What now after Brexit?

Brexit

Britons voted in a referendum on Thursday to leave the European Union. Following are answers to key questions on what will happen next in Britain’s relations with the bloc.

The EU is in shock and entering uncharted territory. No member state has ever left and Article 50 of the EU treaty, which sets out how a state can exit the bloc, offers little detail.

Although it provides a sketchy legal framework for a two-year period of withdrawal, many believe it will take longer to establish a new trading relationship between Britain and the EU and some fear the process will become bitter, disrupting the economy and European affairs across the board.

Cameron has said he will resign by October and leave it to his successor as leader of the Conservative party to notify the Union that Britain is leaving by invoking Article 50. That will set that two-year clock ticking and the EU itself cannot, officials believe, trigger the process itself.

Some in the EU want the process to start more quickly, even as soon as Cameron briefs EU leaders at a summit on Tuesday, and are concerned about suggestions from Brexit campaigners that they might prefer to open new negotiations before triggering Article 50. Cameron’s potential successor Boris Johnson said he saw no reason to start the process and that nothing need change in the short
term.

A deal Cameron struck with EU leaders in February to curb immigration, protect London finance interests from the euro zone and opt out of “ever closer union” has been killed by the referendum result and EU leaders have ruled out new talks on a different form of British EU membership – “Leave means leave”.

Many want a quick, two-year divorce while negotiating terms for a future, arms-length relationship may take much longer. However, Germany in particular is keen to see as orderly a transition as possible to a new relationship. That might involve Article 50 negotiations, which the treaty says should “take account” of the new EU-UK relationship, being extended beyond two years to allow time for a broader deal.

Such an extension requires the consent of all 28 member states, and reaching that unanimity could be problematic. Nonetheless, EU lawyers and politicians are renowned for their ingenuity. One EU official said that a divorce treaty requiring only a majority vote might be agreed within two years but to take effect only once a second treaty establishing a new relationship was finally concluded.

There are a number of options open to Britain, including to maintain its access to EU markets in the manner of Switzerland and Norway — although EU leaders have said the price for that could be allowing free EU migration and accepting other EU rules that British voters have just rejected in the referendum.

If no treaty is agreed, EU law simply ceases to apply to Britain two years after it gives formal notice it is leaving.

Until a departure treaty is signed – which requires assent from Britain and a majority of the remaining 27 states weighted by population – Britain remains, in principle, a full member of the EU but will be excluded from discussions affecting its exit terms. In practice, many expect British ministers and lawmakers to be rapidly frozen out of much of the Union’s affairs.

Some Brexit campaigners have also said Britain should act more quickly, for example to stop funding the EU budget or curb immigration from EU states. That could provoke EU reprisals.

“The Article 50 process is a divorce: who gets the house, who gets the kids, who gets the bank accounts,” a senior EU official said, referring to priorities such as settling the EU budget and the status of Britons living in other EU states and of EU citizens in Britain – several million people in total.

Failing to stick to Article 50 would be “messy divorce territory”, the official told Reuters: “It is spouses, instead of working through lawyers, throwing dishes at each other.”

An array of laws and EU entitlements will cease to apply to British business and citizens, creating what Brexit campaigners say will be opportunities for more growth and more selective immigration but which Cameron has said will do long-term damage to the economy and Britain’s global influence.

New trade barriers would hurt both sides’ economies. But many EU leaders fear that a political “domino effect” of other countries voting to quit the bloc would cost more long-term.

The Union needs quickly to fill a 7-billion-euro hole in its 145-billion-euro annual budget, which is currently fixed out to 2020, as it loses Britain’s contributions while saving on what Britons receive from EU accounts.

The EU will also want to clarify as quickly as possible the status of firms and individuals currently using their EU rights to trade, work and live on either side of a new UK-EU frontier.

Britain is expected to give up its six-month presidency of EU ministerial councils, due to start in July next year. Its place may be filled by Estonia or, possibly, Malta or Croatia.

EU leaders may push for a quick show of unity on holding the bloc together in the face of eurosceptics inspired by the result in Britain — including National Front leader Marine Le Pen, who leads polls for next April’s French presidential election. But there is little prospect of major new projects.

Divisions between Berlin and Paris on managing the euro zone probably rule out a big move on that front before both hold elections in 2017. A major EU security and foreign policy review is already on the summit agenda as is a new push to tighten control on irregular immigration from Africa.

Many leaders caution against alienating voters by moving too fast on integration, which they say has alienated voters. Summit chair Tusk wants to launch a formal process of reflection on where the Union has failed to connect with people.