On March 29th 2017 Prime Minister Theresa May will activate Article 50, closing the door on the European Union. After 44 years of being a part of the community the UK will be leaving. But what does it all actually mean?
Whilst the Article 50 trigger is being pulled on Wednesday, the official leaving process will take another two years. During this time the British government will talk with European leaders to come to an agreement on Britain’s new position outside of the EU.
Since the referendum, there have been many questions asked about what type of deal the UK will receive when it leaves. At the start of the year the PM announced “no deal is better than a bad deal” showing her hard line approach towards negotiations. But what exactly are the costs and benefits of Brexit?
A large cost will come from the final bill, which is estimated at up to £60bn. This will cover spending commitments, and other liabilities. As a full member state, Britain agreed to the last EU budget and now must fulfil its’ commitment.
Britain may also have to pay towards the Eurocrat pension. This is a scheme for retired EU civil servants who are paid on a yearly basis according to the budget. Whilst Britain may argue leaving will stop their obligations, they may continue to pay for the three thousand former British staff which is on average £79,000 per year.
Leaving the single market
In January, the PM stated that staying in the single market would mean “not leaving the EU at all.” She will push for the freest trade possible with European countries, to keep existing deals and avoid re-negotiations. Being in the single market means UK consumers and companies can buy goods and services from across Europe whilst eliminating extra tariffs.
Part of the agreement with the EU is that within the single market there is free movement of people. When Britain leaves the single market, many workers’ rights could be lost in the transition.
However, the PM has stated she will work on converting current EU laws, including employment rights, to UK law in order to protect workers. But, future governments who disagree with these will be able to abolish these laws through a simple Parliamentary vote.
No more subscription fees
Every year the UK pays the EU £13bn in membership fees. This is a large amount which could now be put back into Britain’s economy to fund other services, including the NHS. However, many reports have suggested that leaving the EU will in fact cost the country much more than this for the foreseeable future.
New trading agreements
Last year two of Britain’s largest import trading partners came from countries outside of the EU. With the UK importing over £36bn in goods from the US and just over £35bn from China these are two countries that deals will not need to be struck with. The UK also exported most of its’ products to the US and China earning businesses around £52bn in 2016
Post-Brexit, these deals will be unchanged and the government plan to make more deals with countries outside of the EU including the US’ neighbour Canada. A lot of large countries will, of course, look to these types of new deals as a platform to negotiate their own after Brexit.
Brexit is a huge step into an unknown economic world, it’s something no other member of the EU has done before. While no one is incredibly sure of the effects of voting to leave, things will hopefully become more clear after the 29th.