What Happens Now?
June 24, 2016 by Steve Beckow
European Union and British Union Flag flying in front of Big Ben and the Houses of Parliament Credit: Alamy
What happens now that the UK has voted Brexit – and what is Article 50?
More than three years after David Cameron unveiled his strategy to reform Europe and put it to a referendum, Britain has voted to leave and the Prime Minister has resigned.
It is the greatest disaster to befall the bloc in its 59-year history. The road ahead is unclear. No state has left the European Union before, and the rules for exit – contained in Article 50 of the Treaty of Lisbon – are brief.
Mr Cameron resigned as Prime Minister shortly after 8am, announcing that he thinks Britain should have a new Prime Minister in place by the start of the Conservative conference in October. He will leave the task of triggering Article 50 to his successor.
The EU’s leadership has demanded Britain activate Article 50 exit talks “as soon as possible” as they attempt to end the uncertainty over the bloc, “however painful that process may be”.
President Tusk, President Schulz and Prime Minister Rutte met this morning in Brussels upon the invitation of European Commission President Juncker.
“Any delay would unnecessarily prolong uncertainty. We have rules to deal with this in an orderly way. Article 50 of the Treaty on European Union sets out the procedure to be followed if a Member State decides to leave the European Union,” the official statement said. “We stand ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union.”
Mario Draghi, the president of the European Central Bank, has said it is ready to intervene to steady the markets. Central bankers from Japan to Switzerland have also offered to step in to provide additional liquidity – a measure not seen since the financial crisis.
On Saturday, the foreign ministers of the founding six member states – France, Germany, the Netherlands, Luxembourg, Italy and Belgium – will meet to discuss the implications of the British vote.
David Cameron will next see his counterparts at a European Council summit on Tuesday and Wednesday next week.
The deal, struck after months of negotiation last summer, has evaporated under a ‘self-destruct’ clause.
He will be under intense pressure to activate Article 50 and commence exit negotiations. Leaders do not want to be drawn into months and years of haggling over Britain’s status: “Out is out,” Jean-Claude Juncker said on Wednesday.
By contrast, the official Out campaign has said there is no need to trigger Article 50 until informal negotiations have taken place – potentially lasting years.
Also on the agenda is a discussion of the migration crisis, including tentative proposals for “compacts” to speedily deport migrants back to Africa and the current deployment of naval craft off Libya to intercept smugglers. Britain has a major role in this – a British warship is deployed in the EU’s naval operation and a second has been promised – but the crisis takes a back seat.
Article 50 – and a new deal
Triggering Article 50, formally notifying the intension to withdraw, starts a two-year clock running. After that, the Treaties that govern membership no longer apply to Britain. The terms of exit will be negotiated between Britain’s 27 counterparts, and each will have a veto over the conditions.
It will also be subject to ratification in national parliaments, meaning, for example, that Belgian MPs could stymie the entire process.
Two vast negotiating teams will be created, far larger than those seen in the British renegotiation. The EU side is likely to be headed by one of the current Commissioners.
Untying Britain from the old membership is the easy bit. Harder would be agreeing a new trading relationship, establishing what tariffs and other barriers to entry are permitted, and agreeing on obligations such as free movement. Such a process, EU leaders claim, could take another five years.
Business leaders want the easiest terms possible, to prevent economic harm. But political leaders say the conditions will be brutal to discourage other states from following suit.
The Department for Brexit
One option will be to simply recreate EU laws as British statute. But Civil Service insiders expect a new Brexit government to opt for something much more radical, and to use the opportunity of “throwing off the shackles” to re-regulate Britain.
It means that the Government would have to do three acts simultaneous: negotiate a new deal with Brussels, win a series of major bilateral trade deals around the world, and revise its own governance as EU law recedes.
Running the show would be an effective “Ministry for Brexit”, under a senior minister.
Officials expect the scrapping of EU law could result in an avalanche of new legislation in every corner of Whitehall – perhaps 25 Bills in every Queen’s Speech for a decade.
Hundreds of Treasury lawyers and experts would have to be hired for areas – such as health and safety, financial services and employment – where Britain had lost competence to Brussels. Meanwhile, a Trade Ministry will be required, with hundreds of new negotiators, to establish new deals around the world.
The focus in Brussels now turns to holding the project together.
Proposals for closer defence integration, prepared by Federica Mogherini, the EU’s High Representative for Foreign Affairs, were due to be sent to national governments today. That is likely to be put on hold. But building up the EU’s defence co-operation is regarded by France and Germany as an obvious way of rebooting the project.
Jean-Claude Juncker has called for tighter integration in the event of a Brexit, and has laid out plans for integration of the Eurozone, including a treasury, in order to prevent a recurrence of the Greek crisis. Hitherto, member states have not been ready for that conversation – but the crisis of Brexit is likely to push it up the agenda.
At the same time, leaders fear that Brexit could trigger a domino effect as the bloc without Britain becomes less attractive to liberal, rich northern states such as Denmark and the Netherlands, where demands are growing for copy-cat plebiscites.
The Dutch elections are held in March next year, the French in April and May and Germany in the Autumn. If an independent Britain proves to be a success, the bloc could quickly unravel.
On March 25, 2017, European leaders will mark the sixtieth anniversary of the signing of the Treaty of Rome, the EU’s founding document. It will be a fraught celebration.