The legal, political and economic implications of the brexit

• Author: Anca Ioana Iancu - Gheorghe Iancu
• Pages: 40-47

40 ANCA IOANA IANCU, GHEORGHE IANCU

SECTION 2. THE INFLUENCE OF HUMAN RIGHTS

ON LAW

THE LEGAL, POLITICAL AND ECONOMIC IMPLICATIONS

OF THE BREXIT

Anca Ioana IANCU

Gheorghe IANCU

ABSTRACT

This article aims to highlight the effects of the referendum from June 23, 2016 and its results,

which were announced on the morning of 24 June 2016 by the Election Commission for the Results

of the referendum in Great Britain. In favor of leaving the European Union voted 51,89%

(17.410.742) of the participants, and in favor of remaining in the European Union only 48,11%

(16.141.241) of the participants.

As a result of the referendum for leaving the European Union there have been occurred

substantial political consequences that have influenced the other economic and legal ones.

Of course that Brexit will create problems of adaptation, in very many areas, not only for the

United Kingdom, but also for the European Union and especially for the Member States with full

rights. It is also almost impossible to analyze only the legal implications of Brexit, without its links to

the foundations of such implications, which are also political and economic implications. For these

reasons, the present analysis was done by examining the legal implications together with the political

and economic ones. In fact, everything that is legal is generated in content and form by the

foundations of power in a state, namely the economic and social power, and political means social.

Key-words: the membership of the European Union of Great Britain, positive effects,

referendum, Brexit, economic and social implications.

I. The Campaign for BREXIT

In the campaign for the Brexit there have been set up two large groups, one for

leaving the European Union which included organizations such as: Leave EU,

Grassroots Out, Get Britain Out şi Better Off Out and another one, Britain Stronger

in Europe, for the maintaining in the European Union, that was chaired by Stuart

Rose. This group was informally named Remain, naming that appeared on all the

 Scientific researcher.

 PhD.

Law Review  vol. VI, special issue, December 2016, p. 40-47

The legal, political and economic implications of the Brexit 41

banner ads of this social group. In the latter group there were also included:

Conservatives In, Labour In for Britain, Intogeter (Liberal Democrats), Greens for a

Better Europe, Scientists for EU, Environmentalists for Europe, Universities for

Europe and Another Europe is Possible.1

The referendum took place on June 23, 2016 and the results were announced

on the morning of 24 June 2016 by the Election Commission for the Results of the

referendum in Great Britain. Very precisely, in favor of leaving the European

Union voted 51,89% (17.410.742) of the participants, and in favor of remaining in

the European Union only 48,11% (16.141.241) of the participants2. Interestingly,

there was a second petition calling for a second referendum, which has attracted

more than 4 million signatures, but this petition was rejected by the Government

on 4 July 20163 .

II. BREXIT Consequences

1. Political Consequences

As a result of the referendum for leaving the European Union there have been

occurred substantial political consequences that have influenced the other

economic and legal ones.

Thus, David Cameron announced that he will resign in October 2016, and after

his dismissal, Mrs. Theresa May has become Prime Minister, following her

acceptance by the conservative party. George Osborne was replaced by Philip

Hammond at the Ministry of Justice, Boris Johnson was appointed Secretary of

State for foreign and Commonwealth affairs, and David Davis became Secretary of

State for European Union expansion. Interesting is also the fact that Nigel Farage,

UKIP Chairman, announced his resignation on July 4, 20164.

Then, after the model of the United Kingdom, also other Member States of the

European Union celebrated its exit from the Union. Among these States there are:

Netherlands, which announced that it would follow the example of Great Britain

and will hold a referendum on this. Such danger has been spotlighted also by

Gordon Brown, former Chairman of the Liberal Party, and by former British Prime

Minister, who signed the Treaty of Lisbon5.

On the 28th June 2016, the European Parliament debated Britain’s exit from the

European Union, and as a result adopted a motion requesting this state immediate

activation of art. 50 from the Treaty of Lisbon6. Great Britain’s Government hasn’t

raised it so far, which creates the impression that it could not even invoke it or

1 See: Ian Sone, Vote leave designated as official EU referendum out campaigne, 13 April 2016;

Better off out and Leave.eu, May 2016; Conservativs In, 2 June 2016.

2 EU referendum results, Sky News (United Kingdom), 24 July 2016.

3 See: Brexit: Petition for second EU referendum rejected, BBC News, 9 July 2016.

4 Idem.

5 Brexit, David Cameron to quit after UK votes to leave EU, BBC, 24 June 2016.

6 BBC News 28 June 2016, Brexit vote: Bitter exchanges in EU Parliament debate.

42 ANCA IOANA IANCU, GHEORGHE IANCU

could invoke it, but subsequently carry out procedures, especially the ones that

involve the customs of the British Constitutional Law, to remove the effects of the

Brexit. In case that the European Parliament’s motion will not be applied, the

European Union would be able to apply the provisions of article 7 of the Treaty

(called “the nuclear option”), on the basis of which to terminate the membership of

the European Union of Great Britain, accompanied by cancellation of all rights,

that it could have, namely: freedom of trade and freedom of movement of its

citizens in the Union.

At the same time, the provisions of article 50 could not be raised on the basis

on further negotiations on the future membership of the Union. In an opinion

expressed by a German Supreme Court constitutionalist judge, Udo Di Fabio, such

possibility would exist, but the procedure of returning of the Great Britain in the

European Union would take a very long time, because only the notification of such

intention must be followed by a period of 12 months7. At the same time, any

separate negotiations with London, Scotland and Northern Ireland constitutes a

violation of the Treaty of Lisbon, because it protects the territorial integrity of the

Member States of the European Union.

2. The necessity of implementing the provisions of article 50 of the Treaty of

Lisbon

Immediately after the referendum, Cameron said that the Prime Minister will

activate the provisions of article 50, and at a cabinet meeting on 27 June 2016, it

was decided to establish a group of officials, led by Conservator Oliver Letwin that

should proceed to an intensification of the work relating to this issue, because it is

very important for the future Prime Minister8. Theresa May, after taking the

dignity of the Prime Minister, declared that she wants to work with the European

Council for finding a constructive solution to this end. A similar position was

supported also by German Chancellor Angela Merkel9. Former Prime Minister

Tony Blair also showed on the 28th October 2016 that efforts are needed in order for

the British to understand all the consequences and implications of the Brexit. At the

same time, he indicated that the referendum would have to follow a new

referendum or even a general election, in which the British people to decide

whether the United Kingdom should leave the European Union. Tony Blair also

showed that Britain’s exit from the largest political Union and giving up to the

right to use the world’s largest commercial market, is a big mistake10.

7 Udo di Fabio, Future of the European Union-Chin up FAZ Fr ankfurter Allgemane Zeitung, 7

July 2016.

8 Henley Jon, Will art. 50 ever be triggered ? The Guardian 26 June 2016.

9 Rankin Jennifer, What is art. 50 and why is it so central to the Brexit debate? The Guardian, 25

June 2016.

10 Gordon Brown, The key lesson of Brexit is the globalisation must work for all of Britain, The

Guardian, 29 June 2016; Joe Watts Political Editor, Brexit: Tony Blair says there must be a second vot e

on Uks membership of EU, The Independent, 28 October 2016.

The legal, political and economic implications of the Brexit 43

The procedure laid down in article 50, which will take about two years from

the date on which a Member State shall notify officially the European Union that

wishes to leave this Union, will allow the negotiation of a new agreement with the

European Union, without this negotiation to be mandatory.

What is important, however, is the fact that the British Parliament, which is the

holder of the national sovereignty, will have to rule in relation to all issues raised

by the Brexit, even if the will of the people must be respected. At the same time, the

Parliament will have to be sanctioned by the Queen, sanctioning that has not been

refused from 1707.

In other words, a law of the British Parliament is needed for official

notification to the European Union that the United Kingdom wants to leave the

European Union. The settlement is also the hardest since the United Kingdom has

no written Constitution, and in the area there is no common law and constitutional

customs because it is the first time that there was a situation of Brexit.11

To resolve this problem, The British Supreme Court will have a hard word to

say in connection with the notification in question and the role of the Parliament in

this constitutional procedure. Moreover, at present, the UK Supreme Court

examines such a question.

In fact, ever prior to the date of the referendum for the Brexit, it was argued

very clearly that the ratification of an international treaty is a royal prerogative, but

the ratification of a Treaty concerning the European Union is a prerogative that

requires a previous act of the Parliament. Only that, nowhere is covered how to do

it and who is involved in the removal of a treaty, because this problem to be solved

has never occurred until now.

Lately, it has appeared as a necessity to settle, the important discussion related

to the involvement of the Parliament or not in the action of the official notification

of the European Union and the implementation of article 50. Based on these

themes, in the case Santos and Miller versus the Secretary of State for the extension

of the European Union, of the Supreme Court, it is showed that in Brexit’s case, the

notification cannot be done by the Government, without the approval of the

Parliament12.

At the same time, in another opinion, it is stated that, a notification without a

prior approval by the Parliament might not be consistent with British

constitutional rules13.

Also. the Party of the Peoples Interested in Changing, made up of citizens of

England, Scotland, Gibraltar, Northern Ireland, Wales and England expatriates in

11 Eva-Maria Poptcheva, Art. 50: Withdrawal of a Member State from the EU, Briefing Note for

European Parliament.

12 Judicial Review, Litigation over the correct constitutional porcess for triggering Article 50,

Lexologie, October 13.2016.

13 Proctor Kate, Cameron sets up Brexit unit, Yorkshire Post, West Yorshire, 13 October 2016. See

also The Times, 30 June 2016.

44 ANCA IOANA IANCU, GHEORGHE IANCU

France, agree that article 50 might not be activated without an act of the British

Parliament, because the Royal prerogatives are waste and they were repealed by

the internal constitutional written laws, and, as a result, the Executive could not

use these powers to ensure that the United Kingdom to leave the European Union;

if any prerogatives of power would subsist in this area, this power could not be

extended to the repeal, amendment or renewal of the fundamental rights of the

citizens; such a prerogative of power would constitute an abuse if it were used to

enable Britain’s exit from the European Union14.

However, the Government is about to activate the provisions of article 50,

without the involvement of the Parliament, through the use of the Royal

prerogatives. Moreover, such an approach has been made by a number of requests

addressed to certain courts, other than the Supreme Court, which has been settled

previously the intimation of the latter. The Government motivates such an attitude

in that it gives effect to the will of the people as provided in the law on referendum

in 2015. Further, shows the Government, the exit from the European Union is not a

matter of justice, as it is the decision to entry in the European Union, but it is a very

important political issue which is reserved for the Crown. If still it would be used

the justice, then such use shall be made according to the rules of constitutional law,

and the Royal prerogatives depend on the legislative intentions of the British

Parliament15. As we have already pointed out, the Supreme Court has begun

debating the matter in December 2016.

To this end, the hearings at the Divisional Court were held, in front Lord Chief

of Justice, the Master Bar and Lord of the Justice of Liquidation, on 13 October 2016

and 17 October 2016. The Divisional Court decided that it would submit an appeal

to the Supreme Court in early December 2016, in order for it to decide on the final

position on the issue before the Government to achieve, in March, what it intends

to do, namely to activate the provisions of article 5016.

3. The Great Repeal Law

In October 2016, the Prime Minister of Great Britain announced that March

2017 is the deadline for activation of article 50 and vowed a Great Repeal Law,

which will repeal the Law of European Communities since 1972 and will

reintroduce in Great Britain’s legislation all decisions in force in the EU legislation.

This was supposed to be adopted in the autumn session of the Parliament in the

14 Lexologie, Judicial review litigation over the correct constitutional process for triggering

Article 50, October 13.2016.

15 The case Attorney General versus De Keyser s Royal Hotel, Mason Rowena, Theresa May s

great repeal bill: what s going to happen and when ?, The Guardian, 2 October 2016.

16 Brexit art.50 Challenge to quickly move to Suprem Court, Bloomberg, 19 July 2016. See also

Full judgment, Agnew and others, Applying for leave to apply for judicial review versus HM

Government and SoS for Northern Ireland and SoS for extiting the EU.

The legal, political and economic implications of the Brexit 45

year 2016 and before negotiations for the activation of art. 50 or in their time, but

this has not been achieved17.

Scotland also revealed that such a law should have also the consent of the

Scottish Parliament, especially that according to the Scottish Law from 1998, any

bill that passes through the Scottish Parliament should conform to the European

law. A difficult to solve contradiction appears, namely: the need for the Scottish

laws to comply with the European law, on the one hand, and the desire of Britain

to have the consent of the Scottish Parliament which would alter, if given, the

Scottish law, on the other hand18.

4. The negotiating positions

Various leaders of the European Union took a stand in connection with the

Brexit, before the invocation of art. 50. Thus, Jean Claude Juncker demanded

members of the Commissions of the Union not to engage in any kind of contracts

or discussions in connection with Brexit19.

Donald Tusk said that the United Kingdom will not be able to gain access to

the European market, if it will not accept the four freedoms of the European Union

relating to goods, services and capital and movement.20

Angela Merkel said that she is sure that the negotiations will not take place in

accordance with the principles of the Union. We have and we want to make the

difference between a country that wishes to be a member of the family of the

European Union and another that does not want this.21

Nicola Sturgeon, Scotland's Prime Minister, said that Scotland refuse to assent

to the legislation governing leaving the European Union, with all that Scotland

could not block the Brexit.22

Theresa May, the conservative new Prime Minister of Great Britain, explained

the negotiations with the EU and showed, in a broader approach shown in

Scotland on 15 July 2016, that is very important, first, to see if they’ll turn on the

provisions of article 50 and then discuss about negotiations23.

17 Brooks Libby, May tells Strugeon Holyrood will be fully engaged în art.50 decision, London

UK, 15 July 2016.

18 Laura Hughes, Brexit department spends more than 250.000 pounds on legal advice in just two

months, Daily Telegraph, 9 September 2016.

19 Leaving the EU – Researche paper 13/42. House Commons Library, 1 July 2013, Retrieved 19

May 2015.

20 Parker George (4 July 2016), Britain turns to private sector for complex Brexit talks, Financial

Times, Retrieved 5 July 2016.

21 A and O Legal opinion on EEA membership.

22 EFTA Bulletin Decisions Shaping in the European Economic Area, European Trade

Association, March 2009. Retrived 19 May 2015 şi Jonathan Lindsell, 12 August 2013, Fax democracy ?

Norway has more clout than you know. Civitas.org.uk.

23 The basic futures of the EEA Agreement, European Free Trade Association. Retrieved 8

August 2013.

46 ANCA IOANA IANCU, GHEORGHE IANCU

5. Economic effects

British Treasury estimated that keeping Britain in the European Union would

have positive effects on trade while otherwise it would seriously affect it. 24.

Brexit supporters argue that Britain’s exit from the European Union will allow

the elimination of some fees and as a result will increase government spending25.

Otherwise, the British will pay a contribution to the budget of the European

Union26. What is interesting is the fact that the British Institute for Fiscal Studies

noted that, most of the forecasts of impact of the Brexit over the UK economy

indicate that the Government may have less money to spend, even if it would no

longer have to pay anything to the European Union27.

On June 2016, the supporters for leaving the European Union have presented

the road map of Great Britain after Brexit. Parliament should vote on several laws,

such as: The law of finances for VAT refund in certain situations; the law on

asylum and immigration control and automatically that of the right of EU citizens

to enter the United Kingdom; The law on the national health service, which will

bring extra 100 million pounds; European Union Law; Trade law for the

commencement of negotiations with countries outside the Union; The law

repealing the law of the European Communities 1072, of termination of the

jurisdiction of the European Court of Justice over Britain and cessation of payment

of the contributions to the budget of the European Union28.

The World Pensions Council experts and University of Bath showed that

beyond the discussions that are worn in conjunction with Brexit, the UK economy

will remain resilient even after Brexit. British economic activities won’t fall and the

trade war with London is not in the interest of neither parts.29

On August 10, 2016, the British Institute for Fiscal Studies has published the

report of British funding by the Council of Economic and Social Research. This

report urges the British that they are in the face of a great difficult choice, if they

don’t remain with the benefits of the European Union as full members of the

Union, in terms of restrictions on migration. The same Institute shows that all the

costs of reducing the economic growth would have heavy effects for Brexit and for

Germany, especially since the German car production largely depends on exports.

Thus, on British exports depend 750.000 jobs in Germany, and in the United

Kingdom 3 million jobs depend on exports to the European Union. To this adds

the fact that economic predictions are however uncertain.

24 Brexit and the UKs public finances, Institute for Finances Report 116, May 2016.

25 Eu referendum.Vote leave sets aüt post-Brexit plans BBC News, 15 June 2016.

26 Agreement with the Swiss Federation, free movement of persons, European Commision, 14

July 2016.

27 De Meulemeester Claudia, Country risk. Experts says UK economy will quickly recover from

Brexit shock, Euromoney 17 June 2016.

28 Steven Swinford, Britain could be up to 70 billion worse off if it leaves the Singel Market after

Brexit, IFS warrms, 10 August 2016.

29 Claim hard Brexit could cost UK 10bn in tax, Financial Times, 4 October 2016.

The legal, political and economic implications of the Brexit 47

After the referendum, the German Bundestag has published an analysis on the

Brexit consequences for the European Union and especially for Germany30.

According to the analysis, the United Kingdom is, after France and the United

States, the third most important market for German products. Germany’s exports

of goods and services to the United Kingdom are almost 120 billion euro annually,

which means around 8% of German exports. In 2014, it was recorded a market

surplus of 36,3 billion Euros.

With Brexit, the European Union has lost its second largest economy, the third

largest population and the world financial center31. Also, with Brexit, the European

Union has lost the second largest contributor to its budget (11, 5 billion Euros),

after Germany (14.3 billion Euros), but ahead of France (5,5 billion Euros) 32 As a

result, the loss will have to be covered by the remaining Member States of the

European Union, such as Germany, 4,5 billion Euros in 2019 and 2020. Then, the

Member States will have to cover Britain’s participation at the capital of the

European Investment Bank, to which it had a 16 percent contribution33. Also,

because of Brexit, the European Union has lost part of its military power that

includes the nuclear shield and the second vote as power in the Security Council of

the United Nations.

Of course that Brexit will create problems of adaptation, in very many areas,

not only for the United Kingdom, but also for the European Union and especially

for the Member States with full rights. It is also almost impossible to analyze only

the legal implications of Brexit, without its links to the foundations of such

implications, which are also political and economic implications. For these reasons,

the present analysis was done by examining the legal implications together with

the political and economic ones. In fact, everything that is legal is generated in

content and form by the foundations of power in a state, namely the economic and

social power, and political means social.

30 Angreas Koenig, Ökonomische Aspekte eines Eu-Austritts des Vereigniten Königreichs

(Brexit), Deutsche Bundestag, 27 June 2016.

31 EU-Austritt des UK: Diese Folgen hat der Brexit für Deutscheland und die EU, Merkur, 22

August 2016.

32 Hendrik Kafsack, EU Haushalt: Deutscheland überweist das meiste Geld an Brussel, FAZ.

33 Reuters-dpa, Brexit wird teuer für Deutscheland, FAZ, 10 September 2016.