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On June 23rd, 2016, an entire country headed into the unknown. That’s the day 17.4 million
people in the United Kingdom voted to become the first country to leave the European
Union. This is the story of Brexit. We begin 60 years ago. After World Wars I and II had
brought unprecedented death and destruction to the continent, a simple theory gained
traction: if countries form stronger economic ties, they’ll be much less likely to fight each
other. So, in 1957, Belgium, France, Italy, Luxembourg, Netherlands, and West Germany
signed the Treaty of Rome and formed the European Economic Community. The UK wasn’t
included. It tried to join in 1963 and ‘67, but was blocked by French President Charles de
Gaulle. De Gaulle didn’t trust the British and their close allies, the United States, although de
Gaulle’s official reason was that the UK’s economy wasn’t compatible with Europe’s. A few
years later, once de Gaulle was out of power, the UK became a member of the EEC in 1973.
But not everyone was sold on the idea. So, just two years after joining, the UK held its first
ever national referendum to decide whether it should turn around and leave. The vote
wasn’t close, 67% of the electorate chose to stay. In the years since, the EEC has become
known as the European Union, expanded to 28 member states, and enacted countless laws
and reforms that have created a thriving political and economic zone with 500 million
citizens. In many ways it was designed to mirror the world’s most successful federal republic:
the United States. Just like the American colonies had done two centuries earlier, the
individual countries of Europe decided they’d be better off - economically, geopolitically - if
they formed a unified group. It was a good decision. For proof, look no further than the year-
by-year, per-person GDP rate, which has skyrocketed across the entire euro-zone. Germany,
the UK, and France, the EU’s biggest economies and the 4th, 5th, and 6th largest individual
economies in the world, have seen their growth track right along with each other at roughly
the rate of the United States. A look at the emerging economies of Brazil, China, and South
Africa gives you a better sense of just how closely the Europeans have tracked together.
Look at Turkey — who wants desperately to join the union — compared to Portugal, Italy,
Greece, and Spain the four EU countries most affected by the global downturn at the end of
the previous decade, and you see more evidence of the power of the EU in driving growth.
As it has became more and more integrated — as its members chose to give up more and
more of their sovereignty — the UK kept negotiating ways to stay independent from key
aspects of the union. It didn’t join the open border that the rest of the EU created in 1995 to
create completely free movement within the union, and it chose to keep the British pound
as its currency instead of adopting the Euro. But the development that made the UK’s
eventual exit most likely was the adoption of the Lisbon Treaty in 2009. Not only did it make
the EU’s central institutions more efficient and more powerful, but — for the first time — it
gave its members an official mechanism to leave, called Article 50. At around the same time,
the world was hit by a severe recession. Greece, whose public debt was far higher than most
other EU members, was worse off. Its fellow union members forced it to implement severe
spending cutbacks in exchange for money it needed to stabilize its economy. This was
followed by a migrant crisis, as millions of refugees fled war-torn countries across the Middle
East and North Africa. As immigration rates rose across Europe, the preferred destination
was one of the big three economies: Germany, the UK, or France. With all of these new
arrivals — many of whom were in need of tremendous public assistance — anti-immigrant,
nationalist feelings rose. As Europe’s leaders came under heavy pressure to stop the flow,
fences and walls were built in the east, patrols were intensified along the Mediterranean
coast, camps were set up along borders, and deportations rose. Some leaders, like
Germany’s Angela Merkel pledged to welcome large numbers of migrants, while the UK —
as an island — was able to stop the flow more easily. Facing a tough reelection, UK Prime
Minister David Cameron promised that — if he won — he’d schedule a public referendum on
whether the UK should leave the EU. When he did win, he used his victory as leverage to
successfully renegotiate a few minor terms of the UK’s membership. Although it changed
little, Cameron hailed it as a victory—it was the first time an existing EU member country
had been permitted to have its own special deal. [David Cameron] “Britain will be
permanently out of ever closer union, never part of a European super state. There will be
tough new restrictions on access to our welfare system for EU migrants, no more something
for nothing.” That deal was dependent on Britain choosing to remain in the union during a
vote scheduled for June 2016. By campaigning hard for the remain side, Cameron also made
it a referendum of sorts on his time in office, while giving his rivals and critics who wanted
him out an extra incentive to push for Brexit. Chief among those urging Brexit were far right
politicians who relied on inflamed rhetoric and misinformation. One of the primary l
arguments was that the UK — as one of the wealthier countries in the Union — was
contributing too much money to the EU budget. Another factor that pushed Britain toward
the exit was terrorism. A string of attacks, some carried out by immigrants, had hit Europe,
including the devastating November 2015 violence in Paris that killed or injured nearly 500
people. A look at the data also helps us understand why immigration was a key issue.
Compared to the four other European countries with more than 40 million residents, the UK
has the highest population density. The US, if you’re wondering, is six times less crowded
than the UK. And as you can see in this graph, for the better part of 15 years, the UK had
been absorbing far more immigrants than before—capped off by its two highest years of net
migration right before the Brexit vote. Which finally brings us to the decision that shocked
the world. By a narrow vote of 51.9% to 48.1% the United Kingdom decided to leave the
European Union. The consequences were immediate. Cameron resigned and the value of the
British pound plummeted. Today, it remains around 15% lower against the dollar. Theresa
May — a member of Cameron’s cabinet — had been against Brexit, but in a cunning move,
chose not to publicly campaign, positioning her perfectly to succeed Cameron as Prime
Minister when Brexit passed. True to her “Brexit means Brexit” saying, May sent a letter to
EU President Donald Tusk invoking Article 50, which starts a two yea countdown for the UK
to negotiate its future relationship with Europe before it has to leave. [Theresa May} “A few
minutes ago in Brussels, the United Kingdom’s permanent representative to the EU handed
a letter to the President of the European Council on my behalf confirming the government’s
decision to invoke Article 50 of the Treaty on European Union.” Two years isn’t a very long
time to get through the long list of key points which include: whether the European Court of
Justice will continue to have jurisdiction over the UK; whether the UK will reject the Human
Rights Act in favor of writing their own British Bill of Rights; how the security and crime-
fighting relationship will work; how much the UK will pay for EU projects and programs that
it committed to before Brexit; what the rights will be for EU citizens living in the UK and vice
versa, for Britons living in the EU; what will happen to Scotland, who voted to remain in the
EU by a large margin of 62%-38%, there is some talk it will leave the UK and become an EU
member; what will happen along the land border between Northern Ireland (of the UK) and
the Republic of Ireland (an EU member state). There is currently a common travel area
between the UK and the Republic. The man who wrote Article 50, the distinguished diplomat
Lord John Kerr, detailed the bill Britain must agree to pay before any negotiations will move
forward. [Lord Kerr] “The trade negotiation won’t get very far until the money negotiation is
clearly settled. Now the money negotiation is going to be a very nasty negotiation.”

Perhaps the biggest issue is whether Brexit will be hard or soft. This mainly has to do with
trade and immigration. A soft Brexit would largely keep things the same as they are now,
with the continued free movement of goods and people from the continent.

But a hard Brexit would result in import taxes on goods and services in both directions. Hard
would also restrict the migration of EU citizens into the UK.

Norway is an example of how a soft Brexit would work. It is a member of the single market,
but not a full EU member. So for access to the market, it accepts the free movement of
people. The most influential leader in the EU, German Chancellor Angela Merkel, has made it
clear that Europe is going to drive a hard bargain and will look after the interests of its 27
members.

[Chancellor Merkel speaking in German] The UK is in a terrible bargaining position and has
put the EU leadership in a tough spot. Why would the EU allow the UK to leave, but still keep
the best parts of union membership? In order to maintain the legitimacy of the EU, it has to
make an example out of the UK. It must show its members that leaving has very real
consequences. This has many British business leaders — like entrepreneur David Cleevely —
nervous. [Entrepreneur David Cleevely] “My concern about Brexit is that we have a big
market just a few miles away, and we're not going to be able to access it as freely as we
could before.” Once a deal is hammered out, at least 20 of the 27 countries in the Union
must approve it. But if no deal is reached, negotiations can only continue if all 27 EU
countries agree to extend the talks. Regardless of whether there’s a deal in place when the
UK leaves, the moment it does, all the EU laws Britain has been living under cease to apply.
To deal with this potential catastrophe, the UK plans to pass a Great Repeal Bill. It will copy
all the existing EU laws into UK law to give parliament time to decide which laws to keep,
change, or get rid of. This uncertainty has many who voted for Brexit regretting their
decision. As it becomes clear that independence won’t be so great, opinion polls consistently
show that the result would be reversed if the referendum were held again. So, is there any
chance the UK could reverse course? Again, we’ll again turn to the author of Article 50. After
running through various scenarios for how Brexit could play out, Lord Kerr said this. [Lord
Kerr] “There is, and I’m almost ashamed to mention it, the possibility of the United Kingdom
changing its mind. An Article 50 notification - the triggering - is revocable.” For The Daily
Conversation, I’m Bryce Plank.