To Brexit or not to Brexit, that is the question
[To Brexit or not to Brexit, that is the question.pdf]To Brexit or not to Brexit, that is the question
The referendum vote in the UK as whether Britain should exit the EU is to be held on
23 June. Interestingly, the referendum is only advisory, not compulsory however, UK
politicians are likely to abide by the will of the people and, if the vote is to leave,
eventually pass laws to exit. This would not actually take place until at least 2020,
giving Britain plenty of time to negotiate and clear up some of the most important
uncertainties about the wider impact.
To date, Britain has already successfully renegotiated four key areas with its EU
- Sovereignty: UK is not a part of an “even closer Union”
- Economic Governance: provided protection
- Competitiveness: cut EU red tape
- Social Welfare: UK can cut benefits to EU migrants.
The Cameron Government having agreed to the above reforms believes that EU
membership is overwhelmingly in the national interest.
Brexit - leaving
The argument centres on claims the reforms haven’t gone far enough and Britain risks:
- Low growth in EU is depressing economic activity in the UK
- Size and structure of EU makes reform difficult to adopt and implement
- Growth of the EU population will swamp Britain and will place unsustainable pressure on services (NHS, education and housing and other public services).
Arguments to remain in the EU come as Treasury predicts that household income will
fall and unemployment will rise around 2% at least in the short term. The EU is the
UK’s largest trading partner giving UK preferential access to the EU and other major
trading partners. UK would have to renegotiate new trade terms which may not be
favourable if it leaves.
The path for the UK to leave, should the vote be to exit, will take time and the UK will
be allowed a two year negotiation period from when laws are passed to exit. The UK
will be able participate in trade with the EU during the two year window and must pay
costs incurred with the exit. There is also a possibility that Scotland could again push
for another independence referendum, if the vote is to exit.
The Bank of England has already drawn up contingency plans to provide unlimited
liquidity to the banks using long term repos.[FIW_160617.pdf]
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