organisation for Economic Co-operation and Development (OECD), Interpol and the World Trade
Organization (WTO).

United Kingdom is an island country spanning an archipelago including Great Britain, located in Western
Europe comprising England, Scotland, Wales, and Northern Ireland. United Kingdom is surrounded by the
Atlantic Ocean, the North Sea, the English Channel, and the Irish Sea. It lies near vital North Atlantic sea
lanes and is only 35 km from France and linked by tunnel under the English Channel. The geography is
mostly rugged hills and low mountains. The government system is constitutional monarchy and a
Commonwealth realm; the chief of state is the queen, and the head of government is the prime minister.
United Kingdom has an advanced open market economy in which the prices of goods and services are
determined in a free price system. United Kingdom is a member of the European Union (EU)

United Kingdom, island country located off the northwestern coast of mainland Europe. The United
Kingdom comprises the whole of the island of Great Britain—which contains England, Wales, and Scotland
—as well as the northern portion of the island of Ireland. The name Britain is sometimes used to refer to
the United Kingdom as a whole. The capital is London, which is among the world’s leading commercial,
financial, and cultural centres. Other major cities include Birmingham, Liverpool, and Manchester in
England, Belfast and Londonderry in Northern Ireland, Edinburgh and Glasgow in Scotland,
and Swansea and Cardiff in Wales.

The origins of the United Kingdom can be traced to the time of the Anglo-Saxon king Athelstan, who in the
early 10th century CE secured the allegiance of neighbouring Celtic kingdoms and became “the first to rule
what previously many kings shared between them,” in the words of a contemporary chronicle. Through
subsequent conquest over the following centuries, kingdoms lying farther afield came under
English dominion. Wales, a congeries of Celtic kingdoms lying in Great Britain’s southwest, was formally

3|Page
united with England by the Acts of Union of 1536 and 1542. Scotland, ruled from London since 1603,
formally was joined with England and Wales in 1707 to form the United Kingdom of Great Britain. (The
adjective “British” came into use at this time to refer to all the kingdom’s peoples.) Ireland came under
English control during the 1600s and was formally united with Great Britain through the Act of Union of
1800. The republic of Ireland gained its independence in 1922, but six of Ulster’s nine counties remained
part of the United Kingdom as Northern Ireland. Relations between these constituent states and England
have been marked by controversy and, at times, open rebellion and even warfare. These tensions relaxed
somewhat during the late 20th century, when devolved assemblies were introduced in Northern Ireland,
Scotland, and Wales. Nonetheless, even with the establishment of a power-sharing assembly after
referenda in both Northern Ireland and the Irish republic, relations between Northern Ireland’s unionists
(who favour continued British sovereignty over Northern Ireland) and nationalists (who favour unification
with the republic of Ireland) remained tense into the 21st century.

The United Kingdom retains links with parts of its former empire through the Commonwealth. It also
benefits from historical and cultural links with the United States and is a member of the North Atlantic
Treaty Organization (NATO). Moreover, the United Kingdom became a member of the European Union in
1973. Many Britons, however, were sometimes reluctant EU members, holding to the sentiments of the
great wartime prime minister Winston Churchill, who sonorously remarked, “We see nothing but good and
hope in a richer, freer, more contented European commonalty. But we have our own dream and our own
task. We are with Europe, but not of it. We are linked, but not comprised. We are interested and
associated, but not absorbed.” Indeed, in June 2016, in a referendum on whether the United Kingdom
should remain in the EU, 52 percent of British voters chose to leave. That set the stage for the U.K. to
become the first country to do so, pending the negotiations between the U.K. and the EU on the details of
the separation.

4|Page
Introduction to European Union
The European Union (EU) is a political and economic union of 28 member states that are located primarily
in Europe.  Its members have a combined area of 4,475,757 km2 (1,728,099 sq mi) and an estimated total
population of about 513 million. The EU has developed an internal single market through a
standardised system of laws that apply in all member states in those matters, and only those matters,
where members have agreed to act as one. EU policies aim to ensure the free movement of people, goods,
services and capital within the internal market,  enact legislation in justice and home affairs and maintain
common policies on trade,  agriculture,  fisheries and regional development.  For travel within
the Schengen Area, passport controls have been abolished.[16] A monetary union was established in 1999
and came into full force in 2002 and is composed of 19 EU member states which use the euro currency.

The EU and European citizenship were established when the Maastricht Treaty came into force in 1993.
The EU traces its origins to the European Coal and Steel Community (ECSC) and the European Economic
Community (EEC), established, respectively, by the 1951 Treaty of Paris and 1957 Treaty of Rome. The
original members of what came to be known as the European Communities were the Inner Six: Belgium,
France, Italy, Luxembourg, the Netherlands, and West Germany. The Communities and their successors
have grown in size by the accession of new member states and in power by the addition of policy areas to
their remit. The latest major amendment to the constitutional basis of the EU, the Treaty of Lisbon, came
into force in 2009. No member state has left the EU or its antecedent organisations (Greenland, an
autonomous territory within Denmark, left the Communities in 1985). The United Kingdom signified its
intention to leave after a membership referendum in June 2016 and is negotiating its withdrawal. The
United Kingdom and its dependent territories are scheduled to leave the European Union by 31 January
2020.

Containing 7.3% of the world population,  the EU in 2017 generated a nominal gross domestic
product (GDP) of 19.670 trillion US dollars, constituting approximately 24.6% of global nominal GDP.
[19]
 Additionally, all 28 EU countries have a very high Human Development Index, according to the United
Nations Development Programme. In 2012, the EU was awarded the Nobel Peace Prize.[20] Through
the Common Foreign and Security Policy, the EU has developed a role in external relations and defence.
The union maintains permanent diplomatic missions throughout the world and represents itself at

5|Page
the United Nations, the World Trade Organization, the G7 and the G20. Because of its global influence, the
European Union has been described as an emerging superpower

Initial discussions for a regional union in Europe began in 1948, in the aftermath of World War Two to
promote stability and economic cooperation between member states. Comprised of 28 European
countries, the EU has established common institutions—the Council (which represents national
governments), the European Parliament (which represents the people), and the European Commission (an
independent body that represents the collective European interest)—to democratically legislate specific
matters of joint interest to participating countries at a European level. The EU has developed a single
market through a standardized system of laws that apply in all of its member states. These policies aim to
secure the free movement of people, goods, services, and capital between its member countries.

Originally confined to western Europe, the EU undertook a robust expansion into central and eastern
Europe in the early 21st century. The EU’s members are Austria, Belgium, Bulgaria, Croatia, Cyprus,
the Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Lu
xembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and
the United Kingdom. The EU was created by the Maastricht Treaty, which entered into force on November
1, 1993. The treaty was designed to enhance European political and economic integration by creating a
single currency (the euro), a unified foreign and security policy, and common citizenship rights and by
advancing cooperation in the areas of immigration, asylum, and judicial affairs. The EU was awarded
the Nobel Prize for Peace in 2012, in recognition of the organization’s efforts to promote peace
and democracy in Europe.

6|Page
7|Page
8|Page
9|Page
10 | P a g e
Introduction to Brexit
Brexit (/ˈbrɛksɪt, ˈbrɛɡzɪt/; a portmanteau of "British" and "exit") is the withdrawal of the United
Kingdom (UK) from the European Union (EU). Following a June 2016 referendum, in which 51.9% voted to
leave, the UK government formally announced the country's withdrawal in March 2017, starting a process
that is currently due to conclude with the UK withdrawing no later than 31 January 2020. [2]

Withdrawal is advocated by Eurosceptics and opposed by pro-Europeanists, both of whom span the

political spectrum. The UK joined the European Economic Community (EEC) in 1973, with continued
membership endorsed in a 1975 referendum. In the 1970s and 1980s, withdrawal from the EC was
advocated mainly by the political left, e.g. in the Labour Party's 1983 election manifesto. The
1992 Maastricht Treaty founded the EU, but was not put to a referendum. The eurosceptic wing of
the Conservative Party led a rebellion over ratification of the treaty and, with the UK Independence
Party (UKIP) and the cross-party People's Pledge campaign, pressured Conservative Prime Minister David

11 | P a g e
Cameron to hold a referendum on continued EU membership which was held in June 2016. Cameron, who
had campaigned to remain, resigned after the result and was succeeded by Theresa May.

On 29 March 2017, the UK government formally began the process of withdrawal by invoking Article 50 of
the Treaty on European Union with permission from Parliament. May called a snap general election in June
2017, which resulted in a Conservative minority government supported by the Democratic Unionist Party.
UK–EU withdrawal negotiations began later that month. The UK negotiated to leave the EU customs
union and single market. This resulted in the November 2018 withdrawal agreement, but the UK
parliament voted against ratifying it three times. The Labour Party wanted any agreement to maintain a
customs union, while many Conservatives opposed the agreement's financial settlement, as well as the
"Irish backstop" designed to prevent border controls between Northern Ireland and the Republic of
Ireland. The Liberal Democrats, Scottish National Party, and others sought to reverse Brexit through
a second referendum.

In March 2019, the UK parliament voted for May to ask the EU to delay Brexit until April, and then later
October. Having failed to get her agreement approved, May resigned as prime minister in July and was
succeeded by Boris Johnson. He sought to replace parts of the agreement and vowed to leave the EU by
the new deadline. On 17 October 2019, the UK government and EU agreed a revised withdrawal
agreement, with new arrangements for Northern Ireland.  Parliament approved the agreement for further
scrutiny, but rejected plans to pass it into law before the 31 October deadline, and forced the government
(through the 'Benn Act') to ask for a third Brexit delay. An early general election was then held on 12
December. The Conservatives won a majority in that election, with Johnson declaring that the UK would
leave the EU in early 2020.  There would then be a transition period until at least 31 December 2020,
where the future relationship will be negotiated.

On 22 January 2020, the UK Parliament gave final approval to the Withdrawal Agreement. While European
Parliament's approval is required for Brexit to become law in the European Union and for the transition
period to begin, where it’s almost certain to be ratified, according to Bloomberg News.

On 24 January, the Withdrawal Treaty was formally signed on behalf of the European Union and the United
Kingdom.

Many effects of Brexit depend on how closely the UK will be tied to the EU, or whether it withdraws before
terms are agreed (a "no-deal Brexit"). The broad consensus among economists is that Brexit will likely
harm the UK's economy and reduce its real per capita income in the medium term and long term, and that
the referendum itself damaged the economy.[a] Brexit is likely to reduce immigration from European
Economic Area (EEA) countries to the UK, and poses challenges for UK higher education, academic research

12 | P a g e
and security. Following Brexit, EU law and the EU Court of Justice will no longer have supremacy over UK
laws or its Supreme Court, except to a temporary extent agreed upon in a withdrawal agreement.
The European Union (Withdrawal) Act 2018 retains relevant EU law as domestic law, which the UK could
then amend or repeal.

The vote's result defied expectations and roiled global markets, causing the British pound to fall to its
lowest level against the dollar in 30 years. Former Prime Minister David Cameron, who called the
referendum and campaigned for Britain to remain in the EU, announced his resignation the following day.
Theresa May, who replaced Cameron as leader of the Conservative Party and prime minister, stepped
down as party leader voluntarily on June 7, 2019 after facing severe pressure to resign and failing three
times to get the deal she negotiated with the EU approved by the House of Commons.The following
month, Boris Johnson, a former Mayor of London, foreign minister, and editor of The Spectator
newspaper, was elected prime minister.

Johnson, a hardline Brexit supporter, campaigned on a platform to leave the EU by the October deadline
"do or die" and said he is prepared to leave the EU without a deal. British and EU negotiators agreed on a
new divorce deal on Oct. 17. The main difference from May's deal is the Irish backstop clause has been
replaced with a new arrangement. The revised protocol on Ireland and Northern Ireland is available to read
here. In a stunning victory, the Conservative Party won 364 of the 650 seats in the House of Commons in
Britain's third general election in less than five years.

Brexit is slated to take place before the Jan. 31, 2020 deadline. Britain was expected to leave the EU by
Oct. 31, 2019, but the U.K. Parliament voted to force the government to seek an extension to the deadline
and also delayed a vote on the new deal. The government has so far extended the negotiating period three
times to avoid leaving without ratifying a deal with the EU or a "hard Brexit “.

The EU Referendum in June 2016 was a vote by British citizens on whether the country should stay or leave
the European Union. External It is often referred to as BREXIT which is shorthand for “British Exit.” The
history behind the word BREXIT seems to reference GREXIT when there was talk about Greece exiting the
EU and several sources seem to feel that the word BREXIT originated with Peter Wilding’s post "Stumbling
towards the Brexit" (May 15, 2012). Below a few key dates in the history of the EU/Great Britain
relationship (for more information see the complete timeline External ).

13 | P a g e
  1957: The European Economic Community (EEC) was created with the Treaty of Rome. External
 1973: The United Kingdom joined External the EEC.
 1975: The EEC/EU – UK relationship External was never easy. The Referendum kept the country in
the EEC but Euroscepticism never went away.
 November 1, 1993: The Maastricht Treaty External changed the name of the EEC to European
Community (EC) and created the European Union (EU).
 February 2016: Prime Minister David Cameron announced that a Referendum was to be held so
that voters could decide whether to remain in the EU or to leave it.
 June 23, 2016: The Referendum was held and 52% of voters voted to leave the EU. That vote was
just about What to do. The How is heavily focused on Article 50 External of the Lisbon
Treaty External which when invoked, is when the negotiations between the EU and the UK on the
terms of the exit begin.
 February 8, 2017: The House of Commons passed legislation Wednesday to allow the government
to officially begin the Brexit process.
 March 14, 2017: The British Parliament passed a bill that will allow Prime Minister Theresa May to
start talks to leave the European Union.

14 | P a g e
  March 28, 2017: The UK signed the letter that triggered Article 50 of the Lisbon Treaty which is the
beginning of the 2-year legal process for Britain to leave The EU.
 June 19, 2017: The formal negotiations began for the UK to leave the European Union.
 November 14, 2018:  It was announced that UK cabinet ministers had agreed to a draft agreement
on the terms of the United Kingdom’s exit but this was followed by a series of ministerial
resignations and it still has to be voted on in Parliament though the EU has tentatively scheduled an
emergency summit for the end of November.
 November 25, 2018: European leaders endorsed the BREXIT agreement announced earlier in
November.

 December 10, 2018: The vote in Parliament scheduled for December 11 was canceled. The
European Court of Justice agreed with the advice of its top legal officer External, who declared that
the UK has the power to withdraw its notification to leave the EU under Article 50 without the
agreement of other member states.
 January 15, 2019: The BREXIT vote on the government's plan was rejected by Parliament 432 to
202.

 March 12, 2019: The BREXIT vote on the government's plan was rejected by Parliament for a
second time 391 votes to 242.

 March 13, 2019: Parliament voted to reject leaving the European Union without a deal.

 March 14, 2019: Parliament voted for a delay in BREXIT but rejected a second referendum.

 March 22, 2019: The British Prime Minister was able to secure a delay of BREXIT. The new date is
April 12 (with a possible extension to May 22) if Parliament approves the delay by the end of the
following week.

 March 29, 2019: The BREXIT vote on the government's plan was rejected by Parliament for a third
time 344 votes to 286.

 April 10, 2019: A new deadline of October 31 was approved but if a plan is approved prior to that
date, the extension would be terminated.

 May 24, 2019: Prime Minister Theresa May announces her resignation.

 September 4, 2019: Parliament rejects the Prime Minister’s call for new elections but did pass a bill
forcing the Prime Minister to ask the E.U. to delay BREXIT until January if there is no exit
agreement.

15 | P a g e
  September 10, 2019:  Parliament is suspended (prorogation) for 5 weeks until October 14. On
September 24th the Supreme Court of the United Kingdom deemed External the Order in Council
ordering the prorogation "null and of no effect".
 October 16, 2019: It was announced that a deal between the EU and the UK had been reached,
now but it still has to be ratified by European leaders and the British Parliament.

 October 19, 2019: Sitting in a special Saturday session, Parliament withheld support for the Prime
Ministers plan until related supporting legislation was passed.

 October 28, 2019: The EU approved the UK's request for a three-month extension to the Brexit
process.

 December 27, 2019: British lawmakers gave preliminary approval to the Prime Minister's
Withdrawal Agreement Bill that clears the way for the U.K. to leave the European Union on January
31.

 January 9, 2020: British lawmakers voted overwhelmingly in favor of the Prime Minister's Brexit
deal, which means the path is clear for the country to leave the European Union later this month. It
now goes to the House of Lords.

 January 22, 2020: The House of Parliament rejected the House of Lords Amendments and the
Lords relented and agreed to accept the legislation without tweaks.

 January 23, 2020: The legislation received the royal assent.

Glossary of Brexit Terms:-

 Article 50: Article 50 of the Treaty on European Union specifies the procedure of
withdrawing from the European Union. It was introduced in the Treaty of Lisbon from 2009.
Under the process, once the formal notification has been sent, the withdrawing state and
16 | P a g e
 the European Union has a two year deadline to negotiate a withdrawal agreement. After
that time, unless an extension has been agreed or the withdrawing state revokes its
intention to withdraw, the membership ends regardless of whether or not an agreement was
reached. If an agreement has been reached before the deadline, the withdrawing state may
end their membership at any time before the deadline. On 29 March 2017, UK Prime
Minister Theresa May triggered the procedure.

 Blind Brexit: A scenario where the UK leaves the EU without clarity on the terms of a
future trade deal.EU and British negotiators would then have until 31 December 2020 to
sign off on a future trade deal, during which time the UK would effectively remain a member
of the EU, but with no voting rights. Also known as a "Blindfold Brexit".

 Brexit: Brexit (like its early variant, Brixit) is a portmanteau of "British" and "exit".
Grammatically, it has been called a complex nominal. The first attestation in the Oxford
English Dictionary is a Euractiv blog post by Peter Wilding on 15 May 2012.It was coined by
analogy with "Grexit", attested on 6 February 2012 to refer to a hypothetical withdrawal of
Greece from the eurozone (and possibly the EU altogether, although there was never a
clear popular mandate for it) At present, Brexit is impending under the EU Treaties and the
UK Acts of Parliament, and the current negotiations pursuant thereto.

 Brexit Day: The date that the UK leaves the EU. As of January 2020 set to be 31 January
2020. The date was originally set for 29 March 2019 at 11pm, but has been moved three
times: first to either 12 April or 22 May, depending on whether or not a withdrawal
agreement was ratified; then to 1 July or 31 October depending on whether or not the UK
held European Parliament elections; and finally to 31 January 2020.

 Brextension: A word coined to describe the extension granted until 31 January 2020
(a portmanteau of Brexit and extension).

 Canada plus/Canada model: This is shorthand for a model where the UK leaves
the EU and signs a free trade agreement. This would allow the UK to control its own trade
policy as opposed to jointly negotiating alongside the EU, but would require rules of origin
agreements to be reached for UK–EU trade. It is likely this would lead to UK–EU trade
being less "free" than joining the European Free Trade Association (EFTA), and result in
additional border controls being required, which is an issue of contention, particularly on the
island of Ireland. The Canadian–EU deal took seven years to negotiate, but Brexiteers
argue it would take much less time between the UK and EU as the two participants already
align on regulatory standards.

17 | P a g e
  Chequers plan: A July 2018 white paper by the UK government, setting out its wishes
for the UK's future relationship with EU. The plan was agreed at a cabinet meeting at
Chequers, and caused a number of resignations.When the UK and EU agreed a draft
withdrawal agreement and the related political declaration in November 2018, the Chequers
plan was superseded by that political declaration.

 Clean break Brexit: This term is used primarily by proponents of Brexit, in particular
the Brexit Party. Also known as "clean brexit".

 Divorce bill: It is expected that the UK will make a contribution toward financial
commitments that it had approved while still a member of the EU, but are still outstanding.
The amount owed is officially referred to as the financial settlement but has informally been
referred to as an exit bill or divorce bill.While serving as Brexit Secretary, Dominic Raab
said the UK would not pay the full financial settlement to the EU in a no-deal scenario but
would instead pay a significantly lower amount to cover the UK's "strict legal
obligations".The UK Government's estimate of the financial settlement in March 2019 was
£38 billion. After normal member contributions payable to 31 October 2019 of £5 billion, a
final settlement of £33 billion on that date was estimated by the Office for Budget
Responsibility in July 2019.

 EU customs union: The customs union of the EU: an agreement that EU countries
do not impose taxes on goods imported from one another, and have a common tariff for
goods imported from non-EU countries. Being in a customs union facilitates trade and
economic cooperation, but leaving the EU customs union allows the UK to conduct its own
trade policy. In the 2019 withdrawal agreement, all of the UK will leave the EU customs
union, which creates a de jure customs border on the Ireland–Northern Ireland border. In
practice, customs checks will be performed in the Irish Sea, and taxes will be paid for goods
that are "at risk" of being moved from Northern Ireland into Ireland.

 Exit Day: UK domestic law has defined "exit day" for the purpose of dealing with the
domestic consequences of Brexit, but the date is not formally linked to UK's departure from
the EU.

 Flextension: A "flextension" was how the House of Commons Library described the
first extension made to the Article 50 period. That extension was until 22 May 2019 if the
Theresa May Withdrawal Agreement was approved by the House of Commons, otherwise it
was until 12 April.

18 | P a g e
 A "flextension" was also how European Council president Donald Tusk characterised the
extension to 31 January 2020, which allows the UK to leave before the deadline, on the first
of any month, if by then a deal has been approved by the UK and European parliaments.

 Hard and soft Brexit: "Hard Brexit" and "soft Brexit" are unofficial terms that are
commonly used by news media to describe the prospective relationship between the UK
and the EU after withdrawal. A hard Brexit (also called a no-deal Brexit) usually refers to
the UK leaving the EU and the European Single Market with few or no deals (trade or
otherwise) in place, meaning that trade will be conducted under the World Trade
Organization's rules, and services will no longer be provided by agencies of the European
Union (such as aviation safety). Soft Brexit encompasses any deal that involves retaining
membership in the European Single Market and at least some free movement of people
according to European Economic Area (EEA) rules. Theresa May's "Chequers agreement"
embraced some aspects of a "soft" Brexit.Note that the EEA and the deal with Switzerland
contain fully free movement of people, and that the EU has wanted that to be included in a
deal with UK on fully free trade.

 Hard border: An Ireland–Northern Ireland border with physical border installations.The

UK and EU both desire to prevent a hard border, but finding a way to achieve this has
proved difficult.A hard border is feared because it might endanger the Good Friday
Agreement that in 1998 ended the Northern Ireland conflict.With both Ireland and the UK a
member of the EU, customs checks were not necessary, and the Good Friday Agreement
removed security checks at the border. The draft withdrawal agreement, as updated in
October 2019, avoids a hard border by keeping Northern Ireland aligned with some EU
regulation, while performing customs checks at the Irish Sea border.

 Indicative vote: Indicative votes are votes by members of parliament on a series of

non-binding resolutions. They are a means of testing the will of the House of Commons on
different options relating to one issue.MPs voted on eight different options for the next steps
in the Brexit process on 27 March 2019; however, none of the proposals earned a majority
in the indicative votes. MPs also voted on four options on 1 April 2019 in the second round
of indicative votes. Still, none of the proposals earned a majority.

 Implementaion period: The period ending on 31 December 2020 at 11.00 p.m, as

stated in section 39 of European Union (Withdrawal Agreement) Bill 2019–20.

 Irish backstop: An "insurance policy" intended to prevent a hard border between

Ireland and Northern Ireland, and thus respecting the Good Friday Agreement.It was
included in the 2018 draft withdrawal agreement, and would come in force if no solution to
the Irish border problem was found during the transition period. Under the plan, the UK
19 | P a g e
 would remain in a customs union with the EU, while Northern Ireland and, to a lesser
extent, the rest of the UK would follow additional EU rules. The backstop was controversial
because critics feared it would bind the UK to the EU for an indefinite time,and the UK could
not withdraw from it unilaterally.In October 2019, the withdrawal agreement was revised,
and the Irish backstop was replaced with a four-year period in which Northern Ireland would
remain aligned with EU law, and which can be extended to eight years with the consent of
the Northern Ireland Assembly.

 Leaver: Those supporting Brexit are sometimes referred to as "Leavers".Alternatively the

term "Brexiteers",or "Brexiters" has been used to describe adherents of the Leave
campaign.Likewise, the pejorative term "Brextremist", a portmanteau of "Brexiter" and
"Extremist" has been used by some outlets to describe Leavers of an overzealous,
uncompromising disposition.

 Lexit: Also Lexiter. A portmanteau of 'left-wing' and 'Brexit', referring to left-wing

advocacy of EU withdrawal

 Meaningful vote: A meaningful vote is a vote under section 13 of the European

Union (Withdrawal) Act 2018, requiring the government to arrange for a motion proposing
approval of the outcome of negotiations with the EU to be debated and voted on by the
House of Commons before the European Parliament decides whether it consents to the
withdrawal agreement being concluded on behalf of the EU in accordance with Article 50(2)
of the Treaty on European Union.

 Managed no-deal: "Managed no-deal Brexit"or "managed no deal Brexit" was

increasingly used near the end of 2018, in respect of the complex series of political, legal
and technical decisions needed if there is no withdrawal agreement treaty with the EU when
the UK exits under the Article 50 withdrawal notice. The Institute for Government has
advised that the concept is unrealistic.

 No-deal Brexit: This means the UK would leave the European Union without a
withdrawal agreement.

 Norway model/Norway plus: This is shorthand for a model where the United
Kingdom leaves the European Union but becomes a member of the European Free Trade
Association (EFTA) and the European Economic Area, possibly with the addition of a
customs union ("plus"). EFTA and EEA membership would allow the UK to remain in the
single market but without having to be subject to the Common Fisheries Policy, Common
Agricultural Policy, and the European Court of Justice (ECJ). The UK would be subject to
the EFTA court, which largely shadows the ECJ, have to transfer a large amount of EU law

20 | P a g e
 into UK law, and have little say on shaping EU rules (some of which the UK will be
compelled to take on). The UK would also have to allow freedom of movement between the
EU and UK, which was seen as a key issue of contention in the referendum.

 People’s Vote: An advocacy group launched in April 2018 which calls for a second
referendum on the final Brexit deal. The People's Vote march is part of a series of
demonstrations against Brexit.

 Political declaration: A document setting out the intended future relationship

between the UK and EU. The declaration will form the basis for the trade deal negotiations
that will start once the UK has left the EU.Unlike the withdrawal agreement, which is a
legally binding treaty, the political declaration will not have legal force.

 Remainer: Those in favour of the UK remaining in the EU are sometimes referred to as

"Remainers".The derogatory term "Remoaner" (a blend of "remainer" and "moan") is
sometimes used by Leavers to describe this group especially those that criticised or
campaigned against the result after the referendum.

 Second referendum: A second referendum has been proposed by a number of

politicians and pressure groups. The Electoral Commission has the responsibility for
nominating lead campaign groups for each possible referendum outcome.

 Slow Brexit: The term "slow Brexit" was first coined by British Prime Minister Theresa
May on 25 March 2019 as she spoke to Parliament, warning MPs that Article 50 could be
extended beyond 22 May, slowing down the Brexit process. A 'slow Brexit' implies a longer
period of political uncertainty in which members of Parliament will debate the next steps of
Britain's departure from the European Union.

 Withdrawal agreement: A draft treaty between the UK and the EU, setting out the
terms for the UK's withdrawal. The first version was agreed in November 2018,but was
rejected by the UK parliament three times.The withdrawal agreement contained the
contentious Irish backstop, which was one of the reasons for opposition to it.The failed
ratification let to the resignation of UK's prime minister, Theresa May, and the new prime
minister, Boris Johnson sought to renegotiate it, despite EU's refusal to do so.In October
2019, the EU and the new UK government agreed a new version of the withdrawal
agreement, this time with the backstop being replaced by another solution to the Irish
border problem. The new withdrawal agreement passed its second reading in the House of
Commons in December 2019, following a general election in which the Conservatives won
an decisive majority.

21 | P a g e
 Timeline of major events concerning Brexit.:

2016

 23 June: The UK holds a referendum on whether to leave the European Union. 51.9% of voters vote
to leave.
 24 June: David Cameron announces his resignation as prime minister.
 25 June: The UK representative Jonathan Hill resigns as a EU Commissioner.
 13 July: Theresa May accepts the Queen's invitation to form a government. David Davis is
appointed the newly created Secretary of State for Exiting the European Union to oversee
withdrawal negotiations.
 27 July: The European Commission nominates French politician Michel Barnier as European Chief
Negotiator for the United Kingdom Exiting the European Union.
 7 December: The UK House of Commons votes 461 to 89 in favour of Theresa May's plan to trigger
Article 50 by the end of March 2017.

2017

 24 January: The UK Supreme Court rules in the Miller case that Parliament must pass legislation to
authorise the triggering of Article 50.
 26 January: The UK Government introduces a 137-word bill in Parliament to empower Theresa May
to initiate Brexit by triggering Article 50. Labour leader Jeremy Corbyn instructs his MPs to support
it.
 16 March: The bill receives Royal Assent.
 29 March: A letter from Theresa May is handed to President of the European Council Donald Tusk
to invoke Article 50, starting a two-year process with the UK due to leave the EU on 29 March 2019.
 8 April: Theresa May announces that a general election is to take place on 8 June.
 8 June: A general election is held in the UK. The Conservative Party remains the largest single party
in the House of Commons but loses its majority, resulting in the formation of a minority

22 | P a g e
 government with a confidence-and-supply arrangement with the Democratic Unionist Party (DUP)
of Northern Ireland.
 19 June: Brexit negotiations commence.

2018

 6 July: A UK white paper on the future relationship between the UK and the EU, known as the
Chequers agreement, is finalised.
 8 July: Davis resigns as Secretary of State for Exiting the European Union. Dominic Raab is
appointed as his successor the following day.
 July: Boris Johnson resigns as Foreign Secretary.
 21 September: The EU rejects the UK white paper.
 14 November: The Brexit withdrawal agreement is published.
 15 November: Raab resigns as Secretary of State for Exiting the European Union. Stephen Barclay is
appointed as his successor the following day.
 25 November: 27 other EU member states endorse the Withdrawal Agreement.

2019

 15 January: The First meaningful vote is held on the Withdrawal Agreement in the UK House of
Commons. The UK Government is defeated by 432 votes to 202.
 12 March: The Second meaningful vote on the Withdrawal Agreement with the UK Government is
defeated again by 391 votes to 242.
 14 March: The UK Government motion passes 412 to 202 to extend the Article 50 period.
 20 March: Theresa May requests the EU extend the Article 50 period until 30 June 2019.
 21 March: The European Council offers to extend the Article 50 period until 22 May 2019 if the
Withdrawal Agreement is passed by 29 March 2019 but, if it does not, then the UK has until 12 April
2019 to indicate a way forward. The extension is formally agreed the following day.
 29 March: The original end of the Article 50 period and the original planned date for Brexit. Third
vote on the Withdrawal Agreement after being separated from the Political Declaration. UK
Government defeated again by 344 votes to 286.
 5 April: Theresa May requests for a second time that the EU extend the Article 50 period until 30
June 2019.

23 | P a g e
  10 April: The European Council grants another extension to the Article 50 period to 31 October
2019, or the first day of the month after that in which the Withdrawal Agreement is passed,
whichever comes first. If the UK does not hold European Parliament elections in May 2019 (it did) it
will leave on 1 June 2019.
 23 May: The UK holds elections to the European Parliament which sees the Brexit Party led by Nigel
Farage being the largest party winning 29 seats with the anti-Brexit liberal Democrats led by Vince
Cable coming second with 16 seats.
 24 May: Theresa May announces that she will resign as Conservative Party leader, effective 7 June,
due to being unable to get her Brexit plans through parliament and several votes of no-confidence,
continuing as prime minister while a Conservative leadership contest takes place.
 18 July: MPs approve, with a majority of 41, an amendment to the Northern Ireland (Executive
Formation etc) Act 2019 that blocks suspension of Parliament between 9 October and 18
December, unless a new Northern Ireland Executive is formed.
 24 July: Boris Johnson accepts the Queen's invitation to form a government and becomes Prime
Minister of the United Kingdom, the third since the referendum.
 25 July: Both Houses of Parliament go into summer recess on 25 July until 3 September.
 28 August: Boris Johnson announces his intention to prorogue Parliament in September. The Queen
would deliver a speech from the throne on 14 October to begin a new session. This was
controversial because it would limit the time for Parliament to pass legislation ahead of the Article
50 deadline of 31 October. The Queen approved the timetable at a meeting of the Privy Council at
Balmoral.
 3 September: A motion for an emergency debate to pass a bill that would rule out a unilateral no-
deal Brexit by forcing the Government to get parliamentary approval for either a withdrawal
agreement or a no-deal Brexit. This motion, to allow the debate for the following day, passed by
328 to 301. 21 Conservative MPs voted for the motion.
 4 September: The Benn Bill passed second reading by 329 to 300; a 22nd Conservative, Caroline
Spelman, voted against the Government position. Later the same day, MPs rejected Johnson's
motion to call an October general election by a vote of 298 to 56, which failed to achieve the two-
thirds Commons majority needed under the Fixed-term Parliaments Act. Labour MPs abstained
from the vote.
 9 September: The Government again loses an attempt to call an election under the Fixed-term
Parliaments Act. Dominic Grieve's humble address, requiring key Cabinet Office figures to publicise
private messages about the prorogation of parliament, is passed by the House of Commons.

24 | P a g e
 Speaker John Bercow announces his intention to resign as Speaker of the House of Commons on or
before 31 October. The Benn Bill receives Royal Assent and becomes the European Union
(Withdrawal) (No. 2) Act 2019. Parliament is prorogued until 14 October 2019. Party conference
season begins, with anticipation building around a general election.
 24 September: The Supreme Court of the United Kingdom rules unanimously that Boris Johnson's
decision to advise the Queen to prorogue parliament was unlawful, and that the prorogation itself
is therefore null and of no effect
 25 September: Parliament is recalled.
 2 October: The Government publishes a white paper outlining a new plan to replace the Irish
backstop, involving regulatory alignment across the island of Ireland but retaining a customs border
between the Republic of Ireland and Northern Ireland. A further, shorter, prorogation is announced
from 8 to 14 October.
 7 October: The Outer House of the Court of Session in Edinburgh dismisses a case brought by
petitioners, including Joanna Cherry, seeking a court order compelling Boris Johnson to write the
letter requesting an extension that could be required by the Benn Act, in view of statements by
Johnson and his representatives which it was said indicate that they might attempt to circumvent
the Act. The Court accepted an assurance to it by the government's lawyers that Johnson would
write the required letter. The Court also dismissed a request for an order preventing the
government from frustrating the Benn Act, for example by asking another EU member state to veto
a requested Brexit extension, after the government's lawyers undertook to the Court that no such
action would be taken. There is to be an appeal to the Inner House of the Court of Session.
Separately in the Inner House, the petitioners request a ruling that, if such a letter comes to be
required and Johnson fails to write it, the Court will write the letter itself—an unusual procedure
that is available only in Scotland.
 9 October: The Inner House delays its decision until 21 October, stating: "Until the time for sending
the letter has arrived, the PM has not acted unlawfully, whatever he and his officials are reported to
have said privately or in public. The situation remains fluid. Over the next two weeks, circumstances
will inevitably change."
 14 October: Parliament returns for the Queen's Speech.
 17 October: The UK and European Commission agree on a revised withdrawal agreement
containing a new protocol on Northern Ireland. The European Council endorses the deal.
 19 October: A special Saturday sitting of Parliament is held to debate the revised withdrawal
agreement. The prime minister moves approval of that agreement. MPs first pass, by 322 to 306, Sir

25 | P a g e
 Oliver Letwin's amendment to the motion, delaying consideration of the agreement until the
legislation to implement it has been passed; the motion is then carried as amended, implementing
Letwin's delay. This delay activates the Benn Act, requiring the prime minister immediately to write
to the European Council with a request for an extension of withdrawal until 31 January 2020.
 19 October: Prime minister Boris Johnson sends two letters to the president of the European
Council, Donald Tusk: one, which is stated to be from the UK prime minister but is not signed, refers
to the requirements of the Benn Act and requests an extension until 31 January 2020; the other,
signed personally by Johnson and copied to all Council members, states that it is his own belief that
a delay would be a mistake and requests support from the president and Council members for his
continuing efforts to ensure withdrawal without an extension. The letters are delivered by the
British permanent representative in Brussels, together with a cover note signed by himself which
affirms that the first letter complies with the Benn Act.
 21 October: The Speaker refuses the government's request for a new vote on the withdrawal
proposal, applying the convention that a motion that is the same "in substance" as an earlier one
cannot be brought back during the course of a single parliamentary session.
 21 October: In the Inner House of the Court of Session, the petitioners concede that Johnson has
fulfilled the requirement of the Benn Act that he write seeking an extension, but contend that his
second letter negates the first. The Court refuses the government's request to dismiss the case,
deciding that the case should remain before the court "until it is clear that the obligations under
[the Benn Act] have been complied with in full". On 7 October, government lawyers had
undertaken to the Outer House that Johnson will abide by all requirements of the Act. These
include responding to the EU's reaction to his letter. Any breach of that undertaking could place
Johnson in contempt of the Court.
 21 October: The government introduces in the Commons the EU (Withdrawal Agreement) Bill with
the title: "A Bill to Implement, and make other provision in connection with, the agreement
between the United Kingdom and the EU under Article 50(2) of the Treaty on European Union
which sets out the arrangements for the United Kingdom's withdrawal from the EU".
 22 October: The EU (Withdrawal Agreement) Bill is approved (second reading) by 329 votes to 299,
but the accompanying "programme motion", to get all stages of the bill completed in three days
and thus before 31 October, is defeated by 322 votes to 308 after MPs object that this would not
allow time for adequate consideration. In Brussels, EU Council president Donald Tusk says he will
recommend to the Council that it approve the UK's request for an extension.
 24 October: Prime Minister Boris Johnson asks Opposition leader Jeremy Corbyn to support on 28
October a government motion for a general election on 12 December (in order to achieve the two-
26 | P a g e
 thirds majority required by the Fixed-term Parliaments Act). Corbyn continues to insist that a no-
deal Brexit must first be "off the table".
 25 October: Following a meeting of the European Commission, a spokesperson says that "the EU 27
have agreed to the principle of an extension and work will now continue in the coming days", and
that they plan to decide on the date without an emergency summit.
 28 October: European Council agrees to extend the Brexit deadline until 31 January 2020—the third
extension.
 28 October: Government motion for an election on 12 December is defeated by 299 to 70, short of
the two-thirds majority required by the Fixed-term Parliaments Act, after most Labour MPs abstain.
Government withdraws the EU (Withdrawal Agreement) Bill and states an intention to introduce on
29 October "a short bill for an election on 12 December".
 29 October: Government introduces the Early Parliamentary General Election Act 2019:

(1) An early parliamentary general election is to take place on 12 December 2019 in consequence of
the passing of this Act.
(2) That day is to be treated as a polling day appointed under section 2(7) of the Fixed-term
Parliaments Act 2011.
This measure would circumvent the Fixed-term Parliaments Act without amending it.
The Labour leadership supports the bill in principle, satisfied that the extension to 31 January (now
confirmed) has taken the prospect of a no-deal Brexit "off the table". A government attempt to
prevent non-government amendments fails and an amendment from opposition parties to alter the
date to 9 December is defeated. Amendments from opposition parties to reduce the voting age
from 18 to 16 and to allow resident EU nationals to vote are ruled out by the Deputy Speaker
(chairing) as not within the "scope" of the bill; the government had threatened to withdraw the bill
if they were allowed. MPs pass the bill unamended by 438 votes to 20, with more than 100 Labour
members abstaining and 11 voting against.

 30–31 October: The Early Parliamentary General Election Bill is passed unamended by the House of
Lords and, upon receiving royal assent the following day, becomes law as the Early Parliamentary
General Election Act 2019.
 6 November: Parliament dissolved.
 12 December: General election held in which the Conservative Party gain an 80-seat majority in
parliament.

27 | P a g e
  20 December: The Withdrawal Agreement passed its second reading in the House of Commons in a
358–234 vote.

2020

 22 January: the Withdrawal Agreement Bill proposed by Prime Minister Boris Johnson passed the
UK parliament after several amendments proposed by the House of Lords were rejected by the
House of Commons in a vote of 342-254. The Lords later decided not to propose further
amendments, therefore allowing passage of the bill to the Queen to receive royal assent.
 23 January: the European Union (Withdrawal Agreement) Act 2020 received royal assent
 24 January: Ursula von der Leyen, Charles Michel, and PM Boris Johnson sign the withdrawal
agreement. Von der Leyen and Michel signed the agreement in the Europa Building in Brussels and
then sent the agreement in a diplomatic bag to 10 Downing Street in London for Johnson to sign
the agreement.
 29 January: Scheduled vote in the European Parliament on the withdrawal agreement. It was
backed by its constitutional committee on 23 January.
 31 January: the deadline for the UK to leave the EU following the Article 50 extension agreed
between the UK and the EU in October 2019. It is therefore also the deadline for getting the
withdrawal agreement ratified if the UK is to avoid a no-deal Brexit.

2016 United Kingdom European Union membership referendum:-

 The United Kingdom European Union membership referendum, commonly referred to as
the EU referendum, or the Brexit referendum, took place on 23 June 2016 in the United
Kingdom (UK) and Gibraltar to ask the electorate whether the country should remain a
member of, or leave, the European Union (EU).
 The result would then be facilitated through the European Union Referendum Act 2015 and
also the Political Parties, Elections and Referendums Act 2000
 The referendum resulted in 51.9% of the votes cast being in favour of leaving the EU.
Although the referendum was legally non-binding, the government of the time promised to
implement the result

28 | P a g e
  The succeeding government initiated the official withdrawal process on 29 March 2017,
meaning that the UK was due to leave the EU on 29 March 2019 (when the two-year period
for Brexit negotiations was due to expire).The negotiation period was later extended until
31 October 2019, and then again until 31 January 2020
 Membership of the EU and its predecessors has long been a topic of debate in the United
Kingdom. The country joined the European Economic Community (EEC) or Common Market,
the forerunner to the European Union, in 1973, along with the European Coal and Steel
Community (ECSC), and the European Atomic Energy Community (EAEC or Euratom).
 A referendum on continued membership of the Common Market was held in 1975, with
67.2% of the population voting in favour of Britain remaining a member.
 In May 2015, following a Conservative Party manifesto pledge, the legal basis for the EU
referendum was established through the European Union Referendum Act 2015.
 Britain Stronger in Europe became the official group campaigning for the UK to remain in
the EU, and was endorsed by the Prime Minister David Cameron and Chancellor George
Osborne.
 Vote Leave was the official group campaigning for the UK to leave the EU, and was fronted
by Conservative MPs Boris Johnson and Michael Gove, along with Labour MP Gisela Stuart.
 Other campaign groups, political parties, businesses, trade unions, newspapers and
prominent individuals were also involved, with both sides having supporters from across the
political spectrum.
 Parties in favour of 'remain' included Labour, the Liberal Democrats, the Scottish National
Party (SNP), Plaid Cymru and the Green Party;while the UK Independence Party (UKIP)
campaigned in favour of leaving the European Union; and the Conservative Party remained
neutral.In spite of the official positions of the Conservative Party and Labour, both parties
allowed their MPs to publicly campaign for either side of the issue.
 Immediately after the result, financial markets reacted negatively worldwide, and Cameron
announced that he would resign as Prime Minister and Leader of the Conservative Party,
having campaigned unsuccessfully to remain in the European Union.
 It was the first time that a national referendum result had gone against the preferred option
of the UK Government. Cameron was succeeded by Theresa May on 13 July 2016. The
Labour Party also faced a leadership challenge as a result of the EU referendum.

29 | P a g e
Referendum question:-

 Research by the Electoral Commission confirmed that its recommended question "was clear and
straightforward for voters, and was the most neutral wording from the range of options which are
considered and tested", citing responses to its consultation by a diverse range of consultees
 The proposed question was accepted by the government in September 2015, shortly before the
bill's third reading. The question that appeared on ballot papers in the referendum under the Act
was:

 Should the United Kingdom remain a member of the European Union or leave the European
Union?

 with the responses to the question to be (to be marked with a single (X)):

 Remain a member of the European Union

Leave the European Union

 and in Welsh:

 A ddylai'r Deyrnas Unedig aros yn aelod o'r Undeb Ewropeaidd neu adael yr Undeb Ewropeaidd?

 with the responses (to be marked with a single (X)):

 Aros yn aelod o'r Undeb Ewropeaidd

Gadael yr Undeb Ewropeaidd

Referendum result:-
 The result was announced on the morning of 24 June: 51.89% voted in favour of
leaving the EU (Leave), and 48.11% voted in favour of remaining a member of the EU
(Remain).

30 | P a g e
  After the result was declared, Cameron announced that he would resign by
October.He stood down on 13 July 2016, with Theresa May becoming Prime Minister
after a leadership contest.
 A petition calling for a second referendum attracted more than four million
signatures,but was rejected by the government on 9 July.

2016 United Kingdom European Union membership

referendum

National referendum results (without spoiled ballots)

Choice Votes %

Leave the EuropeanLeave:

Union 17,410,742 51.89 Remain:

17,410,742
Remain a member of the (51.9%)
European Union 16,141,241 (48.1%)
16,141,241 48.11

Valid votes 33,551,983 99.92

Invalid or blank votes 25,359 0.08

Total votes 33,577,342 100.00

UK–EU
Registered voters and turnout 46,500,001 72.21

negotiations:-

 Prior to the negotiations, May said that the UK government would not seek
permanent single market membershipand, among other things, would end
ECJ jurisdiction, seek a new customs agreement, end free movement of
people and maintain the Common Travel Area with Ireland.
 The EU had adopted its negotiating directives in May, and appointed Michael
Barnier as Chief Negotiator. The EU wished to perform the negotiations in
two phases: first the UK would agree to a financial commitment and to
lifelong benefits for EU citizens in Britain, and then negotiations on a future
relationship could begin.
 In the first phase, the member states would demand that the UK pay a
"divorce bill", initially estimated as amounting to £52 billion.EU negotiators

31 | P a g e
 said that an agreement must be reached between UK and the EU by October
2018.
 In April 2017, Theresa May called a snap general election, held on 8 June, in
an attempt to "strengthen [her] hand" in the negotiations;but the election
resulted in a hung parliament, the Conservatives losing their majority. May
remained as prime minister, as on 26 June she formed a minority
government with a confidence and supply agreement with the Democratic
Unionist Party.
 Negotiations commenced on 19 June 2017. Negotiating groups were
established for three topics: the rights of EU citizens living in Britain and vice
versa; Britain's outstanding financial obligations to the EU; and the border
between Northern Ireland and the Republic of Ireland
 In December 2017, a partial agreement was reached. It ensured that there
would be no hard border in Ireland, protected the rights of UK citizens in EU
and EU citizens in UK, and estimated the financial settlement to be £35–39
billion
 May stressed that "Nothing is agreed until everything is agreed".Following
this partial agreement, EU leaders agreed to move on to the second phase in
the negotiations: discussion of the future relationship, a transition period and
a possible trade deal.
 In March 2018, a 21-month transition period and the terms for it were
provisionally agreed. In June 2018, Irish Taoiseach Leo Varadkar said that
there had been little progress on the Irish border question—on which the EU
proposed a backstop, to come into effect if no overall trade deal had been
reached by the end of the transition period—and that it was unlikely that
there would be a solution before October, when the whole deal was to be
agreed.
 In July 2018, the UK government published the Chequers plan, its aims for the
future relationship to be determined in the negotiations
 The plan sought to keep UK access to the single market for goods, but not
necessarily for services, while allowing for an independent trade policy.The
plan caused cabinet resignations, including Brexit Secretary David Davisand
Foreign Secretary Boris Johnson.

32 | P a g e
 Role of Scottland in brexit:-
 After the Brexit referendum, the Scottish Government—led by the Scottish
National Party (SNP)—announced that officials were planning another
independence referendum because Scotland voted to remain in the EU while
England and Wales voted to leave.
 It had suggested this before the Brexit referendum.The First Minister of
Scotland, Nicola Sturgeon, requested a referendum be held before the UK's
withdrawal, but the UK Prime Minister rejected this timing.
 The Scottish Parliament voted in favour of holding another independence
referendum, with Sturgeon planning it for 2021.
 At the last referendum in 2014, 55% of voters had decided to remain in the
UK, but the referendum on Britain's withdrawal from the EU was held in
2016, with 62% of Scottish voters against it. In the event that Northern
Ireland remains associated with the EU – for example, by remaining in the
Customs Union – it is expected that Scotland will also insist on special
treatment.
 On 21 March 2018, the Scottish Parliament passed the Scottish Continuity
Bill.This was passed due to stalling negotiations between the Scottish
Government and the British Government on where powers within devolved
policy areas should lie after Brexit. The Act allows for all devolved policy areas
to remain within the remit of the Scottish Parliament and reduces the
executive power upon exit day that the UK Withdrawal Bill provides for
Ministers of the Crown.
 The bill was referred to the UK Supreme Court, which found that it could not
come into force as the European Union (Withdrawal) Act 2018, which
received royal assent between the Scottish Parliament passing its bill and the
Supreme Court's judgement, designated itself under Schedule 4 of the
Scotland Act 1998 as unamendable by the Scottish Parliament. The bill has
therefore not received royal assent.

33 | P a g e
Pros and cons of brexit
Pros:-
1. Brexit may help the country experience immediate cost savings.
One of the reasons that Brexit passed during its referendum involved the cost of membership to the
European Union. Britain paid £13.1 billion in membership dues to the multinational structure in 2016,
while receiving just £4.5 billion in return through spending. That means the nation experienced a loss of
£8.6 billion in just the one year. If you were to multiply that figure over a decade, then the savings would
create a sufficient cash reserve that could be useful in a variety of ways.
2. Brexit would shift the emphasis of trade for Britain.
The EU-28 is treated as its own import/export block on the global stage. Britain sends over 50% of their
exports to countries in this bloc.
Separating themselves from the European Union gives the country an opportunity to negotiate its own
trade partnerships instead of relying on the multinational governing body to do it for them. Although they
would no longer benefit from the trades arranged by the EU, they will also have the final say in what
happens instead of being a contributing voice to the process.

3. Brexit establishes the sovereignty of Britain.

Being part of the European Union requires Britain to give up some of its unique identity. They were forced
to give up some control over their domestic affairs to maintain its positive membership status. The goal
with this process is to give the Parliament more of its traditional power instead of ceding to the mandates
that come from the EU governing body. Instead of wondering about how the membership bloc works on
any given day, or who is in charge, Brexit makes it possible for the country to grab the steering wheel once
again as they steer toward their fate.
Report this ad

4. Brexit would reduce the issues with forced immigration associated with the EU.
Under the laws of the European Union, member nations cannot prevent anyone from another state that is
also a member from moving to live there. Britons had the right to move elsewhere to live and work, but so
did everyone else. This structure created a pattern of immigration where roughly 800,000 people moved
into the country to take advantage of the opportunities in the UK. Although China and India are the most
signficiant sources of foreign workers in the country, separating from Europe allows Britain to maintain the
pace of immigration that works best for their nation.

34 | P a g e
5. Brexit offers the possibility of new jobs.
There are estimates that 3 million jobs in Britain are connected to trade policies, procedures, or activities
right now. Separating from Europe does create a risk where these employment opportunities could be lost.
If trading increases after the separation, then there is a chance that employment growth in this sector
could occur. When you factor in the expected drop in immigration rates since the UK no longer follows
what the EU mandates, there could be more jobs for people to find in the months and years ahead.
6. Brexit could improve border security.
Iain Duncan Smith, who is the former Work and Pensions Secretary, suggests that the recent spike in
terrorism experienced in Europe would continue to be a risk for Britain domestically because of the free
movements that the EU allows. By taking advantage of Brexit’s structure, Smith suggests that the country
could close their open borders to begin checking visitors and controlling the flow of people movement.
7. Brexit could help to stop issues with bureaucracy.
There are regulatory frameworks that the European Union implemented that do not always work well for
Britain’s needs. That led most of the people who were for the referendum to feel like the membership
block is a bureaucratic burden with far too many regulations to follow. By creating a separation between
the two governing structures, it becomes possible for the local government to create a framework that is
much more specific to the needs of everyone while still benefitting from the relationships formed during
their time in the EU-28.

8. Brexit would create additional savings opportunities worth considering.

Consumers in Britain would no longer be asked to follow EU policies like the Common Agricultural Policy
when Brexit occurs. More than £1 billion each year in subsidies goes to foreign farmers that help to make
them competitive, so removal of this could lower prices at the supermarkets. There is also the Common
Fisheries Policy that places regulations on the local industry that are believed to be keeping it from
reaching its full potential.
When the changes in taxation and other regulations are calculated into the equation, the average family in
Britain could save roughly £1,000 per year through less regulation and bureaucracy alone.

CONS:-

1. Brexit would eliminate protections of equal pay, maternity leave, and safe workplaces.
The idea that Britain would give up their push toward more equality for women seems low, even if a no-
deal Brexit ends up happening. The European Union has spent much of their time bringing the country

35 | P a g e
along, often reluctantly, to offer equality benefits to women and minority populations. Once the divorce
happens, then there wouldn’t be the same protections against discrimination as there are now in the
international courts.
We have seen what misogyny and populism can do to the United States and how it gains national
acceptance. This issue could impact Britain more than anyone could ever predict. The various directives
that could be reversed with Brexit include the following.

• Four weeks of guaranteed annual leave for workers.

• Regulated break times and working hours that prevent more than 48 hours of labor per week.
• Four months of paid parental leave, including additional protections for workers who are pregnant.
• Worker protections that apply when businesses change ownership.

2. Brexit would change the perspective of Britain being the “gateway” to Europe.
One of the reasons that Britain decided to avoid the eurozone was that the strength of its currency was
higher. It continues to be the most valuable currency trading right now, with 1 GBP equally 1.31 USD and
1.14 Euro. Tax revenues will drop when the country separates itself from Europe because banks would
move their headquarters back into the membership block.
Report this ad

Banks in the United States would no longer do business in the country when dealing with Europe either,
which could impact their economy in unpredictable ways. There would no longer be a free passport across
the continent for financial firms to enjoy.

3. Brexit could create a labor shortage.

Although a drop in the immigration rates would create more job availability for everyone who stayed in the
country, Brexit does offer the potential to create labor shortages as well. Should this disadvantage occur,
then it could hold back the potential for economic growth within the country. A decline in population
would also likely reduce the demand for goods and services sold domestically. Skill shortages could hurt
specific sectors of the economy as well.
4. Brexit could prevent the sharing of intelligence information.
Brexit might help Britain find ways to close some vulnerable borders, but it would also limit the
information flowing from the European Union and NATO. There could even be a reduction in data coming
from the United Nations after the separation takes place. Having access to passenger records, criminal
data, and counter-terrorism teams helps to create a safer space for everyone living there. Although many

36 | P a g e
of the bilateral relationships would continue, it will take more effort to get essential information items into
the hands of the people who need them the most.
5. Brexit could reduce the amount of foreign direct investment that Britain receives.
By joining together in the European Union, the 28 members (before Brexit) form 25% of the global GDP. To
give that figure some perspective, the United States currently holds a 15.2% share of the worldwide GDP.
As Europe has continued to grow and form relationships, their common bonds have helped to leverage
more of the world’s economy. The U.S. represented 40% of the global GDP in 1960.
With Britain separating itself from this membership bloc, the impact will be felt first in the amount of
foreign direct investment that comes into the economy. In 2012, over £937 billion was received, with 50%
of that related to EU activities. There is a real possibility that the Brexit divorce could cost the country over
£300 billion in FDI almost immediately.

6. Brexit could still force Britain to be subject to EU laws and regulations.

Many who support the idea of Brexit look at Norway as a model for how Britain could have a relationship
with the European Union. Although Norway does receive an exception of CAP, it is still subject to the laws
and regulations of the membership bloc. That is the price that is paid for having access to the single market
of the EU. Britain would likely be paying the same price. It could require the government to continue
following the bureaucratic requirements without having the power to influence decisions after the
separation completes itself.
7. Brexit could reverse the protections of food, health, and animal rights.
Most of the food standards that are in place in Britain right now originate in the European Union. That
gives Britons comfort in knowing that many of the potentially harmful additives which are put into food
products around the world are not in what they eat. That’s why an ingredient list from items made in
Europe is much shorter than for a comparable one produced in the United States.
The European Union also banned animal testing (with some exemptions) across the entire membership
bloc in 2012. This measure included animal welfare standards that could shift once Brexit begins its journey
forward.

8. Brexit could force Brits living in EU member states to move back home.
Because of the border issues created by Brexit, there would be a separation between Britain and the
remaining 27 members. More than 1.4 million people from the country have taken advantage of the travel
and work agreements which exist in the European Union. Once this separation takes place, their status will
become questionable instantly. They may be required to apply for a work visa, seek citizenship, or even

37 | P a g e
move back home to avoid a potential conflict with their status. The UK would also lose the strength which
comes when you are part of a diverse national and international culture.
9. Brexit would create more high-skill job openings that would remain unfilled.
When you compare the educational data of Britain with that of the remaining European Union members,
then employers will see that EU workers tend to be better educated. About 32% of people living in the EU-
27 (excluding Britain) have a university degree, compared to the 21% of citizens in the UK. People moving
into Britain from Europe have contributed 34% more financially to the nation than they cost in required
supports.
10. Brexit could cause Britain to lose the U.S. as a primary trading partner.
The United States and Europe have an on-again, off-again relationship with the creation of a free-trade
zone between the two entities. They combined make up over 40% of the global GDP. If Britain separates
itself from the EU, then it would lose the benefits of this trade arrangement. Although they could set up
their own agreements, Britain wouldn’t have the same leverage to ask for benefits that help domestically
as they would if they were part of the membership block.
Report this ad

11. Brexit would end access to the regulation cost guarantees that Europe provides.
Consumers benefit from the regulations that limit costs throughout Europe for specific products and
services. Since 2015, consumers using cellular phones and data receive the same price for services in one
of the EU-28 states as they do back at home. This structure prevents the unexpected costs from roaming.
These costs might rise on the day that the separation occurs. There are additional travel cost concerns to
consider as well, such as airline tickets, hotel bookings, and even the price of fuel.
12. Brexit could cause household energy bills to rise.
Although the average household would save about £1,000 from unnecessary regulations when Brexit is
finalized, they’ll lose some of that savings by paying for higher heating and cooling prices. The energy costs
could increase by £500 million or more in the years afterward because the UK would no longer be able to
negotiate pricing on the same scale. There would be concerns with air pollutants and their impact on the
environment. These costs could be enough to make some investors look for other options instead of
staying in Britain with their money.
13. Brexit may shift the educational diversity found in the country today.
Students from the European Union are eligible to pay the same tuition and fees as Britons under the
regulations of the EU. They can apply for the same financial supports when attending university in the UK
as well. Once the separation is complete, then it would be up to the British government to determine how

38 | P a g e
the costs for students from Europe would be regulated. It would also impact access to the Erasmus
program that allows over 200,000 students and 20,000 staff to spend time abroad as part of their studies.
These pros and cons of Brexit show how complex and uncertain these current circumstances are. There are
some suggestions that a second referendum might create a very different result if it were permitted.
Europe seems to be taking a hard line on this separation, refusing to budge from the various deals that
were negotiated in the past 24 months. The only thing we know for certain is that by April 2019, we will
begin to have some answers to all of this uncertainty

Impacts Of Brexit

EFFECTS OF BREXIT IN INDIA:-

 India is one of the top investors in the UK.

 There are about 800 Indian-owned companies in the country employing roughly 110,000 people.
(Eg: Jaguar Land Rover is owned by the Tata group)
 Many of these firms made investments with the wider European market in mind.
 Together, the UK and Europe account for over-a-quarter of the country’s IT exports, worth around
$30bn.
 The UK is the third largest source of foreign direct investment in India and India’s largest G20
investor.
 India is the third largest source of FDI to the UK in terms of numbers of projects. India invests more
in the UK than in the rest of Europe combined, emerging as the UK’s third largest FDI investor.
 The key sectors attracting Indian investment include healthcare, agritech, food, and drink.
 In November 2015, Prime Minister Modi has said, ”As far as India is concerned, if there is an entry
point for us to the EU, that is the UK.”
 But, the UK is only India’s 12th largest trade partner, well behind other European countries such as
Germany and Switzerland.
 Interestingly, the UK is also among just seven in 25 top countries with which India enjoys a trade
surplus.

Negative Impacts of the Brexit referendum on India

 India will have to adjust to changing world order.

39 | P a g e
  There may be foreign fund outflow and dollar rise.
 Rupee may depreciate because of the double effect of foreign fund outflow and dollar rise.
 This may increase petrol and diesel prices to an extent.
 The government then may want to reduce additional excise duty imposed on fuel when it was on a
downward trajectory. This may increase fiscal deficit unless revenue increased.
 Prices of gold, electronic goods, among others may also increase .
 Sensex and Nifty may tumble in the short-run.
 The falling value of the pound could render several existing contracts loss-making.
 The vote is also bad news for Indian outsourcers.
 Foreign funds are likely to move out if the world outside thinks that investment in India is risky.
 India’s Forex (currently a record 363 billion dollars) may diminish, particular if the currency is stored
in Euros or Pound (this comes around 20% of total forex).
 Brexit will have a negative impact on the $108 billion Indian IT sector in the short term.
 Many Indian companies are listed on the London Stock Exchange and many have European
headquarters in London. Brexit will take away this advantage.
 Due to fall in the value of Pound sterling, Indian exports to the UK will suffer. Cheaper rupee will
make Indian exports, including IT and ITeS, competitive. Indian import companies operating in the UK
may also report a loss. Also, note that India is exporting more than what it is importing from Britain.

Positive Impacts of the Brexit referendum on India

 There are many who think a weakening British currency might be good news.
 India being more of an importing country than an exporting nation, the overall effect may turn out
positive for India (if the dollar doesn’t appreciate much against rupee).
 With lower pound value, Indian companies may be able to acquire many hi-tech assets.
 As investors look around the world for safe havens in these turbulent times, India stands out both
in terms of stability and of growth.
 Brexit might give a boost to trade ties between India and the UK.
 Britain will now be free to discuss a bilateral trade pact with India.
 Due to the fall in the value of Pound sterling, those who import from the UK will gain. Indian export
companies operating in the UK may also gain.

40 | P a g e
  More Indian tourists can afford to visit Britain in the coming days as the currency value has fallen.
 More Indian students can afford to study in Britain (for higher education) as the fees may seem
cheaper.
 Britain will need a steady inflow of talented labour, and India fits the bill perfectly due to its English-
speaking population.
 The fall in the prices of commodities like crude, which will help India save a lot on its import bill
(every $1 drop in crude prices leads to roughly $1 billion savings in India’s oil import bill), reducing its
trade and current account deficits (CAD).
 Brexit would weaken global growth and lead to a meaningful decline in commodity prices. This is
only going to enhance both the relative and absolute appeal of India.
 Lower commodity prices will help the macro fundamentals: be it fiscal deficit, current account
deficit or inflation, which will give the government more levers to pump up the investment cycle.

Is India ready to handle the Brexit?

 The finance ministry said that the country has sufficient foreign exchange reserves to handle any
impact.
 RBI Governor Raghuram Rajan said the central bank will infuse whatever liquidity is needed into the
Indian market to keep it “well behaved”.
 SEBI and stock exchanges have beefed up their surveillance mechanism to deal with any excessive
volatility.
 If exports to the UK are costly and imports are cheaper, India can think of utilizing the import-
advantage by reversing the present trade scenario.
 Once the dust settles, India may be seen to be a net gainer and inflows would continue to gravitate
towards the Indian shores.

Impact of brexit on UK economy:-

The macroeconomic effects of Brexit: longer term

1. There have been many attempts to model the macroeconomic consequences of Brexit, nearly
all of which find that there will be a long-term loss of GDP for the UK economy compared with
the status quo projections of remaining fully in the EU and its single market.
 It is important to stress that this means lower GDP than would otherwise be the case, not an actual fall
in prosperity: if, for example, the UK maintained its trend growth rate up to 2030, the economy would
41 | P a g e
 be some 30% larger, and the ‘losses’ envisaged are relative to that projection. A loss of 6% would,
therefore, mean 24% growth instead of 30%, but would also mean that the UK economy would be
smaller indefinitely.
2. The range of estimates is large, from a loss of GDP of nearly ten percentage points (in the least
attractive trade and inward investment scenarios modelled by the Treasury, NIESR and the
Centre for Economic Performance at LSE)1 to a gain of four points (Minford, for Economists for
Brexit2– a clear outlier) – see figure 1.
 The main reason for the differences lies in the assumptions made about shifting from the current
access that the UK has to the EU single market to a new regime in which the UK faces restrictions.
 As well as assumptions, there are methodological disagreements about analytic techniques. When
examined by the group of economists, the conclusion was that the approach adopted by Minford
stands out from all the others and was considered to be the most questionable. Unsurprisingly Minford
is equally critical of his critics
 The scenarios least damaging to the UK interest are those that involve the fewest restrictions on the
UK’s access to the EU, including being closest to the status quo of EU membership, whereas those that
result in new barriers to UK trade or inward investment are the most damaging.

42 | P a g e
The macroeconomic effects of Brexit: short-term

1) There is a consensus, even including proponents of ‘leave’, that there would be a short-term negative
shock to the EU economy from Brexit.

 However, there is clear disagreement about the likely duration of this effect and whether it would have
only immediate limited costs or have permanent consequences.
 The two main reasons for this short-term effect, explained notably by the Treasury3, are that the
uncertainty surrounding the outcome of the referendum has deterred investment and that there would
be transitional costs of shifting to a new regime for trade and investment.
 Other short-term effects could derive from currency volatility and financial market reactions. The Bank
of England4, in particular, has warned that Brexit could result in financial instability that could have
damaging macroeconomic effects because of the financial openness of the UK.

1. To the extent that there is a loss of GDP, it will also, in macroeconomic terms, mean a lower
level of employment in the UK economy.
2. Demand from other EU countries constitutes around 12% of final demand for UK goods and
services and this translates into around 3.3 million jobs.
 It does not, as some campaigners wrongly imply, mean that those jobs are
necessarily at risk from Brexit.
 Nevertheless, there are some sectors of activity in which job losses are likely, and
others where Brexit could see an increase in jobs, in both cases depending on
what replaces the current arrangements. Some job losses are likely in the City of
London, as many of its representatives have made clear, while major exporters
(such as the manufacturers of cars) could be forced to retrench if obstacles to
exporting to the EU increase.

43 | P a g e
  Equally, there are some import competing industries which can be expected to
see job increases if exit from the EU means that they become more competitive,
either because a new trade regime raises the costs of imports or because they
can then avoid regulations that impair their competitiveness.
3. The UK economy has become increasingly reliant on the service sector, both as the main
engine of job creation and as a source of export demand. Between 1997 and 2013,
according to ONS data on final demand5, the proportion of services in total UK exports rose
from 28% to 41%, with rapid growth in key service activities, such as financial and business
services. These sectors are now as important to the overall UK export effort as the major
manufacturing sectors of cars, aerospace, computers & electronics and pharmaceuticals.
 It follows that the outlook for UK access to export markets in services will be crucial
for future job creation: the digital and creative industries have been identified in
various studies as especially important. These are UK priorities for extending the
single market, but progress in this direction might lose momentum if the UK leaves.
4. The regional distribution of jobs could be influenced by shifts in the destination of foreign
direct investment into the UK, a pattern already seen following the 2008/9 recession when
Wales, Northern Ireland and the more northerly English regions lost ground.
The public finances :
 The direct effect of Brexit on the public finances will be to allow the UK to save on
its current payments into the EU budget.
 Any savings from direct contributions to the EU budget would be erased if Brexit
results in a GDP loss of as little as one percentage point and the public finances
would be worse if the loss were greater, despite no longer paying into the EU.

The economic effects of migration

1. Migration from the EU (as opposed to refugees from beyond the EU,
analytically a very different phenomenon, with little to do with EU
membership) can have both positive and negative economic effects.
2. There is little doubt that the inflow of labour from the EU has had a beneficial
effect on the supply of labour and that many public services, in particular, rely
on EU workers. EU citizens of working age are significantly more likely to be in
44 | P a g e
 employment than their indigenous counterparts and make a positive
contribution to the UK’s public finances.
 Despite the often quoted statement by Stuart Rose of the Britain Stronger in
Europe campaign, there is no statistical support for the proposition that the
inflow of EU migrants has resulted in lower wage levels.
 Migrants from some origins do remit some of their income to their home
countries and this can be regarded as a loss for the UK economy.
3. In some localities, migration undoubtedly puts pressure on public services and
housing.

Who is likely to gain or lose overall?

1. There may well be opportunities for the UK to cut costly regulations, although some of the amounts
claimed exaggerate the likely benefits.
 However, it is too easily forgotten that regulation also has benefits and, that, contrary to the
general image, an absence of regulation can also be costly, whether for consumers or, in some
instances, businesses.
 In some instances the UK has chosen to ‘gold-plate’ regulations making them more onerous than
required by EU rules.
2. International organisations, such as the IMF and the OECD6 have warned that the balance of risks
for the UK economy is negative and will have lasting effects.
 These International organisations have also highlighted the likely adverse consequences for EU
partner countries and the prospect that Brexit could be a negative shock for the global economy,
derailing its fragile recovery from the crises of recent years.

IMPACT OF BREXIT ON TRADE:-

To estimate the effect of Brexit on the UK’s trade and living standards, we use
a modern quantitative trade model of the global economy. Quantitative trade
models incorporate the channels through which trade affects consumers,
firms and workers, and provide a mapping from trade data to welfare. The
model provides numbers for how much real incomes change under different
trade policies, using readily available data on trade volumes and potential
trade barriers. Our model uses the most recent data (WIOD) which divides
45 | P a g e
 the world into 35 sectors and 31 regions. It allows for trade in both
intermediate inputs and final output in both goods and services. The model
takes into account the effects of Brexit on the UK’s trade with the EU and the
UK’s trade with the rest of the world.

To forecast the consequences of the UK leaving the EU, we must make

assumptions about how trade costs change following Brexit. It is not known
exactly how the UK’s relations with the EU would change following Brexit,
which means that there is a lack of clarity over the consequences of Brexit for
trade costs between the UK and the EU.

To overcome this difficulty, we analyse two scenarios: an optimistic scenario

in which the increase in trade costs between the UK and the EU is small, and;
a pessimistic scenario with a larger rise in trade costs.

The optimistic scenario assumes that in a post-Brexit world, the UK’s trade
relations with the EU are similar to those currently enjoyed by Norway. As a
member of the European Economic Area (EEA), Norway has a free trade
agreement with the EU, which means that there are no tariffs on trade
between Norway and the EU. Norway is also a member of the European
single market and adopts policies and regulations designed to reduce non-
tariff barriers within the single market.

But Norway is not a member of the EU’s customs union, so it faces some non-
tariff barriers that do not apply to EU members such as rules of origin
requirements and anti-dumping duties. Campos et al (2015) find that
Norway’s productivity growth has been harmed by not fully participating in
the EU’s market integration programmes.

In the pessimistic scenario, we assume that the UK is not successful in

negotiating a new trade agreement with the EU and, therefore, that trade
between the UK and the EU following Brexit is governed by World Trade
Organisation (WTO) rules. This implies larger increasesin trade costs than the
optimistic scenario because most favoured nation (MFN) tariffs2 are imposed
46 | P a g e
 on UK-EU trade and because the WTO has made less progress on reducing
nontariff barriers than the EU
Increases in trade costs between the UK and the EU following Brexit can be
divided into three parts: (i) higher tariffs on imports; (ii) higher non-tariff
barriers to trade (arising from different regulations, border controls, etc.);
and (iii) the UK may not participate in future steps that the EU takes towards
deeper integration and the reduction of non-tariff barriers within the EU.

In the optimistic scenario, we assume that the UK and the EU continue to

enjoy a free trade agreement and Brexit does not lead to any change in tariff
barriers. In the pessimistic scenario where trade is governed by WTO rules,
we assume MFN tariffs are imposed on UK-EU goods trade.

Regarding non-tariff barriers, in the optimistic scenario, we assume that UK-

EU trade is subject to one quarter of the reducible non-tariff barriers that are
observed in trade between the United States and the EU. In the pessimistic
scenario, we assume a larger increase of three quarters of reducible non-
tariff barriers.

47 | P a g e
Finally, trade costs between countries within the EU have been declining approximately 40% faster than
trade costs between other OECD countries (Méjean and Schwellnus, 2009). In the event of Brexit, the UK
would not benefit from any future reductions in intra-EU trade costs.

In the optimistic scenario, we assume that in the ten years following Brexit,
intra-EU trade costs fall 20% faster than in the rest of the world, while in the
pessimistic scenario, we assume intra-EU trade costs continue to fall 40%
faster than in the rest of the world. This implies that in the optimistic case,
non-tariff barriers within the EU fall 5.7% over the next decade, while in the
pessimistic case they fall by 12.8%.4 .

All EU members are worse off: Ireland suffers the largest proportional losses
from Brexit, alongside the Netherlands and Belgium. Countries that lose the
most are those currently trading the most with the UK. Some countries
outside the EU, such as Russia and Turkey, gain as trade is diverted towards
them and away from the EU

A Swiss alternative?

Switzerland is not in the EEA but has many bilateral agreements with the EU, which gives it some access to
the single market. Like Norway, it has to adopt all the regulations covering those parts of the single market
48 | P a g e
in which it participates and it allows free movement of labour. It does, however, benefit from a lower fiscal
transfer to the EU (about 40% of the UK’s contribution on a per capita basis). On the other hand, it does
not have free trade in services with the EU, which would be a disadvantage for an economy like the UK,
which has a comparative advantage in services.

We simulate the effects of Brexit using Switzerland as an alternative optimistic scenario. The results are
very similar: a loss of income of 1.30%. Although the fiscal transfers are lower than for Norway, these are
more than offset by higher costs of trade in services.

Future trade agreements

EU members have a common trade policy and are represented by the EU in all international trade
negotiations. After Brexit, the UK would become an independent player, free to seek its own trade deals
with the rest of the world. The UK could use this freedom to look for new trade deals with countries such
as China, India and the United States.

Our model shows that trade with such non-EU countries does indeed rise after Brexit. But the magnitude
of these increases is not enough to offset the decline in trade with the EU. Being part of the EU does not
restrict UK companies’ ability to trade with the rest of the world, but as our nearest neighbour and the
world’s largest market, the EU is the UK’s natural trade partner.

When negotiating post-Brexit trade deals, the UK would not need to compromise with other EU countries.
On the other hand, the UK would have to take on the cost of hiring civil servants to rebuild its capacity to
undertake trade negotiations. More importantly, since the UK is a smaller market than the EU, it would
have less bargaining power in trade negotiations than the EU does.

Has the UK benefited from past trade deals reached by the EU? CEP research by Breinlich et al (2016)
estimates that trade agreements negotiated by the EU over the past two decades have reduced the
quality-adjusted prices of imports into the UK by over one-third. Although it is often argued that the EU

49 | P a g e
does not pursue trade agreements that are beneficial to the UK, these consumer benefits are twice as big
as those enjoyed by the 12 other members that joined before 1995.

The EU is currently negotiating a major new free trade agreement with the United States (the Transatlantic
Trade and Investment Partnership or TTIP) – as well as an ‘economic partnership agreement’ with Japan. If
the UK leaves the EU, it will not benefit from these. Breinlich et al (2016) estimate that the US and
Japanese agreements would lower prices by 0.4% and 0.2% respectively. The United States has stated that
it would not do a trade deal with the UK alone (Holehouse, 2015).

The impact on the society

Fiscally a vote to leave means the return of UK’s contributions to the EU budget, offering choices on the
pace of deficit reduction. From 2010 to 2015, the UK’s average annual gross contribution to the EU
amounted to around £16.8 billion. However the UK also receives a rebate and funding from various EU
initiatives. This means that the UK’s average annual net contribution to the EU budget over these same
years is estimated to be around £8.8 billion, or around 0.5% of GDP.

With a vote to leave the EU, although in the near term budgetary contributions to the EU must still be
made, and funding flows into the UK will continue, there will no longer be a requirement to make these
contributions beyond the expected two year negotiation period (unless these become part of a deal similar
to the Norwegian or Swiss models). But the UK will also cease to receive funding from the EU too (e.g. in
relation to the Common Agricultural Policy, regional development and research and development).

For those who need to keep the machinery of state running, there will be other impacts of Brexit, which
will differ according to the extent of exposure of each public sector organisation to the EU. For some, like
central government departments, there will now be significant transitional work as EU responsibilities
move back to the UK.

Policy choices will also need to be made on whether or not to re-create EU Funds but in a Brexit form. This
will in turn impact on devolved administrations and local government, particularly if EU funds are not fully
replaced. Scotland could also call for a new referendum on the back of the vote to exit the EU.

50 | P a g e
For others in education and health, where talent mobility is an important issue, it may be that certain parts
will be greatly affected. For instance, universities will have concerns about loss of access to EU research
funding and student mobility schemes.

And across the public sector, there will also be an impact on public sector bodies as employers, whether
that’s in terms of changes to UK employment law (e.g. Working Time Regulations 1998, Agency Worker
Regulations 2010) or to government procurement, which is currently subject to EU law.

Of course, in the aftermath of the vote to leave the vast bulk of delivery of public services will need to
continue on a day to day basis in parallel with Brexit negotiations, which will add uncertainty to the cocktail
of short term fiscal austerity as well as longer term demographic challenges.

Clearly nothing will change overnight, with full transition out of the EU taking anywhere between two and
ten years. But even so public servants will now need to commit the plans in their head to paper and get
ready.

Impact of Brexit on the European Union

The Long-Term Impact

 The UK is among the European Union's largest trading partners, accounting for about 13 percent of its
trade in goods and services. When the United Kingdom leaves the European Union, higher barriers to
trade, capital flows, and labor mobility will affect output and jobs not only in the UK but also in the
remaining 27 EU member states. Since Brexit means both parties will withdraw from a frictionless
economic relationship, there will be costs on both sides, as our new study suggests.

Bonds between the EU and the UK run deep: The UK is among the EU 27's largest trading partners,
accounting for about 13 percent of its trade in goods and services. Beside bilateral trade links, there are
substantial supply chain trade links between the EU-27 and the UK that involve several countries.

51 | P a g e
Financial linkages are also strong, with gross bilateral capital flows totaling around 52 percent of
EU-27 GDP in 2016.

Migration flows have also strengthened over time, and are very large for some countries, such as
Ireland.

Reversing integration will hurt long-term output and jobs in the EU

A constructed index that captures all these channels of integration indicates growing EU-UK
bilateral integration over the past 30 years.

The reversal of that integration in following Brexit will hurt income and employment in the EU.

If the UK and the EU settle on a standard free trade agreement (FTA) where tariffs on goods trade
are low but with higher non-tariff barriers, we estimate that EU-27 real output will be lower by 0.8
percent, and employment by 0.3 percent, in the long run than in a no-Brexit scenario once all
transmission channels are accounted for. 

If the parties default to WTO rules, the decline in real output relative to no-Brexit would be even
larger, at 1.5 percent in the long run, and employment would fall by 0.7 percent. Under a relatively
benign “Norway” scenario (EEA), however, where access to the single market is preserved while
membership in the customs union is lost, the decline in output and employment for the EU-27
appears negligible.

Brexit-related hit: country-by-country estimates of the trade impact

The more any country trades with the UK, the larger the Brexit-related hit to its output will be. To
shed light on this, we used a country-specific framework to study the direct and indirect trade
effects from higher tariffs and non-tariff barriers for both goods and services trade. The simulated
effects are relatively smaller compared to the estimates presented above as only trade links are

52 | P a g e
accounted for in the model framework.

53 | P a g e
We find that EU-27 real output would be lower by 0.2 percent in the long run under the FTA
scenario than under a no-Brexit scenario, with the hit to Ireland’s income the largest in the EU-27
(about 2.5 percent compared to the no-Brexit scenario), followed by the Netherlands, Denmark,
Belgium, and Czech Republic.

These estimated impacts relative to no Brexit increase in the event of a default to WTO rules,
reaching an output loss of 0.5 percent for the EU-27, and an output loss of 4 percent for Ireland
given the substantial increase in both tariff and non-tariff barriers.

54 | P a g e
Our study does not look at the effect of uncertainty about the future relationship between the EU-
27 and the UK, or the transition to the new relationship. It focuses entirely on the long-term impact,
when all parties have fully adjusted to the new relationship. The ultimate consequences will take
years to materialize and will depend on the eventual deal between the EU 27 and the UK.

EU-UK Trade Relationship

The UK is more dependent on the EU than vice versa given that 12.6% of UK GDP is linked to exports to the
EU wheareas only 3.1% of GDP among the other 27 Member States is linked to exports to the UK. The EU is
the destination of 44% of UK exports and 60% of total UK trade is covered by EU membership and the
preferential access it grants to 53 markets outside the EU. If TTIP and other current negotiations succeed
this could increase to 85%.1 The UK is a service-based economy with the service sector making up almost
80% of its economy.2 Furthermore, although the UK has a net trade deficit with the EU, it had a net trade
surplus in services of 10.3 billion pounds in 2013.3 The EU is one of its biggest partners with 36% of total
UK service exports going to the EU. The UK is also the leading EU destination for Foreign Direct Investment
(FDI) because it combines an Englishspeaking and relatively flexible labour market with barrier-free access
to the EU Single Market. Market size is a major determinant of the size of FDI flows, and membership of
the EU expands the UK market.4 The barriers that matter to investors in a competitive modern economy
are not tariffs but non-tariff barriers such as divergent national standards and regulations. The EU Single
Market provides a level playing field, replacing 28 sets of regulations with a single rule book and free
access to 500 million customers to the companies operating with it. Outside of the EU the UK will most
likely lose full access to the Single Market, making it a less attractive destination for companies that would
like to use it as a base for their investment in the EU market.

55 | P a g e
The UK negotiation position vis-à-vis the EU

Brexit campaigners have so far argued that the EU’s trade surplus with the UK is its trump card in
negotiations. However, this ignores the fact that, whereas UK exports to the EU are 44% of total UK
exports, on average the other 27 Member States only export 7% of their total exports to the EU. According
to the Centre for European Reform “half of the EU’s trade surplus with the UK is accounted for by just two
Member States: Germany and the Netherlands. Most EU Member States do not run substantial trade
surpluses with the UK, and some run deficits with it. Any agreement would require the assent of the
remaining 27 members, some of whom buy more from Britain than they sell to it”.5 Furthermore, the EU
only has a trade surplus based on goods exports but a trade deficit of 10.3 billion pounds in services.
Therefore there is far less of a rationale for the EU to conclude a liberal agreement on services access than
on goods, which would severely hurt the UK’s service-based economy.6 Moreover, many more
international trade treaties already regulate and help reduce barriers to trade in goods, yet very few, if any
cover, nontariff barriers to trade in services. The EU’s access to goods will thus not be as heavily affected as
the UK’s access to services on an already much smaller share of the EU’s overall trade.

Future Scenarios
56 | P a g e
Growth Predictions (by 2030):

Predictions on how a Brexit would affect economic growth depend on four factors: 1) Whether the EU
itself will embrace reforms; 2) the outcome of TTIP and other trade agreements the EU negotiates; 3) To
what extent the UK is willing to turn Britain into a dramatically deregulated free trading economy; 4) What
type of relationship the UK decides to have towards the EU Single Market. Due to the unpredictability of all
of these factors growth predictions vary greatly. According to the most optimistic scenarios, where the UK
maintains a high level of access to the Single Market, the effects range from a loss of 2.2% of GDP7 and the
absolute best case scenario, which foresees that the UK would benefit from leaving Europe with a 1.6%
higher GDP in 2030.8 The assumptions and the plausibility of this very positive best case scenario will be
evaluated further down in the paper. The most pessimistic predictions, where the UK would have a simple
WTO managed relationship with the EU, show that the UK could face an income loss of between 3.1% (50
billion pounds) and 9.5% of GDP.9 As a baseline for comparison: following the 2007/2008 global financial
crisis UK GDP fell by around 7%

Different plausible relationships to the Single Market

The UK could decide to have a Norwegian/EEA-style relationship, a Swiss-style bilateral trade agreement, a
Canada-style bilateral trade agreement a WTO-style managed relationship or a uniquely negotiated
relationship with the Single Market. Under the first two models the UK would have to pay for Single
Market access and accept almost all EU regulation without having a voice at the table. The WTOstyle
relationship, absent of significant domestic reforms, is the “worst case scenario” and would bring
substantial economic costs. Overall, no free trade deal with the EU will offset the loss of access to the
Single Market and EU customs union. If the UK decided to have an EEA-type relationship where it pays for
full access to the Single Market, most EU regulation would continue to apply to the UK, including the five
pieces of EU derived legislation considered to be the most “costly”.The only plausible model for a
relationship where the UK could gain substantial access to the Single Market without requiring freedom of
movement is the bilateral EU-Canada Comprehensive Economic and Trade Agreement (CETA). However,
according to the UK Treasury, such an agreement would result in a 6.2% smaller UK GDP in 2031, a £4,300
decrease in household income and an annual £36 billion “black hole” in tax receipts, equivalent to a little
more than one third of the NHS budget. Given that reducing migration is one of the main goals of the
Leave campaign, it is significant to note that any possible future relationship that restricts or removes
freedom of movement results in substantial economic costs and growth loss for the UK. To conclude, none
of these existing models would carry much appeal for the UK. If the UK were to negotiate a unique

57 | P a g e
agreement, it would probably take more than two years to do so.13 One Eurosceptic think-tank concludes
that their most favourable alternative relationship model “would be the hardest option to negotiate, and it
may actually be easier to achieve a model along these lines by renegotiating from inside the EU.

UK economically stronger outside the EU: A “pie in the sky”

For the UK to benefit by 1.6% of GDP gains by 2030, as the best case scenario implies, it would have to
substantially reform its economy on three broad fronts: 1) open up to China, USA, India and Indonesia; 2)
pursue a liberal policy for labour migration; 3) slash regulation on climate change, social and employment
protections and financial services rules. The last two reform packages would only be possible if the UK
decided to choose a WTOstyle relationship with the EU, given that EU rules would apply in the other cases.
However, most models show this option to produce the biggest income losses for the UK economy and it
therefore represents a high risk option.15 It is highly unlikely that all or any of these models will be
acceptable from a political viewpoint. Introducing unprecedented levels of competition in manufacturing
and other industries by opening up to China, India, etc. is a politically sensitive topic and would not be
popular with working class populations. Furthermore, given that antiimmigration sentiments are helping to
drive a Brexit sentiment, the government would probably not introduce a more liberal policy on
immigration. Also, if the UK decides to sign up to the Single Market it will need to agree to the free
movement of people.16 Currently the UK has opt-out agreements on Schengen in place so this would most
likely cause an increase in immigration to the UK, neutralising one of the main pro-Leave arguments. To
compare, in 2013 Norway was the destination of over twice as many EU migrants per head than the UK. 17
Also, Britain is likely to keep many EU rules in place, for example on climate change and banking regulation
where it has gone further in some areas than the EU standard.

Better and faster trade deals outside the EU?

The EFTA (of which Norway is a member) currently has 25 free trade agreements covering 35 countries.
These include Canada and Singapore where both FTAs were concluded ten years ahead of the EU. The EU
also currently does not have plans to negotiate with China. However, the quality of these deals should be
questioned. To give an example, the Switzerland-China free trade agreement opens up the entire Swiss
market to China immediately while maintaining tariffs on exports of Swiss watches to China in perpetuity.
Were it to negotiate from outside the EU, the UK, a medium-sized country, would have to strike less
favourable trade deals than it would do as part of a 500 million-strong market. Furthermore, no matter
58 | P a g e
how attractive alternatives to trade with the EU might appear, the fact is that, as the Centre for European
reform argues, “Europe has become a regional trading hub. Over three-fifths of EU Member States’ trade
in goods is conducted among themselves. IntraEU trade expanded less rapidly than extra-EU trade over the
last decade, but it still managed growth of 5.4 per cent a year, suggesting that European regional trade
integration is far from exhausted.

Effect on UK citizens living in the EU

Another measure of EU-UK interdependency is the 1.4 to 1.8 million UK nationals that live in the EU on a
permanent basis who would be most affected by a Brexit. In the case of Brexit, a lot of pensioners would
move back to the UK to use NHS services, further burdening a system already working at or over its
capacity. The current scheme whereby individuals receiving UK state pensions are entitled to healthcare in
the other Member States, which is then reimbursed by the UK, would stop. In addition to losing the right to
live, work and own property in the other Member States, UK citizens would also lose the ability to vote in
local elections in their EU country of residence, the mutual recognition of child custody decisions, the right
to use public services in other EU countries and the use of the European Small Claims procedure to reclaim
up to 2.000 euros from individuals in other EU countries.

59 | P a g e