Brexit

Brexit refers to the United Kingdom’s withdrawal from the European Union, which was finalized on January 31, 2020.
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Updated: Jun 3, 2024

3 key takeaways

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  • Brexit stands for “British Exit” from the European Union.
  • The UK officially left the EU on January 31, 2020, following a 2016 referendum.
  • Brexit has significant political, economic, and social implications for both the UK and the EU.

What is Brexit?

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Brexit, a portmanteau of “British” and “exit,” refers to the United Kingdom’s decision to leave the European Union (EU), a political and economic union of 27 European countries. The decision was made following a public referendum held on June 23, 2016, where 52% of voters chose to leave the EU, while 48% voted to remain. This historic vote set in motion a complex and often contentious process of negotiation and separation that concluded with the UK’s official departure on January 31, 2020.

Brexit marked the end of the UK’s 47-year membership in the EU, which began in 1973. The departure has led to significant changes in the UK’s political landscape, trade relationships, and regulatory environment, as well as impacts on immigration, travel, and the rights of UK and EU citizens.

The Brexit process

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  • Referendum and Article 50: The 2016 referendum result led the UK government to invoke Article 50 of the Treaty on European Union in March 2017, formally starting the process of leaving the EU. Article 50 outlines the steps for a member state to withdraw from the Union.
  • Negotiations: The UK and EU entered into extensive negotiations to determine the terms of the withdrawal, including issues such as trade, citizens’ rights, and the financial settlement. The negotiations were marked by several challenges and extensions.
  • Withdrawal Agreement: In October 2019, the UK and EU reached a new withdrawal agreement, which was approved by the UK Parliament. This agreement outlined the terms of the UK’s departure, including a transition period until December 31, 2020, to allow time for further negotiations on the future relationship.
  • Transition Period: During the transition period, the UK remained in the EU’s customs union and single market but was no longer represented in EU institutions. This period was used to negotiate the future trade relationship between the UK and the EU.
  • Final Departure: On January 1, 2021, the transition period ended, and the UK fully exited the EU’s customs union and single market, beginning a new phase of its relationship with the EU under the terms of the Trade and Cooperation Agreement.

Advantages and disadvantages of Brexit

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Advantages:

  • Sovereignty: Supporters argue that Brexit restores the UK’s sovereignty, allowing it to make its own laws and regulations without being subject to EU rules.
  • Trade Opportunities: The UK can negotiate its own trade deals with countries around the world, potentially leading to new economic opportunities.
  • Immigration Control: Brexit allows the UK to implement its own immigration policies, giving it greater control over who can live and work in the country.

Disadvantages:

  • Economic Uncertainty: Brexit has created economic uncertainty, affecting trade, investment, and business operations. The long-term economic impacts are still being assessed.
  • Trade Barriers: Leaving the EU’s single market and customs union has introduced new trade barriers, impacting businesses that rely on seamless trade with the EU.
  • Political Division: Brexit has deepened political divisions within the UK and has led to debates about the future of the United Kingdom itself, including calls for Scottish independence.

Real-world application

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Brexit’s impact is far-reaching, affecting various aspects of life in the UK and the EU. Businesses have had to adapt to new trade regulations and customs procedures, while individuals face changes in travel, residency, and work rights. The political landscape has also shifted, with ongoing discussions about the future of the UK and its role on the global stage. Brexit serves as a case study in the complexities of disentangling integrated economies and the challenges of negotiating international agreements.

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  • European Union (EU)
  • Article 50 of the Treaty on European Union
  • Trade and Cooperation Agreement
  • UK immigration policy post-Brexit
  • Scottish independence movement
  • Economic impact of Brexit

Understanding Brexit is essential for grasping the current and future political, economic, and social dynamics between the UK and the EU, as well as its broader implications for international relations and global trade.



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Arti
AI Financial Assistant
Arti is a specialized AI Financial Assistant at Invezz, created to support the editorial team. He leverages both AI and the Invezz.com knowledge base, understands over 100,000... read more.