This article has been written by Arpita Tripathy, from KIIT School of Law. This is an exhaustive article which deals with Brexit.


The United Kingdom has been formed and consists of different parts. Scotland, England, Wales, and Northern Ireland are the constituents of the United Kingdom. Great Britain does not include Northern Ireland and consists only of Scotland, England and Wales. Recently, Brexit has remained in the headlines.


The term ‘Brexit’ has been derived from the words ‘Britain’ and ‘exit’ which was widely enunciated by the media and was later incorporated as the official term for Britain’s exit from the European Union. A referendum was conducted in 1975, where voters were asked if they are willing to stay in the European Union. 68% of people voted in favour of the European Union, implying that the voters did not want to leave the Union.

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In 2014, the United Kingdom Independence Party was formed with the agenda of divorcing the United Kingdom from the European Union. This party stood for European Union Parliamentary Elections and received 25% votes. In 2015, the Conservative Party promised during general elections that a referendum would be conducted for people to decide if Britain should leave the Union. Because of this promise during elections, the party finally won it and David Cameron was elected as the Prime Minister. When Prime Minister David Cameron came into power he declared a referendum for deciding on Brexit. In 2016, the referendum was conducted in which majority votes (52%) were given in favour of leaving the European Union. 

The Brexit deal

After the referendum, the next major step was the implementation of the withdrawal process. For withdrawal of a country from the European Union, Article 50 of the Treaty of European Union, which was signed in Lisbon had to be invoked. Article 50 allows any country to exit the Union after notifying the European Union about the same. This was the first time that Article 50 of the Lisbon Treaty was being invoked by a member. The House of Commons passed the bill for initiation of the exit process from the Union. In March 2017, the United Kingdom signed the notification to be sent to the European Union. After the notification was sent to the European Council, 2 years time period was provided to the EU and the United Kingdom. The 2 years time period was for negotiation between them regarding the future relationship between them. In June 2017, negotiations started between the Union and UK. 

In case, no agreement could be formed then the country could exit without any agreement. However, an extension period for the agreement could be decided. The government’s plan for Brexit was rejected by the Parliament twice in 2019. Therefore, the EU did not have an agreement ready for Brexit. Thereafter, Brexit was shifted to a later date as was voted by the Parliament. The Prime Minister asked the EU for an extension of time till January 2020.

In October 2019, an agreement was formed. In January 2020, the agreement was passed by the Parliament in favour of the deal reached. The deal was sent to the House of Lords which also accepted the deal. The deal was also accepted with royal assent. After the agreement had been reached, the UK had to wait for another 11 months to officially exit from the European Union. 


The reason behind the demand for Brexit

  1. The major cause behind the decision of the United Kingdom to leave the European Union was that the decisions of the country should be made within the country itself. The membership of the Union took the power of the people to make decisions away from them and vested it in the European Commission. 
  2. There was too much bureaucracy while making decisions. A lot of procedures and documentation were involved while coming to a resolution. This reason also led to an opinion that the European Union is pushing the UK back and not letting it progress.
  3. European Union charges a membership amount from all the 28 countries. European Union charged the membership fees according to the economic capacity of the countries. Europe charged 13 billion euros as membership fees and in return, the United Kingdom received only 7 billion Euros. 
  4. The citizens of Britain do not want to lose their distinctive identity. Britain did not integrate with the other European countries. 
  5. Immigration has been an important factor in deciding on Brexit. The laws regarding immigration were formulated by the European Union. The UK wants immigration to be around 1,00,000. However, due to the policies of the European Union, the number is way too much. The power of setting a limit on immigration is with the Union and not with the UK. There was an increase of 200% in the foreign-born population. 
  6. The UK contended that it can become an economic superpower if it disassociates itself from the Union. The UK wants a free market and wants to deal more with countries outside than only in the Union. 

European Union

The European Union is an organization that consists of 28 fiscally independent European countries. The Union covers most of the countries in Europe and is a political, social, and economic union. The concept of ‘Single Market’ has been incorporated in the Union under which, citizens of the members of the European Union are allowed to move freely throughout any country of the Union. 

The concept behind forming the European Union was that the countries which trade together are most likely to remain away from grappling with each other. The countries initially were just an economic union whose motto was to stop the bloodshed and unify the economic system. The European Economic Community was formed in 1957 with the Treaty of Rome which removed the economic barriers, a common external trade policy, and a common agricultural policy was formed. The United Kingdom joined the European Economic Community in 1973. In the year 1993, Maastricht Treaty External changed the name of the European Economic Committee to the European Committee. In 1993 the Union upgraded itself as a political union and thus gave birth to the European Union. In 2012, the Union also received the Nobel Peace Prize award for promoting peace and democracy in Europe.  

Problem with the EU

Initially, the original model and the objective of the European Union for which it came into existence was for having strong economic integrity. However, the economic policies of the Union have now become long-lived and have not been upgraded. The economic policies of the United States of America have given birth to many new and gigantic companies. However, new companies have not evolved in Europe. Even the European Union is not ahead in technical fields like machine learning. 

The vision that a single currency would make the economy stronger, has not been fulfilled. Even though the membership of the European Union does not mean acceptance of the Euro, even then the EU has always put emphasis on the single currency. The situation did not get better, rather it worsened. The health of the economy of the European Union has remained weak. The European Central Bank provided the stimulus for resolving the growth of economic problems of the European countries. 

After Brexit

The European Union was initially created for maintaining the financial integrity of all the member countries. The main effect on the United Kingdom after Brexit will be on the economy. Along with it, many political and social changes will be seen after it. The following points cover the same:

  1. The economy of the United Kingdom will be adversely affected. There were more than 700 agreements of the United Kingdom. The UK will no longer be a party to the contracts. The economy of the UK will be hit badly with a poor gross domestic product.
  2. It has been even estimated by the UK itself that the economic growth will be undersized for the next 15 years.
  3. It has also been said that Brexit is an event that was self-induced and would cause a major pitfall for international trade, employment, and the economy. Many European countries have now shown reluctance in trading with the UK. In favour of Brexit, it was argued that there are other countries for trade, however, the economists believe that trade with other countries would not be as beneficial as trade with European countries.
  4. The United Kingdom will cease to be a shareholder at the European Investment Bank.
  5. The burden on the European Union would increase as the United Kingdom was the second biggest contributor of funds. The burden on other member countries would be magnified.
  6. The United Kingdom will no longer be a member of the Common Agricultural Policy. This policy made rules and regulations for the farmers. Therefore, after Brexit, the UK would be able to make its own policies for the farmers.
  7. The United Kingdom also left the Common Fisheries Policy. Now the UK will make its own fisheries policy. The Common Fisheries Policies guaranteed the facility to the EU member countries to fish up to 12 nautical miles of the UK coast.
  8. Research and academic studies would be hugely affected as they often received funding from the European Union. The students who researched in the United Kingdom would also leave and therefore, there would be a crisis of students and funds for efficient research.
  9. While the United Kingdom was a member of the EU, the policies of the EU majorly governed the decision making. After Brexit, the United Kingdom would have the right to take its own decision. Some of the older EU laws which had to be continued have been converted into UK laws and have been under the title, ‘Retained EU Law’.
  10. The immigration policies will be managed by the United Kingdom itself and not be the European Union as was the earlier practice. Immigration is expected to lower down because the free movement within the EU member countries will be stopped.
  11. There might be security problems for the United Kingdom because the members of the European Union stand unified against any security threat and terrorism.

Impact of Brexit on the rest of the world

Just after the day result of the Referendum was declared, the stock markets saw a steep decline. This decline was not only in the European countries or in the United Kingdom, but was observed all over the world, including the Bombay Stock Exchange. 

The economic fall in the United Kingdom after the voting was already low and after the voting even the then Prime Minister David Cameron resigned which in turn facilitated the drop.

The members of the European Union faced huge losses because-

  1. Increase in economic burden towards the European Union. 
  2. Most of the trading of the European Union members was done with the United Kingdom. The major losses would be suffered by the Netherlands and Belgium. 

On the other hand, the countries which are not members of the European Union would be making profits out of Brexit. The United Kingdom’s trade will most likely be diverted away from the member countries of the European Union and thus the profit would be high for countries like Russia. The less purchasing power of the people of the United Kingdom would lead to fewer imports which would affect the economy of other countries exporting goods to the UK. 

Current scenario

The time period before Brexit happens is called the transition period. There are speculations that the date when Brexit will be effective might be extended up to June of 2021. During the transition period, the Market authorization holders will be able to continue their trade in the European Union. Also, application by the United Kingdom-based firms will be allowed during this period. The bodies which have been notified can continue their 3rd party conformity assessment.


Brexit has been a major socio-political and economic move by the United Kingdom. The referendum was conducted for taking this major decision of Brexit. However, it should be noted that referendum is not legal voting but an instrument to know the opinion of people. This referendum which does not even have legal binding has been used for such major decisions that can affect not only the economy of the United Kingdom but also other countries.

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