Understanding “Brexit” in a nut-shell | srei

Understanding “Brexit” in a nut-shell

What is happening?
A referendum was held on Thursday, 23 June, 2016 to decide whether Britain should leave or remain in the European Union. A referendum is basically a vote in which everyone (or nearly everyone) of voting age can take part, normally giving a "Yes" or "No" answer to a question. Whichever side gets more than half of all votes cast is considered to have won.

Why is a referendum being held?
Prime Minister David Cameron promised to hold one if he won the 2015 general election, in response to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum. The EU has changed a lot since then, gaining more control over our daily lives, they argued. Mr. Cameron said: "It is time for the British people to have their say. It is time to settle this European question in British politics."

What is the European Union?
The European Union - often known as the EU - is an economic and political partnership involving 28 European countries. It began after World War Two to foster economic co-operation, with the idea that countries which trade together are more likely to avoid going to war with each other. It has since grown to become a "single market" allowing goods and people to move around, basically as if the member states were one country. It has its own currency, the euro, which is used by 19 of the member countries, its own parliament and it now sets rules in a wide range of areas - including on the environment, transport, consumer rights and even things like mobile phone charges

What will the referendum question be?
"Should the United Kingdom remain a member of the European Union or leave the European Union?"

What does Brexit mean?
It is a word that has become used as a shorthand way of saying the UK leaving the EU - merging the words Britain and exit to get Brexit, in a same way as a Greek exit from the EU was dubbed Grexit in the past.

Who will be able to vote?
British, Irish and Commonwealth citizens over 18 who are resident in the UK, along with UK nationals living abroad who have been on the electoral register in the UK in the past 15 years. Members of the House of Lords and Commonwealth citizens in Gibraltar will also be eligible, unlike in a general election. Citizens from EU countries - apart from Ireland, Malta and Cyprus - will not get a vote.

Didn't David Cameron try and change the rules of the UK's EU membership?
Yes. This was the big news back in January and February as David Cameron sought an agreement with other European Union leaders to change the terms of Britain's membership. He says the deal, which will take effect immediately if the UK votes to remain in the EU, gives Britain "special" status within the 28 nation club, and will help sort out some of the things British people say they don't like about the EU, such as high levels of immigration and giving up the ability to run our own affairs.

Critics say his deal will make little difference and falls well short of what he had promised when he announced his plan for a referendum.
 
The main points of the deal are:

  • Child benefit - Migrant workers will still be able to send child benefit payments back to their home country - Mr. Cameron had wanted to end this practice - but the payments will be set at a level reflecting the cost of living in their home country rather than the full UK rate
  • Migrant welfare payments - Mr. Cameron says cutting the amount of benefits low paid workers from other EU nations can claim when they take a job in the UK will remove one of the reasons people come to Britain in such large numbers (critics say it will make little difference). He did not get the blanket ban he wanted. New arrivals will not be able to claim tax credits and other welfare payments straight away - but will gradually gain the right to more benefits the longer they stay, at a rate yet to be decided.
  • Keeping the pound - Mr. Cameron has said Britain will never join the euro. He secured assurances that the Eurozone countries will not discriminate against Britain for having a different currency. Any British money spent on bailing out Eurozone nations that get into trouble will also be reimbursed.
  • Protection for the City of London - Safeguards for Britain's large financial services industry to prevent Eurozone regulations being imposed on it
  • Running its own affairs - For the first time, there will be a clear commitment that Britain is not part of a move towards "ever closer union" with other EU member states - one of the core principles of the EU. This will be incorporated in an EU treaty change. Mr. Cameron also secured a "red card" system for national parliaments making it easier for governments to band together to block unwanted legislation. If 55% of national EU parliaments object to a piece of EU legislation it will be rethought. Critics say it is not clear if this would ever be used in practice.

What about businesses?
Big business - with a few exceptions - tends to be in favor of Britain staying in the EU because it makes it easier for them to move money, people and products around the world. Many small and medium-sized firms would welcome a cut in red tape and what they see as petty regulations. The British Chambers of Commerce says 55% of members back staying in a reformed EU.

If the UK left the EU would UK citizens need special permits to work in the EU?
Lots of people asked about this. A lot would depend on the kind of deal the UK agreed with the EU after exit. If it remained within the single market, it would almost certainly retain free movement rights allowing UK citizens to work in the EU and vice versa. If the government opted to impose work permit restrictions, as UKIP wants, then other countries could reciprocate, meaning Britons would have to apply for visas to work.

What about EU nationals who want to work in the UK?
As explained in the answer above, it would depend on whether the UK government decided to introduce a work permit system of the kind that currently applies to non-EU citizens, limiting entry to skilled workers in professions where there are shortages.

If UK stays in, will UK keep the pound forever?
It is up to the UK government to decide whether or not to keep the pound or switch to the euro. The deal David Cameron struck with the EU included recognition that the UK has no plans to switch to the euro currency.

How much does the UK contribute to the EU and how much do they get in return?
UK is one of the 10 member states who pay more into the EU budget than they get out, only France and Germany contribute more. In 2014/15, Poland was the largest beneficiary, followed by Hungary and Greece. The UK also gets an annual rebate that was negotiated by Margaret Thatcher and money back, in the form of regional development grants and payments to farmers, which added up to £4.6bn in 2014/15. According to the latest Treasury figures, the UK's net contribution for 2014/15 was £8.8bn - nearly double what it was in 2009/10. The National Audit Office, using a different formula which takes into account EU money paid directly to private sector companies and universities to fund research, and measured over the EU's financial year, shows the UK's net contribution for 2014 was £5.7bn.
 
How long will it take for Britain to leave the EU?
This was a question asked by many people. The minimum period after a vote to leave would be two years. During that time Britain would continue to abide by EU treaties and laws, but not take part in any decision-making, as it negotiated a withdrawal agreement and the terms of its relationship with the now 27 nation bloc. In practice it may take longer than two years, depending on how the negotiations go.

What is the single market?
The single market is seen by its advocates as the EU's biggest achievement and one of the main reasons it was set up in the first place. Britain was a member of a free trade area in Europe before it joined what was then known as the common market. In a free trade area countries can trade with each other without paying tariffs - but it is not a single market because the member states do not have to merge their economies together.

The European Union single market, which was completed in 1992, allows the free movement of goods, services, money and people within the European Union, as if it was a single country. It is possible to set up a business or get a job anywhere within the EU. The idea was to boost trade, create jobs and lower prices. But it requires common law-making to ensure products are made to the same technical standards and imposes other rules to ensure a "level playing field". Critics say it generates too many petty regulations and robs members of control over their own affairs. Mass migration from poorer to richer countries has also raised questions about the free movement rule.

If the UK left the EU, would it be able to rejoin in the future?
A few people have asked this question - and the answer is yes. UK would have to start from scratch with no rebate, and enter in to accession talks with the EU. Every member state would have to agree to the UK re-joining. But with elections looming elsewhere in Europe, other leaders might not be generous towards any UK demands. The mechanisms for re-joining the EU are set out in the Lisbon Treaty. According to Article 50: "If a state which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49." And Article 49 states: "The applicant state shall address its application to the Council, which shall act unanimously after consulting the Commission and after receiving the assent of the European Parliament, which shall act by an absolute majority of its component members. The conditions of admission and the adjustments to the Treaties on which the Union is founded, which such admission entails, shall be the subject of an agreement between the member states and the applicant state." New members are required to adopt the euro as their currency, once they meet the relevant criteria, although the UK could try to negotiate an opt-out.

The blog post is authored by Mr. K.R. Muthuraman, Sr. VP – Treasury, Srei Infrastructure Finance Limited.

Shared below is an interesting video explaining ‘Brexit’ and its impact.

Source: https://ged-project.de