Client Alerts

Keoghs Insight

Author

Samantha Ramen

Samantha Ramen

Partner

T:07713 393534

BREXIT – a summary of processes and options

Client Alerts28/06/2016

Much has happened since the EU referendum result broke last Friday. The Prime Minister resigned, half of the shadow cabinet have walked out, and EU leaders are putting ever more pressure on the UK to invoke Article 50.

So what happens next?

Electing a new Conservative leader

The first thing that the Government needs to do is start the process of electing their next leader. This procedure is as follows:

  1. Nominations will open on Wednesday evening and close at midday this Thursday (30th June). MPs require the nominations of only two of their colleagues to stand.

  2. MP ballots will then be held every Tuesday and Thursday following until only two candidates are left. This means the first MP ballot will be on 5 July, then on 7 July, and then on 12 July and 14 July, if necessary. In each ballot the candidate finishing last is eliminated, though others may drop out. This continues until two candidates are left.

  3. These two candidates will then go forward to a membership vote, which is likely to be held throughout August, and possibly starting towards the end of July.

  4. The new leader, and therefore Prime Minister, will be announced on 2 September, just ahead of the September parliamentary session, and party conferences.  


Keoghs viewpoint:

The quick timetable may favour candidates who already have an established base of support and will likely restrict the opportunities for surprise candidates to emerge.


The Article 50 trigger - a timeline

The Prime Minister has stated that he will leave his successor to enact Article 50, with the process of the UK’s exit now including the leadership race.

The process will include:

  1. A new Prime Minister is elected, by 2 September.

  2. The new Prime Minister holds consultations with business, the Bank of England, the Cabinet and other relevant organisations to decide upon a preferred future relationship with the EU.

  3. The UK Government triggers Article 50 – either at the end of this year or early in 2017.

  4. The European Commission seeks a mandate from the European Council to undertake negotiations on UK withdrawal from the EU – all other member states must agree to guidelines for negotiation.

  5. The European Commission will then undertake negotiations with the UK to agree its withdrawal from the EU. Existing EU Treaties will remain in place.

  6. The withdrawal negotiations are subject to a two year deadline.

  7. If an agreement has not been reached by this point, the EU Member States must agree unanimously to extend negotiations or the UK will immediately leave the EU regardless of whether a replacement relationship is in place.

  8. If a deal is reached, it requires approval from the European Council (by qualified majority: 20 out of 27 Member States) and the European Parliament. 

 
Keoghs viewpoint:

The period between the election of a new Prime Minister and the triggering of Article 50 will be critical in determining the terms of the UK's new relationship with the EU that we will seek - and during this time, business, trade unions and other organisations will be expected to make clear their views regarding the best future relationship with the EU.


What type of agreements might be considered?

The main options are:

  1. Norway-EU agreement: gives significant, but not total, access to the EU Single Market – in return, the UK would be required to accept freedom of movement, wide ranging EU obligations and contribute to the EU budget.

  2. Swiss-EU agreement: close to the Norwegian model but with only partial access to the Single Market in goods and more limited access in services. In return the agreement gives Switzerland greater legislative freedom from the EU.

  3. Canada-EU agreement: a more detached relationship with the EU, with significantly less Single Market access than the Swiss model, but free from obligations on free movement of people and contributions to EU the budget.

  4. Turkey-EU agreement: a loose free trade agreement with some sector-specific access to the Single Market.

  5. World Trade Association membership: the default fall-back option, marking a decisive break from EU membership.

 
Keoghs will monitor political activity in this area, particularly in relation to how the Brexit vote might affect the progress of personal injury reform. We will continue to stay close to any developments and will keep clients informed.