Exiting the EU: UK reform proposals, legal impact and alternatives to membership

Published Thursday, June 4, 2015

The UK will hold a referendum on whether to stay in the European Union by the end of 2017, after the Government has negotiated reforms which will benefit the UK. The Prime Minister is expected to outline these reforms to the European Council in June 2015. What might the impact be of a decision to leave the EU? How would the UK leave? Would the UK join a different grouping of states or go it alone? Would EU or UK citizens or businesses have any vested rights? This paper considers the background to the EU referendum, the withdrawal process, various legal and constitutional issues and possible alternatives to EU membership.

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David Cameron pledged during the previous Parliament that if the Conservatives were returned to government in the 2015 general elections, he would legislate to hold an in-out referendum on the UK’s continued membership of the European Union, following the negotiation and agreement of a number of reforms he had set out in speeches and policy papers.

The Prime Minister identified areas for reform in his Bloomberg Speech on 23 January 2013. His five principles for a European Union “fit for the 21st Century” were: competitiveness, flexibility, repatriating powers to Member States, democratic accountability and fairness. In March 2014 he set out proposals for reform:

  • Powers flowing away from Brussels, not always to it;
  • National parliaments able to work together to block unwanted EU legislation;
  • Businesses liberated from red tape;
  • UK police forces and justice systems able to protect British citizens, without interference from the European institutions;
  • Free movement to take up work, not free benefits;
  • Removing the concept of “ever closer union”.

It is not yet clear whether the Government’s proposed reforms will require EU Treaty change or how much support they have in the rest of the EU. David Cameron sought support for his reform ideas among other EU leaders, and launched his reform agenda – briefly - at the European Council on 25-26 June 2015. This triggered the start of technical talks involving UK and EU officials. The European Council agreed to return to the matter in December 2015.

The Treaty on European Union provides for a Member State to leave the EU, either on the basis of a negotiated withdrawal agreement or without one. If the UK were to leave the EU following a referendum, it is likely that the Government would negotiate an agreement with the EU, which would probably contain transitional arrangements as well as provide for the UK’s long-term future relations with the EU. There is no precedent for such an agreement, but it would in all likelihood come at the end of complex and lengthy negotiations.

As to whether UK citizens would benefit from leaving the EU, this would depend on how the UK Government filled the policy gaps left by withdrawal from the EU. What would happen to individuals and businesses who were already exercising EU rights – either in the UK or in other EU countries – if the UK left the EU? Some of these ‘vested’ rights might not be automatically removed or reversed once the EU Treaties no longer apply, either because of a withdrawal agreement, or because some EU-based UK legislation would probably remain in force. In some cases it might not be compatible with domestic law (and/or international law) to remove vested EU rights.

There is no definitive study of the economic impact of the UK’s EU membership or the costs and benefits of withdrawal. Many of the costs and benefits are subjective or intangible and a host of assumptions must be made to reach an estimate. If the UK were to remain in a reformed EU, assumptions need to be made about what the reforms might be. Any estimate of the effects of withdrawal will be highly sensitive to such assumptions.

In some policy areas, the environment, for example, where the UK is bound by other international agreements, much of the content of EU law would probably remain. In others, it might be expedient for the UK to retain the substance of EU law, or for the Government to remove EU obligations from UK statutes.

Much would also depend on whether the UK sought to remain in the European Economic Area (EEA) and therefore continue to have access to the single market, or preferred to go it alone and negotiate bilateral agreements with the EU along the lines of the Swiss model.

Recent opinion polls confirm that the UK population has less affinity to the EU than that of most other A YouGov poll, conducted 8-10 May 2015, found 45% would vote in a referendum for the UK to remain in the EU and 36% to leave (3% would not vote and 16% didn’t know).

It is now suggested that the referendum could be held in 2016.

The House of Lords European Union Committee considered the reform agenda, process and timetable in its Third Report of 2015-16, The referendum on UK membership of the EU: assessing the reform process, 28 July 2015.

For information on the impact of a UK exit in key policy areas and in Scotland, Wales and Northern Ireland, see CBP 07213, The impact of an EU exit in a range of key UK policy areas, 9 June 2015.

For information on the European Union (Referendum) Bill, see CBP 07212, European Union Referendum Bill 2015-16, 3 June 2015.

Commons Briefing papers CBP-7214

Authors: Vaughne Miller; Arabella Lang; Ben Smith; Dominic Webb; Daniel Harari; Matthew Keep; Richard Cracknell

Topics: EU law and treaties, EU political integration, Europe, International economic relations, International law, International politics and government

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