econ single market chapter 8

brexit referendum took place in 23rd of june 2016

cameron was the prime minister of the conservative party

• holding a referendum for brexit was one of his election promises

• he was not really in favour of brexit, but most people were

  • rise of UKIP party

  • from his party there were supporters of brexit as well

  • pressure to organize a referendum

why did so many british citizens want to leave the eu (7 factors)

1. cool lovers of the european idea—-love and hate relationship

2. island perspective—-commonwealth

3. a hostile british media against the eu

4. uk injects large amounts of money to the eu

5. brexit was a cry for help for poor people

6. eu enlargement in 2004 with central and eastern european expansion

7. the influx of refugees from the middle east

1. love and hate relationship with the eu

• 1952 when france and germany decided to form ecsc, after they asked the eu but eu did not want to join, they were angry because they settled this behind their back

• 1960s UK wanted to join the eu but this time de Gaulle was in France and he was scared of uk power

• 1973— new government in France and British wanted in anyways, but a narrow majority was established in the uk, but still in

• 1974—new government in UK, referendum, people wanted to stay in 2/3

• british membership was controversial even from the beginning

2. the island feeling and nostalgia for the great british empire

3. hostile british media against the eu

strong anti-europe feeling on media

4. large amounts of money that uk injected to europe also played a role

5. cry-for-help by poor group of people in the uk

• large group of poor population

• big inequality between the rich and the poor

• north-england is post-industrialized wasteland of the UK

  • deindustrialization and this region is extremely poor

6. the eu enlargement in 2004 with the expansion of central and eastern european countries

uk did not impose restrictions when those countries first joined

• because they needed high-skilled people in the uk, and they thought with highly skilled people from those countries they would thrive

• but that was not the case. mostly low-skilled people arrived

  • many poles and lithuanians

  • they steal our jobs mentality

  • pressure on housing market, rising rental prices,

7. the large influx of migrants from the middle east

• they had the perception of “everyone wants to come to the uk”

• which was not the case

the direct consequences of the referendum

• cameron resigned

• may took over

• problem: there was no script of what had to be done to exit because cameron did not expect that coming

Lisbon Treaty: if a country wishes to withdraw from europe

• the country must formally inform the eu

• european council draws the directives

• european commission starts the negotiations with the country

• negotiations may last up to 2 years

• then the country exits whether there is an agreement or not

hard brexit

• uk leaves the eu with zero or little deals

• no longer a part of the single market

• trade under WTO

soft Brexit

• partly freedom on goods, services, capital and people

there were many points to discuss about brexit

• hard or soft brexit

• would there be a border between northern ireland and ireland

• free movement of people??

• brexiteers never knew what it actually meant to leave the eu

• leaving the eu was not super easy in seconds

• doubts about the decision on the referendum

• also the campaing runner of in favour of brexit spent more money than what was allowed

the final outcome

• after some delay brexit happened on the 31st of january 2020

• may resigned—- boris johnson

• soft brexit

how much of each of the freedoms remained or disappeared? FREEDOM OF GOODS

freedom of goods:

• now governed by Trade and Cooperation Agreement

  • tariff free trade in goods but with new rules and new non-tariff barriers

freedom of services

freedom of services

• before country of origin system: uk could offer its services without having to comply with nations’ specific regulations

• now uk has to follow each country’s specific regulations in terms of services

freedom of capital

• largly intact

• under Trade and Cooperation Agreement

  • ensures the capital can still flow relatively freely

  • new regulatory rules for businesses and individuals

  • UK financial servies now also have to establish EU subsidiaries to continue operating in the EU market

freedom of people

ended with brexit

visa requirement

apart from soft Brexit, additional agreements

• uk, norway, eu deal on fishing quotas for the north sea

• windsor: northern ireland and ireland border problem

the situation of the border between northern ireland and ireland before the referendum

• northern ireland belongs to the uk

• some citizens of the northern ireland want to be re-united with ireland

• some no, still uk

belfast agreement 1998

• majority of the people wanted to stay in the uk

• but a substantial amount of epople wanted ireland

• in case people change their mind, they will talk later uk and ireland

• but for now northern ireland belongs to the uk

• open border

what could have become a problem after Brexit

• uk would no longer be a part of the eu

• northern ireland and ireland border would become an external border

  • 1. there could be tension in the border if they closed it

    1. EU wanted to avoid a leak in its borders

       1. smuggle of goods from the uk

       2. goods without eu standards would access the eu

backstop deal

• to ensure that there would be no clear border between ireland and northern ireland

• but without creating a leak in the eu

• during the negotiations, they wanted to make sure there was a deal about this.

How would the border remain open under this Backstop deal?:

• uk would remain in a customs union with the eu

• there would be free movement of goods

• northern ireland would have to continue to follow eu standards so no border check at ireland and northern ireland can be ensured

• but a border between northern ireland and uk would be established

• uk wanted an end date to this

• eu did not : housing fire insurance would you put an end date etc

windsor framework

after brexit in 2023

• to deal with the situation of northern ireland

• uk left with a brexit agreement

• two systems for goods going from the UK to northern Ireland

  • green route: without customs for destined for northern Ireland

  • red route: with customs control for goods meant to go to ireland

  • so the border between the eu and the UK was on the sea

  • (the free ‘movement of goods’ would officially remain between Northern Ireland and Ireland, not between Northern Ireland and the rest of UK). → But this time they came up with a solution on how to do this.

  • BUT no referring to free movement of people

brexit agreement

• free movement of goods would still remain between northern ireland and ireland after brexit

• but not northern ireland and the rest of the uk

• however, they did not come up with a solution on how this border between the eu and the uk would be created

free movement of people

under CTA Common Travel Area: Northern Ireland and Ireland can move freely

• eu citizen needs visa for the uk

• but can go to Ireland and then northern Ireland under cta

Is the EU more important for the UK or vice versa?

• eu is more important for the uk: 50% of imports and exports of uk is with eu-27 countries

• uk is less important for the eu: only 7-8% percent. for ireland it is important

what agreements have been signed after Brexit

• trade and cooperation agreement

  • under WTO rules

  • rules are stricter

  • tariff-free but strict regulatory issues

  • especially about food quality standard etc

• fishing quota

• windsor

when looking at 1 case, ‘trade’, a few years after Brexit, it is already clear:

▪ That the Brexit is putting downward pressure on the trade with the UK.

▪ that the value chains seem to be shifting.

▪ that the EU suppliers are being replaced by others.