Britain’s negotiations with the EU are at a crucial point as time ticks down to the UK’s scheduled exit from the bloc on March 29 next year.
Here the FT provides answers to some of the big questions about Brexit, including the key dates, news on the fraught discussions between London and Brussels and the impact on economic indicators such as house prices and the pound.
What is Brexit?
Brexit is a shorthand way of referring to Britain’s exit from the EU. It is partly based on the word “Grexit”, which referred to the possibility that Greece might leave the eurozone.
What is the latest Brexit news?
Theresa May’s battle to win wider backing for her Brexit deal has been dealt severe blows by a series of ministerial resignations, including that of the cabinet member responsible for negotiating Britain’s exit from the EU.
The UK prime minister managed to secure cabinet backing for Britain’s draft exit deal at a fractious five-hour meeting on Wednesday. But on Thursday morning the cracks in her government’s unity quickly began to show with Brexiters claiming the deal ceded too much sovereignty to Brussels.
Dominic Raab quit as Brexit minister, saying in a letter that he could not support an arrangement “where the EU holds a veto over our ability to exit”. His resignation was quickly followed by that of work and pensions secretary Esther McVey. “The deal you put before the cabinet yesterday does not honour the result of the [2016 EU] referendum,” she said in a letter to the prime minister.
And Jacob Rees-Mogg, the pro-Brexit leader of the Eurosceptic European Research Group of MPs, called for a vote of no confidence in Mrs May as Conservative party leader.
The prime minister defended her Brexit plan at the House of Commons on Thursday, insisting that the alternatives were no Brexit or no deal.
What happens next?
‣ See our timeline of key Brexit dates
MUST BE WRAPPED UP BY AUTUMN
- Terms of the transition
- Separation terms
- Future status of Northern Ireland
- Framework for future UK-EU relationship
TO BE COMPLETED BY MARCH 29 2019, BREXIT DAY
- Approval by at least 20 of the other 27 EU states at a summit
- UK parliament holds meaningful vote on deal
- UK parliament passes separate legislation to bring exit treaty into British law
- Consent vote by European parliament
TO END ON DECEMBER 31 2020
- Formal trade talks begin
- UK seeks to replace 750 EU international agreements
- Both sides prepare new immigration/customs/regulatory systems
- European elections in May 2019
What has been provisionally agreed?
Under the deal reached between London and Brussels, “backstop” provisions to avoid a hard border in the island of Ireland would keep all of Britain in a customs union with the EU until a more permanent solution was agreed.
The all-UK customs union would replace the EU’s original requirement that the treaty include a special customs arrangement for Northern Ireland — a demand that Mrs May said no British prime minister could ever accept.
But in exchange the EU would have a say over when Britain left such a UK-wide customs union.
The more than 500-page treaty text also sets up a prolongable transition period (scheduled at present to last until the end of 2020), as well as addressing issues such as the rights of EU and UK citizens in each other’s jurisdictions and Britain’s Brexit bill of £40bn or more.
Read more on what the EU and UK have agreed
Will Brexit cause a recession?
The uncertainty over the outcome of the Brexit negotiations has affected the UK economy, eating away at business confidence and investment but making much less impression on consumer spending and the labour market.
How will Brexit affect the pound?
The aftermath of the 2016 referendum has led to some of the most volatile trading in the pound in the past half century and is expected to continue to do so up to and beyond March 29.
The most widely watched metric of sterling’s performance is its behaviour against the dollar. However, its movements against the euro, which have also been highly volatile, are widely seen as a proxy for Brexit risk.
Read more about Brexit and the pound
‣ FT Markets Data: Compare GBP with other currencies
Will Brexit hit house prices?
Estate agents say the unknowns surrounding Brexit are weighing down the British property market. Although the market initially appeared little affected by the 2016 referendum, Mark Carney, governor of the Bank of England, recently warned that a disruptive no-deal Brexit could cut 35 per cent off house prices.
Will the UK still be subject to EU rules?
Since a UK-wide customs union with the EU has been written into the withdrawal treaty as a “backstop” measure to prevent a hard Irish border, the European Commission has secured guarantees over areas such as competition, taxation and the environment. These would restrict the UK’s ability to diverge while the backstop is in force.
These are known as “level playing field” provisions.
France, Germany, Denmark and the Netherlands have pressed for “very demanding” assurances and enforcement mechanisms, with Paris in particular asking the UK to “dynamically” align itself with future changes in EU law.
Some of the most sensitive level playing field provisions are environmental targets that the EU has agreed on for 2030. These aim to slash energy consumption by 32.5 per cent compared with business-as-usual projections. Another is a demand that the European Court of Justice oversees how the UK applies the bloc’s restrictions on state subsidies to companies.
More on the level playing field
Why is fish so important?
Fishermen in France, Spain, Denmark, the Netherlands, Sweden and Belgium are all dependent, to varying extents, on their EU-allocated quotas of fish from British waters.
The EU initially sought to make access to British waters an explicit precondition for any future trade deal covering the entire UK economy. By contrast, Mrs May wants the UK to have complete power to decide on access to British waters “as an independent coastal state”.
The dispute has spread to the negotiations over Britain’s exit treaty from the EU, since this includes a UK-EU customs union as part of the backstop plan for Northern Ireland.
Under a compromise struck by the two sides, the fishing sector would be excluded from such a customs union until an agreement is reached on reciprocal access to waters.
This would mean that Britain need not give upfront concessions on access. But it could hit British industry, because 75 per cent of the UK’s exports are to the EU and rely on the customs union. Nevertheless some EU member states with big fishing industries wanted more concessions from the UK on the issue.
More on fish
What is happening with financial preparations for no deal?
Valdis Dombrovskis, the European Commissioner responsible for financial regulation, told the Financial Times that EU banks and companies could continue using UK-based clearing houses to process derivatives trades even if Brexit negotiations failed — but on a strictly short-term and conditional basis.
Banks and other institutions’ worries about the consequences of an acrimonious break-up between London and Brussels are far from over as Brexit day approaches. Those concerns are heightened by the two sides’ notable failure in recent weeks to strike a divorce deal.
Other big issues in which a no-deal scenario could put financial stability at risk include the validity of derivatives contracts; emergency capital for banks; and the EU’s calls for lenders to keep planning for a no-deal Brexit. Despite the recent progress, both sides still suspect the other of seeking to exploit the debate about financial stability to its own advantage, whether to replicate the advantages of the single market or to tempt business across the Channel.
More on Brexit and financial stability
What are the customs union and the single market?
In 1968, just over a decade after the European Economic Community was founded, the European customs union was completed, with a common external tariff and the intent of establishing free trade within the area.
Almost 50 years later, the internal market — or single market, as it came to be known — remains a work in progress. The “four freedoms” — movement of goods, services, capital and labour — are a founding principle of the EU.
At stake in the Brexit negotiations are the kind of ties the UK will have with both the single market and the customs union, which could shape Britain’s future for decades.
When was the Brexit vote?
Britain’s historic referendum was held on June 23 2016. Initially the British government had wanted the question: “Should the UK remain a member of the EU?” But the country’s Electoral Commission, which by law has to be consulted, was unhappy with the phrasing, noting concerns that the question was biased and might encourage people to vote Yes.
It recommended in September 2015 that the question be amended to: “Should the UK remain a member of the EU or leave the EU”? The government and parliament accepted these changes and this was the question that was asked.
How many people voted for Brexit?
On a record turnout of 72.2 per cent, 17.4m people (51.9 per cent of voters) voted Leave, while 16.1m people (48.1 per cent) voted Remain in the referendum. The winning margin was therefore 1.3m votes.
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