Britain has voted to leave the European Union. This is having an immediate effect on markets. It is also having immediate political ramifications. David Cameron has announced he will not continue in his role as British prime minister.
Legally speaking, though, the process of actually leaving will take some time. Britain will now enter a kind of phony Brexit period. It is still a member of the EU. The referendum vote is not as such legally binding. It is advisory only—but if it is out it creates a political imperative for the U.K. government to arrange its exit of the EU.
The law governing Brexit is found in Article 50 of the EU Treaty. This is a provision adopted by EU member states in 2009 to govern Brexit-like scenarios. It puts a two-year time limit on withdrawal negotiations. When the two years is up (or on the date any agreement reached before this enters into force) the U.K. is officially out of the EU.
Article 50 requires the U.K. to trigger the exit process by notifying its intention to withdraw. Not one, but rather a cascade of agreements, will follow this Brexit notification:
- The Article 50 exit agreement
- A separate treaty governing the U.K.’s future relationship with the EU—which could take many years to negotiate (and which, if it goes beyond trade, will require ratification by every single EU member state)
- Trade agreements between the U.K. and up to 134 other WTO members
- A tidying-up treaty between all the remaining EU states that removes all references to the U.K. from the EU treaties.
The initial main focus, however, will clearly be the Article 50 Brexit agreement.
How Will It Work?
The U.K. would be the first state to leave the EU but it is most likely that the European Commission, the executive arm of the EU, will do the negotiating on behalf of the remaining 27 member states. They will no doubt cast a watchful eye on proceedings, before voting on the deal.
