The United Kingdom has finally left the European Union. After being mired in debate since June 2016, Brexit (the “British exit”) occurred on January 31, 2020.
To say that the U.K.’s political establishment did what it could to resist — or at least put off — the results of the 2016 referendum is the understatement of the century. But, after a late 2019 parliamentary election that in effect acted as a second Brexit referendum, lawmakers in Downing Street finally saw the writing on the wall. The country officially terminated its relationship with the EU on January, 31.
This is such an unprecedented political event that it has left many wondering exactly what happens when someone leaves the European Union. For now, the answer seems to be: not much. Here are the details.
Transition Period Set to End on December 31, 2020
Once Brexit occurred, the United Kingdom entered into a transition period. From January 31 2020 to December 31 2020, the UK and the EU will operate as they have always operated. All the prior regulations, laws, and trade agreements will continue. Ideally, this means that the UK and EU will have finished ironing out the details of Brexit by December 31 2020.
This can be seen as just another series of delays upon delays, as the UK still hasn’t “completely” Brexit-ed. But a harsher transition could be seen in the future if the UK and EU can’t come to terms.
The Fear of Divergence
Let’s take a look at what could prevent the UK and the EU to come to terms.
From the UK’s perspective, breaking out of the EU means that the UK could undercut European Union countries on the basis of production and manufacturing. If they are able to strip away some regulations, for instance, they can reduce the cost of their production and companies will move to the UK rather than the EU. Once outside of the EU, the UK has no reason to honor the EU’s agreements.
From the EU’s perspective, the UK needs the EU for a great deal of trade, and the EU can substantially control this trade if the UK decides that it does want to undercut it. The UK is still extremely valuable to the EU, and it operating as a free agent could be damaging to it. But the EU is larger and in many respects has more to offer the UK than vice versa, simply in terms of gross product.
It’s possible the UK and the EU won’t be able to come to terms. If that happens, it will be a “no deal Brexit,” under which trade agreements are not properly formulated. This will be economically difficult for both parties, and could be devastating along the border between Northern Ireland and the Republic of Ireland.
For citizens, one of the major changes will be that travel becomes more complicated. Presently, travel can still occur under the old regulations of the EU. In the future, UK citizens may find it more difficult to freely travel around the countries of the union, and business between the UK and the EU may become complicated.
Scotland Attempts to Break Away from the UK
Not enamored with the actions of the United Kingdom, Scotland has been taking action to gain independence and potentially move back into the EU. The EU has been welcoming to that regard. Polls show that Scotland is split, but that the majority does in fact favor independence. This could be a way for Scotland to avoid any complications that arise with Brexit.
But that doesn’t mean things wouldn’t change things for Scotland. Scotland relies upon the rest of the United Kingdom economically, just as the UK relies upon the EU economically, and there would still be some major disruption should Scotland gain independence. Further, it’s possible that Scotland could gain its independence and still not be accepted into the EU, as there are processes for introduction into the EU.
Citizens Won’t See Many Changes
The bottom line is that the citizenry of the UK aren’t likely to see any changes this early on in the process. Even if this has been in the works since 2016, deals of this sort usually take time. Most trade agreements alone take four to six years to develop, as countries need to consider everything carefully, revise, and collaborate.
What citizens may see is a shifting in business, as businesses may become more leery of making deals across the waters. Economically, there’s a great deal of uncertainty, as no one knows how the trade agreements are going to pan out long-term. Businesses are going to need to plan for the potential that they may either face reduced regulations or increased regulations depending on how the “deal” for Brexit goes.
