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After the initial shock of the Brexit vote on June 23, the markets have gradually begun to stabilize and politicians returning for a new political semester are scrambling to refine their positions and approach to the more long term challenge of Britain’s new relationship with the EU.

On August 31, at a special meeting of the UK government to discuss their ‘Brexit Strategy’, Prime Minister Theresa May stressed that, despite continued divisions among ministers on what the next steps should be, a second referendum will not be held. It is likely that May will launch the formal process of leaving the EU in early 2017, by triggering Article 50 of the Lisbon Treaty. Once this happens, the UK will need to negotiate its exit from the union as well as the format of its new relationship. Any deal will need the unanimous consent of all 27 remaining EU countries.

Without nailing down specifics, UK ministers announced that they will be negotiating for a “custom built” new trade relationship, which would ideally protect their access to the single market (particularly in the area of financial services), while putting an end to unlimited immigration. Currently the UK can influence EU legislation not only through the Council and through their MEPs, but also via numerous specialist stakeholder groups and trade associations. With the UK seeking to increase its control over regulation, moving from this, to the Norwegian system for example, of merely rubber-stamping EU legislation, without being able to shape it, would not be politically acceptable to UK citizens. Among the ideas being proposed for this new relationship, is for the UK to form a union with non-EU countries, such as Norway and Iceland, to jointly negotiate access to the EU’s single market.

EU leaders are also preparing their negotiating strategy, with a common position to be decided at an informal meeting of the 27 heads of state (without the UK) in Bratislava on September 16. Senior European politicians have however repeatedly stated that the custom built relationship the UK are looking for is not on the table, as any deal granting access to the single market will not be accepted without substantial returns. The major decision to be made is therefore what exactly will be demanded from the UK in return for this privilege.

The EU will be torn between member states like France asking for a harsh treatment for Britain to send a strong signal to the populist movements like Front National, that an exit from the Union does not pay, and the member states dependent on the UK for trade and want to leave it as undisrupted as possible, which include ourselves in Ireland, as well as Germany, the Benelux countries and Scandinavia.

Trade is not the only thing that faces upheaval- the entire functioning and composition of the EU institutions will also have to be realigned. With 73 UK MEPs leaving the European Parliament, the qualified majority threshold will be lowered from 376 votes to 340. The loss of the generally more liberal and business-friendly MEPs from the UK will impact the positioning of the Parliament, shifting it further left. In the Council, Germany and France will both increase their respective weights by around 2%, while Italy, Poland and Spain will gain 1-1.5%. Therefore, the EU without the UK will leave the North weaker, the South strengthened and the Central European countries will be more crucial to Ireland for coalition building.

There will also undoubtedly be a change to key policy areas, including the Common Agricultural Policy (CAP). An informal meeting of EU agricultural ministers held on September 1 & 2 recognised that the farming sector will face a number of challenges following Brexit, resulting from reduced funding and the increase possibility of market volatility.

By Alison Graham

European Affairs Executive

Tags: Brexit, UK