U.K. Faces Long Tussle Over Departure From European Union


LONDON—The U.K.’s startling vote to leave the European Union has paved the way for an unprecedented separation, which Britain must now navigate while trying to prevent political and economic turmoil.

The decision, one of the most momentous by a Western country in the past half-century, marks the beginning of the end for the U.K.’s 43-year involvement in European political and economic integration.

The shock result prompted Prime Minister David Cameron, who led the campaign to remain in the EU, to announce Friday morning that he will step down, just a year after his election triumph on a pledge to hold the referendum.

It also swept across global markets, punishing stocks, the British pound and emerging-market currencies. The Stoxx Europe 600 index fell 7%, its steepest drop since 2008, while sterling at one point was down 11% against the dollar.

The vote isn’t legally binding, so Parliament now must pass laws to make Britain’s exit happen.

It unleashes a yearslong, highly bureaucratic tussle over the U.K.’s exit from the bloc. There is no clear road map given that the vote marks the first departure from the modern-day EU.

The foreign ministers of the EU’s six founding member states are gathering in Berlin on Saturday to discuss the result of the vote and its repercussions, following calls from anti-EU leaders across the region for similar votes to steer their countries out of the bloc.

Mr. Cameron is due to have his first post-referendum meeting with other EU leaders next week in Brussels at a European Council gathering scheduled for Tuesday and Wednesday.

Among Britain’s next steps will be determining when to start the process of severing its ties to Europe. Under Article 50 of the EU’s Lisbon Treaty, a member can give notice of its intention to leave, opening a two-year window for negotiating terms of withdrawal, meaning the U.K. technically remains a member until its formal departure. The time period can also be extended.

If the 27 countries and the U.K. fail to reach an agreement on the terms of separation within two years, Britain is automatically kicked out.

The government hasn’t spelled out exactly when it would seek to start the clock ticking. Some senior officials, including Mr. Cameron, have said they would enact Article 50 rapidly, and the presidents of the EU’s institutions urged the government in London to start the divorce proceedings as soon as possible.

However, some supporters of Britain’s exit have said the U.K. wouldn’t need to rush. German Chancellor Angela Merkel has also called for patience on the issue. European countries must “analyze and evaluate the situation calmly and prudently, and jointly make the right decisions on this foundation,” she said Friday.

One of the thorniest tasks will be to hammer out a trade deal between the U.K. and the EU’s remaining 27 members. It isn’t clear what access a post-EU U.K. would have to the bloc’s vast single market for goods and services, or what terms the EU would demand in return.

Pro-Brexit campaigners offered differing views during the campaign over what shape any new deal might take, citing EU arrangements governing trade with Norway, Switzerland and Albania. The terms of access to the EU’s market could be critical for the U.K.’s economic prospects.

Myriad other challenges face negotiators. Opposition to the free movement of EU citizens was one of the driving forces of the pro-Brexit camp. A British exit raises questions about the immigration status of current and future EU workers in Britain, as well as of the more than 1 million Britons living elsewhere in the EU.

On June 23 the U.K. votes on whether to stay in or leave the European Union. It’s difficult to know exactly what will happen if voters choose leave, but that hasn’t stopped both sides of the debate predicting the future. So, here are three things we definitely don’t know about Brexit. Photo: Getty Images.
The vote to leave also raises questions about the future shape of the U.K. itself. The debate underscored a divergence in public opinion between English voters and their often more pro-EU counterparts in Scotland, where nationalists harbor ambitions for a rerun of the independence vote they lost in 2014.

Nationalist leaders in Scotland sent a strong signal before Thursday’s vote that they would push again for secession if Britain chose to leave the EU, and on Friday Scottish First Minister Nicola Sturgeon said the Scottish government would begin preparing legislation to hold a second referendum and that a second vote was now “highly likely.”

The world’s major central banks, including the Federal Reserve, the European Central Bank and the Bank of England, have signaled their readiness to step in and calm any turmoil in financial markets and, if necessary, make cash available in a variety of currencies to any banks that face a funding squeeze.

BOE Gov. Mark Carney has said the central bank will need to judge carefully whether to cut interest rates to support the U.K. economy should growth falter, or to lift borrowing costs to restrain inflation should the pound fall sharply.

Source: wsj

Post a Comment