Part Two

I’ve attempted to set out the very basics of Brexit in a (currently) three-part guide designed for those who may not be aware of some of the history and context.  In Part One of my series, I set out the basics of what the EU is, and why the United Kingdom is set to leave. This Part Two explores some (but not all!) of the main issues and concerns that have complicated or otherwise stalled the negotiations. Part Three will explain why I think Americans should care about Brexit.

There are many issues that have complicated or otherwise stalled the negotiations. Just some of the big concerns and questions are set out below.

 

The border between Northern Ireland
and the Republic of Ireland.

Despite sharing the island of Ireland, Northern Ireland is part of the United Kingdom, whereas the Republic of Ireland has been an independent country since 1937.

As a relative newcomer to the UK, I didn’t grow up learning about – of being impacted by – the Northern Ireland conflict. Also known as “The Troubles,” the violence over the constitutional status of Northern Ireland spanned thirty years (1968 – 1998). But despite not knowing all of the details myself, I know enough to appreciate that the open border that was negotiated as part of the Good Friday Agreement (GFA) is really important.

As I explained in Part One of my Brexit series, the are no physical borders between EU countries. But the reason there is an open (soft) border between Northern Ireland and the Republic of Ireland isn’t just because of EU rules: it’s been open since 1998 because that’s what was agreed in ending decades of violence in Ireland.

Brexit will effectively make the border between the Republic and Northern Ireland an “external EU border.” What complicates things is that the Irish government, the UK government, and EU representatives have all stated that they do not wish for a hard border, due to its sensitive nature. To avoid major chaos ahead of the March withdrawal, The EU proposed a “backstop agreement” that would put Northern Ireland under a bespoke range of EU rules in order to avoid the need for border checks.

But this backstop has been opposed by the British government as it would essentially mean different rules apply to different parts of the United Kingdom. This has reignited the question of allowing Northern Ireland to leave the United Kingdom to reunite with the Republic of Ireland.

Northern Ireland as a whole voted 56% in favor of remaining in the EU. Recent polling suggests that 52% of voters in Northern Ireland said they would support a united Ireland outside Britain if it leaves the EU.

 

Scottish Independence

It is not only Northern Ireland which poses a serious long-term threat to the UK’s territorial and constitutional unity because of Brexit. Scotland – which unified with England in 1707 after centuries of warfare between the two countries – is also toying with the idea of leaving the UK.

Scotland was the jurisdiction most in favor of remaining within the EU, with 62% voting remain. However, it’s important to remember that only two years earlier, Scotland had a “leave or remain?” referendum of its own – but in respect to the United Kingdom. In 2014, 45% of Scots voted to leave the United Kingdom, while 55% wanted to remain. But now that the United Kingdom is leaving the European Union, some argue that Scotland must go its own way and become an independent country that could – at some point – rejoin the European Union on its own.

Financial Services

Financial services are a key industry in the United Kingdom, and the degree of inter-linkage between London and the EU economies is both economically substantial and intricate in terms of the legislative interface. The “passporting” system allow banks and finance companies to sell their services across the 28-member bloc with a local license, rather than getting a new license to operate in each member country where it does business. Put simply, banks established the UK can buy, sell and trade financial products across the EU with relative ease.

But Theresa May has already ruled out passporting after Brexit. Some of the world’s biggest banks have begun moving jobs out of London, and many question London’s future as a global financial center. Michel Barnier, the EU’s chief Brexit negotiator, has explained that Theresa May’s proposals for a new financial services regulatory framework “would violate the principle that access rights to the bloc’s financial services market are a gift from Brussels that can be freely withdrawn.”

 

Commodities and Critical Supplies from the Continent

If Brexit ends up creating regulatory and tariff barriers between the UK and the EU, customs checks and delays could severely hamper the import and export of commodities and critical supplies. Increased tariff and trade complications could disrupt supply chains and drive up operating costs, and the devaluation of the pound leads to higher prices.

The UK imports 30% of its food from the EU, most of which is fruit, veg, and meat.  Likewise, as explained by The Guardian, many of the pharmaceutical factories that supply the UK are elsewhere in Europe. Getting medicines to pharmacies and hospitals is a complex process, and if European supply chains are disrupted, there could be shortages.  Ministers have therefore drawn up plans to send in the Army to deliver food, medicines and fuel in the event of shortages if Britain crashes out of the EU without a deal.

 

Expats and the End to Freedom of Movement

For both non-UK Europeans living in the UK and UK citizens living elsewhere in Europe, Brexit means uncertainty about residence, pensions, healthcare, and much more. Will these expats need to apply for visas or citizenship? If so, by when? While the EU has published a guide “to help EU citizens make their own decisions about their current situation in the UK in light of Brexit,” many questions still remain.

Currently, 3 million EU citizens live in the UK and 1 million Brits live in other EU countries. These expats stand to lose all automatic rights and protections overnight, which is a deeply upsetting prospect for many. For example, British expats enjoying their retirement on the Continent could stop receiving UK private pension and insurance payments as UK providers lose the authority to transact within the EU. There is also no official word on the process that EU citizens will need to go through here in the UK, to secure or even apply for permanent residency.

 

The National Health Service

The National Health Service is revered as a national treasure. Much like a child in a custody battle between divorcing parents, the NHS has been used by both sides of the Brexit debate.

On the side of leaving the EU, Vote Leave claimed that the UK sends £350m ($460m) each week to the EU. Online and at other Vote Leave events, the slogan explicitly read “Let’s give our NHS the £350 million the EU takes every week.”

 

Those who support(ed) remaining in the EU pointed to the fact that the NHS relies on EU staff. Although a majority of NHS staff in England are British, a substantial minority are not. Around 63,000 out of 1.2 million staff are from elsewhere in the EU, with the most represented nationalities being Irish, Polish, and Portuguese.

 

Elisabetta Zanon, director of the NHS European Office, has laid several other key potential Brexit implications for the NHS over at Kings College London’s UK and EU website. One that stuck out to me in particular is that UK health organisations are one of the largest beneficiaries of EU health research funds in Europe, with €760 million ($875 million) in EU funding having supported research in the UK between 2007 and 2013. The NHS has benefited from this funding, as well as from EU collaboration in clinical research more generally. What is the scope for continued European investment for medical research?

 

Manufacturing and Motorsport

Petrol heads around the world know that the Britain is famous for its premium and sports car heritage, and is home to Aston Martin, Bentley, Daimler, Jaguar, Land Rover, Lotus, McLaren, MG, Mini, and Rolls-Royce… to name a few.

But might the auto industry go “extinct” because of Brexit? Land Rover recently announced plans to move some production to Slovakia and Honda has admitted a no-deal Brexit would cost millions of pounds. Additionally, EU regulations require that at least 55% of automotive parts must come from within the EU, which could mean suppliers in the UK are abandoned.

 

Stranded on an Island

When the UK leaves the EU, it will also leave the single aviation market, which is the regulatory basis for flights in and out of the country at the moment. This impacts not just flights to the EU itself, but to other countries with which the EU has a deal, including the United States. Accordingly, planes leaving the UK could be prevented from using Irish airspace, as the UK’s post-Brexit default trade status under the World Trade Organization does not include commercial travel rules.

Heathrow airport has raised nearly £1 billion ($1.3 billion) in debt to keep it going through a “worst-case scenario” following a hard Brexit. The operator the airport itself has also announced it will move its international HQ from the UK to Amsterdam as a result of Britain leaving the EU. Although a spokesman for British Airway’s parent company stated “we are confident that a comprehensive air transport agreement between the EU and UK will be reached,” Ireland-based RyanAir “believes that the risk of a hard (no-deal) Brexit is being underestimated.” Speaking of airports, there are also growing concerns about those infamous passport queues at Heathrow getting even worse.

Politics and Personalities

Of course, in addition to policy debates, there are also political clashes that may stall or otherwise derail Brexit. These include infighting amongst different factions of the Prime Minister’s Conservative Party, which may threaten Theresa May’s continued leadership.

In a long-read profile of the Prime Minister for the New Yorker, it was posited that Theresa May faces an impossible situation, with populist demands on one side, practical realities on the other and no way to truly reconcile both. “May’s best hope has been to contain the damage on all sides.”

Unfortunately, the British government remains almost exclusively focused on Brexit. “The country — as an administrative entity — has virtually stopped working,” explained Businessweek.

There are also substantial questions about the legitimacy of the referendum itself. The vote was not legally binding, and potential Russian interference with the Vote Leave campaign has also come to light. People’s Vote, a campaign group calling for a public vote on the final Brexit deal, is also gaining in popularity.

For now though, Brexit does appear to be plowing forward, if a bit unsteadily. But it would be unwise to forget that considerable challenges – only a few of which have been mentioned above – still lie ahead.

 

Coming soon: Why Should Americans Care About Brexit?