Countdown to Brexit:
How did we get here?
The UK voted to leave the European Union on June 23rd 2016 by a majority of 51.9 to 48.1 per cent, with a turnout of just under 72 per cent. This set the UK on course to leave the EU, but left all the details of its exit still to be decided. The timetable was set the following March 29th, when British prime minister Theresa May took the formal step, required under EU law to start the exit process, of triggering Article 50 of the Lisbon Treaty. Under the two-year process the UK was due to leave the EU on March 29th, 2019 but that date was postponed after a meeting of the European Council until October 31st, 2019. However, the UK can leave earlier if it ratifies the Brexit withdrawal agreement before that (see Key Dates, below).
The talks between the UK and EU started in June 2017 and focused on the details of the UK’s withdrawal, which must be set down in a formal, legal agreement. Outline agreement was reached on what the UK will pay the EU after departure – the so-called exit bill or divorce bill – and on the mutual recognition of the rights of UK citizens in the EU and EU citizens in the UK.
In November 2018, agreement was also reached on a backstop for the Irish border, a way to provide a guarantee that there be no hard border on the island of Ireland no matter what future trade arrangements are agreed between the EU and UK. This cleared the way for a draft withdrawal agreement and final talks on a political declaration outlining the principles for future negotiations. This draft needs to be ratified politically by both sides. The process was subsequently thrown into crisis after Theresa May failed on a number of occasions to secure support from the House of Commons for her deal.
If the withdrawal agreement is passed, a so-called transition period, a kind of standstill in current arrangements, would apply from the leaving date until December 2020, or 2022 if it is extended. This is to allow future trade arrangements and the wider ongoing relationship between the EU and UK to be negotiated. (Read a full explainer on the transition period here) . The withdrawal agreement also contains a provision known as the backstop, but more on that later.
Boris Johnson succeeded May as Conservative leader and British prime minister in July 2019 after she failed to break the deadlock over Brexit and her withdrawal agreement with the EU was rejected three times in parliament. Johnson’s election threw the manner of the UK’s exit by the next deadline of October 31st in doubt given that during his campaign to become leader he described the withdrawal agreement as a “dead letter” and demanded that the backstop be removed from the withdrawal agreement. Brussels and Dublin have insisted the withdrawal agreement would not be renegotiated and the backstop would not be removed from the agreement.
In his first speech as British prime minister Johnson described the backstop as “anti-democratic” and said that he was convinced he could do a deal with the EU without having to have checks at the Border.
The key changes
For a country to leave the EU is unprecedented ‑ and the extent of the complications has slowly become evident in the last couple of years. EU membership is a central part of the economy and society of all its members and unscrambling this is very complex, before account is even taken of sketching out how the two sides will relate to each other in future.
Much of the discussion has been about the UK’s membership of the EU trading bloc. There are two elements to this. First, the UK is part of the EU customs union. This is a free trade area under which allows goods to circulate freely through the EU. Part of this is a commitment by all members to impose the same import tariffs – or taxes – on goods entering from outside the EU.
The UK is also part of the EU single market, the system of rules and regulations which allow free movement of goods, services, people and capital. Together, membership of the customs union and single market allows goods to move freely across the EU and also for free trade in services like banking. Common EU regulations also underpin trade in a host of different areas, for example pharmaceuticals and food.
The single market also allows free movement of people across the EU. The UK is also involved in common international policies co-ordinated at EU level, notably in foreign policy and defence and in trade deals with other countries.
Brexit talks between the UK and the EU have been taking place in a sequenced order, which has led to no little confusion in the debate.
What has been agreed, but not approved by parliaments, are the draft terms on which the UK leaves, contained in the withdrawal agreement. A political declaration on what the future relationship might look like has also been finalised. However, details of the future relationship between the EU and UK will be decided in talks after the UK actually leaves ‑ assuming the two sides are still talking and assuming it actually leaves.
In the short term the conclusion of the withdrawal agreement would mean that once the UK leaves a transition period, a kind of standstill, would commence and last until the end of 2020. The withdrawal agreement also suggests that this transition period could be extended until 2022. If the agreement is ratified and the transition period kicks in, not much will change on day of Brexit, except for the UK’s formal departure. However, if the withdrawal agreement is not finalised then there is a risk of a no-deal departure on October 31st, unless a further postponement is agreed.
What’s a no-deal scenario?
If there is no withdrawal agreement, then the UK would leave the EU in a so-called “no-deal” Brexit on October 31st, 2019, which could be chaotic as barriers to trade would go up overnight and there would be uncertainties in areas ranging from aviation to pharmaceuticals to co-operation in nuclear regulation. There was some speculation that the EU and UK would work together to try to avoid the worst of the chaos but as a no-deal Brexit has become more and more likely preparations have intensified in both Dublin and Brussels on how the border between the Republic and Northern Ireland, and other arrangements, would be managed.
If a withdrawal agreement is finalised, then talks move on to how the two sides will relate in future in areas such as foreign policy, defence and security and, crucially for Ireland, trade. (Follow this link for an in-depth explainer on what a no-deal Brexit would mean for Ireland)
Norway & Canada?
If the UK and the EU enter talks on their future relationship after Brexit then a number of options are on the table. In terms of trade, the UK could have a close relationship with the EU – like Norway, which follows many EU rules and regulations and is in the single market – or have a free trade deal with the EU, like Canada. (Read our explainer on the Norway option)
The crunch point is that the EU insists that the UK must either be fully in the EU trading bloc and accept all the rules, or be out of it, and have a relationship similar to the EU and Canada. For the UK, the more closely aligned it remains with the EU, the less freedom it will have to set its own economic course after Brexit.
What's the Backstop?
The UK’s departure from the EU means Northern Ireland is leaving the bloc too so checks would be required along the 499-kilometre Irish Border as different trade rules would apply north and south after Brexit. The Border in Ireland will become the only land border between the UK and the EU after Brexit.
The 1998 Belfast Agreement laid the foundation for Northern Ireland’s peace process with many all-island rules and institutions. Neither side wants the return of border checks because of the risk to peace whereby a physical border infrastructure would be considered a potential target for paramilitaries.
The Backstop is an insurance policy that the EU and UK have agreed to include in the withdrawal agreement to avoid this happening. Both sides see it as a last resort to be triggered in the event of no better solution being found to avoid a hard border in a EU-UK trade deal. But there is a sequencing problem: a withdrawal treaty must be agreed before a trade deal, hence the need for the backstop first. (Follow this link for an in-depth explainer on the Border and the backstop, or this link for an explainer on how the backstop became centre stage again after the election of Boris Johnson as Conservative party leader and British prime minister)
The economic impact
The economic impact of Brexit is negative, for both the UK, Ireland and the rest of the EU. The biggest impact will be in the UK itself and in Ireland, its closest trading partner. For the UK, any trade arrangement reached after Brexit – barring full membership of the EU trading bloc, which the UK has ruled out – will be less favourable than current arrangements. Economists say that any new trade opportunities elsewhere will not make up for losses in trade with the EU. Weaker sterling since Brexit has already cut the purchasing power of UK consumers and uncertainty has hit investment, with growth estimated to be 1 to 2 per cent per annum lower over the couple of years.
For Ireland, growth remains strong and the main short-term impact has been via a weaker sterling exchange rate, which is good if you’re going to the UK to buy a second-hand car but bad if you’re an exporter to the UK market.
The main threat to Brexit comes from barriers to exports to the UK and also delays and higher prices for importers of UK goods to Ireland. Forecasters have estimated that in a harder version of Brexit, where the UK leaves the EU trading bloc, the Irish economy could be 4 to 7 per cent lower in a decade’s time, with most of the hit in the first five years. A no-deal Brexit means the economic effect would be more severe and happen more quickly
ugust 25th-27th, 2019: G7 summit of world leaders in Biarritz, France.
September 22nd-25th, 2019: Britain's Labour Party holds its annual conference in Brighton
September 29th-October 2nd, 2019: Conservative Party holds its annual conference in Manchester
October 8th, 2019: The last practical polling date on which a British prime minister could hold a general election or second referendum before the next Brexit deadline.
October 17th-18th, 2019: EU leaders meet for the final European Council summit before the UK’s extension is due to expire.
October 31st, 2019: The six-month extension to the “Article 50” process expires. If no other agreement is reached, the UK will leave on this date in a scenario known as a no-deal Brexit.
July 1st, 2020: Under the draft Brexit agreement, the UK and EU can, before this date, request an extension to the transition period "of up to one or two years to the transition period".
December 31st, 2020: If the EU and UK have agreed a Brexit treaty and agree a future trading relationship, this is the earliest date by which the transition period will end.
December 31st, 2022: the date the EU’s chief negotiator Michel Barnier has proposed extending the Brexit transition to in order to allow the EU and UK negotiate a trading deal. Under the withdrawal agreement this is the latest date on which the transition period can end. If it were extended until 2022 it would mean that the UK would stay within the single market and customs union for six and a half years after the Brexit vote.