Brexit – What, When And Why?

This blog post is the first in an on-going series of blogs and articles by Dashboard Insights on the implications to the automotive industry of the June 23, 2016 referendum decision in the United Kingdom ("UK") to exit the European Union ("EU"). This first blog will reprise briefly developments leading to the Brexit vote, the process that now appears likely to unfold and the implications as the UK changes its relationship with the EU. Suffice to say, there has long been growing political, social, cultural and economic restiveness in the UK about EU policies, rules and membership obligations culminating in the vote to "leave" (despite a more than 20 year battle leading to the UK's joining the EU in 1973).

While the majority vote to leave was very, very narrow and while many voters explained their vote to "exit" as simply "sending a message" of their generalized dissatisfaction with the status quo, the message has been received with significant and widely-reported fall out. The consequences are already being felt across the board exemplified by the plunging value of the UK pound, the uncertain future of non-UK EU nationals working in Britain or through the decisions (whether fundamental, incremental, explicit or unknowing) being made as each day since the Brexit vote passes by business to change strategies and priorities. All these consequences will have costs, whether for better or worse.

Executive Summary

Assuming that the UK does not suddenly wake up from what has becomingly widely viewed as a very bad dream, the near term problem/challenge in the UK and in the EU as a whole is uncertainty. The UK and the EU must, like it or not, negotiate the UK's terms of exit and of its future relationship with the EU pursuant to the increasingly famous Article 50 of the 2009 Treaty of Lisbon. Until the "exit," the UK will remain a member and, theoretically, benefit from and be subject to all of the elements of its current EU member status. However, for example, even if regulatory structures (e.g., direct application of EU law in the UK, competition policy, tariffs/trade and free movement of goods), social policies (e.g. free movement of people) and frameworks in negotiation (e.g., the unitary patent system) remain in place for the present there will be, at a minimum, increasing divergence as people, enterprises and countries adjust their respective strategies to the new reality. Whatever the outcome of the exit negotiations and what form the new...