When the European Union member states drafted and then approved the Treaty of Lisbon in 2007, they did not think anyone would ever want to leave ‒ it was a few years before the Eurozone crisis, and the bloc was still glowing from its watershed expansion eastwards.
So when, for the first time in its history, the EU included an article – the now-infamous Article 50 ‒ for a potential exit, they left it deliberately vague.
“The Treaty of Lisbon was drafted with the idea that [Article 50] would not be used, and to make it pretty hard to exit in a smooth way,” says Chris Bickerton, a lecturer at Cambridge University and author of The European Union: A Citizen’s Guide.
What this means in practice now is days, weeks and even months of political uncertainly as all sides try to work out how to interpret the treaty.
Here is what is spelled out explicitly in Article 50:
A government must trigger the article by officially notifying the EU of its intention to leave. Then there is a two-year period in which the terms of the leaver’s exit are negotiated. During this time Britain would no longer be able to take part in any EU decision-making, and any exit agreements must be approved by all 27 remaining EU nations and the European Parliament. Then after Britain’s formal exit, fresh negotiations can begin on any new trade deals.
But crucially, there is no timescale or mention of when to trigger Article 50 after a referendum, leaving many politicians worried about a long period of uncertainty.
“The negotiations must immediately start,” said Manfred Weber, chairman of the centre-right European People’s Party.
“The most important thing is that we do this very quickly – we need to avoid a long period of uncertainty. The European continent cannot be occupied by an internal Tory Party battle over who will be the next leader of the Tory Party and the next Prime Minister of Great Britain.”
David Cameron however has hinted that it may be the job of whoever succeeds him to trigger Article 50, and Jan Techau, the director of the Carnegie Europe think tank, says there would be little the other EU nations could do to prevent that.
“The ball is in the British court – they need to decide how procedurally they want to run this,” he told The Independent.
6 ways Britain leaving the EU will affect you
6 ways Britain leaving the EU will affect you
1/6 More expensive foreign holidays
The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more
2/6 No immediate change in immigration status
The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay
3/6 Higher inflation
A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum
4/6 Interest rates might rise
The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output
5/6 Did somebody say recession?
Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018
6/6 And we wouldn’t even get our money back
All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget
Even after the issue of the triggering of Article 50 is resolved, the British government must then decide its negotiating position, and decide what sort of relationship they want with the EU in the future. Would they still want access to the single market? What status would they want for the EU citizens currently employed in Britain, and Britons working elsewhere in Europe? What sort of trade deals would they wish to pursue? These proposals would then be put to the other 27 EU member states.
It is a process which European Council President Donald Tusk has warned could take up to seven years, and it is likely to be a bitter fight.
“There has to be some sort of deterrent that the other 27 member states now need to build into this so that there is a clear message that this is not an attractive model,” says Mr Techau.Reuse content