Brexit Dilemma

Brexit was one of the main topics that has been discussed in March 2019 as the actual Brexit date was 29th of March. The UK’s agenda was intense by trying to leave EU with a deal that would be beneficial for both sides, especially to the UK. As the deal was not passed from the parliament, Prime Minister Theresa May asked European Committee to extend the Brexit date for at least two weeks which was accepted by the committee, moving the date to 12th of April. Before we go into the detail, we will be looking for answers to the questions of;

What does Brexit mean? Why it is wanted by UK citizens? Why and by whom was it presented in referendum?

Brexit is short for “British exit” and it is used for UK’s decision to leave the European Union (EU). It is beneficial to remind that EU is a political and economic union of 28 countries which trade with each other and allow citizens to move between countries easily (compared with the countries outside the EU) to live and work.

In addition to that; EU laws and regulations give right to the countries to leave the EU whenever they want to (as far as the bill is paid when leaving) according to the article 50.

The UK applied to join to the European Economic Community (EEC) two times in 1963 and 1967 but they were declined.

The UK finally joined the EU, then known as the EEC, in 1973. Though the UK has been in the European Union (EEC earlier) for more than 45 years, there was always a little discomfort from the first days of the union. Britain has been debating the pros and cons of membership in a European community of nations almost from the moment the idea was broached. The first Brexit referendum took place just after two years the UK joined the EEC. What we can easily say is that Brexit has been in UK politicians’ and public’s minds for too long. In 1975, 67% of the voters voted for staying in the EEC, which was still a critical ratio for a new union member country. As there are various advantages to be a member of the EU, there surely are various political, economic and fundamental reasons for public and politicians to yearn to leave the EU such as;

•             Membership fee was one of the main reasons. Brexiteers argued that leaving the EU would result in an immediate cost saving, as the country would no longer contribute to the EU budget. (net contribution was around £8.5 bn in 2016)

•             It was thought that it was an obstacle to the UK’s sovereignty.

•             The refugee (immigration) crises in Europe and terror attacks around the world before and during the referendum affected voters vote.

•             Being obliged to co-operate the union members in most of the cases.

•             Immigration makes job market harder as it brings more competition.

•             It is not convenient to apply monetary policies (QE or QT) for UK without discussing with the EU.

•             The EU is not a free-trade area; it is a customs union. The free trade is only available for/between the member countries.

The UK will be the first country to leave the EU if Brexit happens with or without a deal.

It all restarted in 2015 when David Cameron had made a promise to hold in-or-out-referendum by stating beforehand that he will support to stay inside the bloc. The referendum was a close call and the Leave Campaign won by 51.9% to 48.1%, a gap of 1.3 million votes in 23 June 2016. Even though Cameron was the man who presented the referendum, he always supported the UK to keep on being EU member so he announced his resignation the following day.

After Cameron’s resignation, Theresa May has taken over the place and has been negotiating with the EU for smooth Brexit for more than two years now and agreed on a withdrawal agreement, which was rejected in the parliament for three times. The interesting part of the story is that the parliament rejected “no-deal-Brexit” option too. Not much time for the UK to agree on a deal plan while parliament is stucked as all the proposals and deal drafts have been rejected. There have been various complaints of the deal proposal, many of which claim the deal fails to give back to the UK control of its own affairs from the EU and the vital divergence between the UK and EU is the border discussion between Northern Ireland (Part of the UK) and the Republic of Ireland (Part of the EU), which is the only land border between the UK and EU.

As May could not finalize the withdrawal agreement before 12th April, she went back to the EU to ask for another extension- which EU has agreed to. The new deadline is 31 October 2019. However, the UK can leave before then if the Prime Minister can somehow get her deal approved by Parliament. Theresa May has to convince them to be able to leave the EU with a withdrawal agreement before the new deadline because it will be much harder to extend the deadline for the third time as they look for clarity.

Europe is Britain’s most important export market and its biggest source of foreign investment with the help of UK’s EU membership. Most of the European and international companies have been planning to leave the UK as they will not have the advantage of “being a member of the customs union that includes 27 more countries”. The government expects the country’s economy to grow anywhere from %4 to %9 less than it would inside the bloc over the next 15 years, depending on how it leaves.

It has already started to harm the economy from the first day but keeping the Brexit saga alive will have a continuous negative impact. Therefore, the UK would better to agree on a Brexit deal sooner than later even they just have additional brand six-months’ time for Brexit.