By Ashley Osborne | Head of UK Residential & Managing Director – International Properties
In the words of Theresa May launching her bid for the conservative leadership in June – “Brexit means Brexit’ and in the past week she announced that she will invoke Article 50 without a Parliamentary vote on the subject. After the EU referendum result it was largely unknown whether it would require a parliamentary debate and subsequent vote in order to do so, but it has since become clear the Prime Minister has the legal right to invoke article 50 without consent of Parliament. Precisely when this will occur remains unclear, but May has specified it will be next year at some stage and there categorically will not be another referendum.
So now that it’s clear – Brexit really is happening – what happens next and what does Article 50 actually mean?
Article 50 of the Lisbon treaty sets out how an EU country might voluntarily leave the union. Five short, obscure paragraphs totaling 250 words in a European treaty have now become a major talking point. The wording will be the subject of dispute between EU leaders and Brexiters, but the first thing that needs to happen once Article 50 is invoked is that negotiations must take place to agree the terms of the UK’s ‘divorce’ from the European Union.
In this regard, May has already set the ball rolling. At the end of August her cabinet were instructed to deliver action plans for ‘Brexecution’ – undoubtedly an opportunity for the government to determine its negotiations points. There are four main categories which these negotiation points will come under – goods, services, capital and the movement of people. It has become clear since May’s appointment to Prime Minister that she understands the importance of the issue of immigration to those that voted to leave the EU – and therefore it’s fair to predict that the UK will concentrate their efforts in those other areas.
As with any divorce, the initial decision can be the easy part – the most difficult part will be coming up with a settlement where all parties concerned, in this case it will mean satisfying a minimum of 20 EU member countries with 65% of the population. There is then a two year period for all parties to reach an agreement on terms – this can be extended but requires the agreement of all 27 EU member countries. In the case that no agreement can be reached to extend negotiations, then the EU treaties cease to apply to the UK.
Now it’s over to the lawyers and divorce experts, what is clear is that it’s most likely going to take longer than anyone realized. Although Article 50 talks are not supposed to last longer than two years, at the EU’s pace of negotiations, this is unlikely to be a realistic timeframe. Chancellor of the Exchequer Philip Hammond has said that hammering out these new deals — and making sure they do not disadvantage the UK— may take up to six years once the U.K. has officially withdrawn from the Union. Others, like former EU legal chief Jean-Claude Piris, have estimated a five to ten-year period.
While the referendum result was of immense political importance, it is clear that Brexit is happening, there was no framework for the Leave result to have any direct knock-on effects. The short to medium term will involve a period of wait and see – how long for exactly is anyone’s guess.