Why is Britain Leaving the European Union?
On June 23rd, 2016, a referendum – a vote in which anyone of voting age can take part, was held to decide whether the United Kingdom should leave or stay in the European Union. A decision to leave was won by 52% to 48%. More than 30 million people voted.
Since the Referendum
Britain has a new Prime Minister, Therese May, she was also the former Home Secretary. She replaced David Cameron as Prime Minister who resigned in the aftermath of the referendum. Initially, Theresa May was against Britain leaving the European Union b
ut she has clearly expressed that she will always respect the will of the people. Negotiations on migration, movement of goods and workers between its members will commence after notice under Article 50, which will be served by the end of March.
The United Kingdom economy went into an initial shock after the referendum, first notable by the value of the pound depreciating to a 30-year low. The Bank of England Monetary Policy Committee (MPC) lowered the interest rate to from 0.50 percent to 0.25 percent, establishing a record low. One major effect of the interest rate cut is that it exacerbates the growing pension funds’ deficit because of falling bond yields. As yields fall it reduces the incomes pension funds get from the investments. The Bank of England announced a huge extension of its quantitative easing program by an additional 70 billion pounds. Figures show that the United Kingdom’s current account deficit widened towards record levels, with few signs that the fall of the pound in the wake of the referendum has helped to boost exports. Government finance were forecasted to be 122 billion pounds short in the period until 2021.
Britain’s Actual Leave
For the United Kingdom to leave the European Union it must invoke an agreement called Article 50 of the Lisbon Treaty. This agreement sets out the process by which the member states may withdraw from the European Union. There is a two-year time limit to complete the negotiations. Theresa May has indicated interest in triggering Article 50 by the end of March, 2017, thus giving the expectation of the United Kingdom to leave the European Union by 2019 a near sure one. Also, the government will enact a ‘Great Repeal Bill’ which will end the primacy of the EU law in the UK. Speculation is strongly divided over the long-term effects of leaving the European Union.