Brexit: some legal, constitutional and financial unknowns

What do we not know about Brexit? An awful lot. We don't even know when the negotiations can start, let alone what they will be about or when they will end.

The referendum and article 50 Article 50 unknowns

Article 50 has never been used before. Its meaning and how it will be used are not entirely clear. The exit negotiations will last two years, or longer if all the other EU Member States agree an extension.

Negotiation unknowns

Almost all policy questions depend on the outcome of the exit negotiations and the kind of agreement(s) reached. Most Brexit ‘unknowns’ are therefore predicated on this main ‘unknown’.

We don’t know how long the process will take or even when it will start. We can’t calculate the economic impact or say for sure how the Devolved Nations will be affected.

We don’t know what the withdrawal agreement will look like or what other agreements the UK will negotiate with the EU to settle future relations.

Can an Article 50 notification be withdrawn?

Article 50 TEU does not say, and there is disagreement among lawyers. It might be for the EU Court, if asked, to rule on this question.

Will there be a referendum on the terms of Brexit?

Legally possible if Parliament legislates for one, but politically unlikely.

The Prime Minister has insisted there will be no second referendum on the terms of the withdrawal agreement or for any other reason in connection with Brexit.

UK Parliament and the Devolved Legislatures The UK Parliament’s role in triggering Article 50

The High Court ruled on 3 November 2016 that the Government could not trigger the Article 50 process without parliamentary approval. The Government will challenge this judgment at the Supreme Court.

The UK Parliament’s role in scrutinising the negotiations and exit agreement

Treaty negotiations are undertaken by the Government under the Royal Prerogative. The UK Parliament has no formal role in scrutinising the negotiation of treaties (although it can delay or even – in the case of the House of Commons – block ratification).

The Government has made some commitments to share information on the negotiations with Parliament, and the Commons has set up a new Select Committee on Exiting the EU.

A role for the Devolved Legislatures?

The Brexit Secretary, David Davis, said the new Department was “fully engaged” with the devolved legislatures, and that he and ministerial colleagues had “discussed the next steps with a range of organisations”, including with the general secretary of the Trades Union Congress, key business groups, representatives of the universities and the charitable sector, and farming and fisheries organisations.

What will happen to EU law in the UK?

The Government intends to introduce a ‘Great Repeal Bill’ in 2017 to convert the EU acquis into UK law but without an EU basis. The Government (and Parliament?) will decide what to keep, repeal or amend.

We don’t know:

• to what extent legislation currently in force that gives effect to EU law will be repealed or amended
• how much European Union law will be transposed into domestic law after the UK leaves the European Union
• whether the UK will seek to remove to all references to EU institutions from the domestic law
• where EU legislation is transposed into domestic law, whether the law will be updated in line with any changes made by the EU
• the extent to which changes to legislation to give effect to Brexit will be set out in primary legislation
• the extent to which the Government will rely on Henry VIII powers to make changes to legislation to give effect to Brexit?
• whether the ‘Great Repeal Bill’ will simply transpose EU law into domestic law or include substantive changes to the law to come into force after Brexit
• whether the Great Repeal Bill will contain powers to facilitate transposition, to ensure that individuals’ legal position is maintained or whether it will contain powers to enable changes to be made so as to remove those elements of EU law that the Government wishes to change post Brexit
• whether the UK courts will continue to rely upon the jurisprudence of the CJEU when interpreting EU law after it has been transposed into domestic law.

Will any repatriated powers go directly to the Devolved Administrations?

The argument would be that the ‘reserved powers’ model reserves only specific powers to Westminster, whilst any other powers are devolved by default. The SNP believes that this would happen.

The legislation isn’t clear – arguments could be made both ways and the outcome will likely be politically influenced.

The ‘Great Reform Bill’ and the Devolved Administrations

The proposed Bill may have to make changes to the Devolution Acts, which will probably require a Legislative Consent Motion (under which it is recognised that the UK Parliament will not normally legislate with regard to devolved matters without the consent of the devolved legislature).

Impact on UK and EU citizens

Will UK and EU citizens have any ‘acquired rights’ other than those contained in Brexit agreements? General principles of certainty, stability, non-retrospectivity and mutual interest suggest some kind of continuing protection.

But it is far from certain that after the UK leaves the EU, individuals would be able to rely in the courts on an ‘acquired right’ to stay under EU law, the 1969 Vienna Convention on the Law of Treaties or customary international law.

UK expats and EU citizens

The position of British citizens in other EU Member States and of EU citizens in the UK remains uncertain.

What will happen to EU and UK students?

EU membership provides support to EU students studying in the UK and access to European research funding. EU membership also gives UK students access to European student mobility schemes such as Erasmus+.

The UK has signed the Bologna Declaration, which started a process to create a European higher education area through the harmonisation of systems across the EU in matters such as comparability of degrees, and by promoting academic mobility.

Universities are mainly concerned about the impact of Brexit on students and research.

The Government has said that successful bids for EU research funding made while the UK is still an EU Member would be guaranteed by the Treasury.

The Government has also confirmed that qualifying EU students applying to HE or FE institutions in the UK for the 2017-18 academic year would still be eligible for home student fees and tuition fee support for the duration of their courses.

But the longer term outlook for UK students abroad and EU students in the UK is uncertain.

Finance and trade When will the UK stop contributing to the EU budget?

The UK will remain a Member of the EU until its departure and will continue to contribute to the EU budget at least until this point.

Following a negotiated departure, the UK may still make contributions to the EU Budget.

Any future contributions will depend on the arrangements agreed for the UK’s future relationship with the EU. If there is a ‘hard Brexit’ it is unlikely that there would be a UK contribution.

The economic impact of the referendum result and Brexit

As of early October 2016, according to the Office for National Statistics, the referendum result appears not to have had a major effect on the UK economy.

Most economists expect GDP growth to slow in 2017 due to a reduction in business investment and slowing consumer spending. The decline in the value of the pound makes imports more expensive which might feed through to higher inflation and a decline in the purchasing power of consumers.

In the longer term, the UK’s new trading and investment relationships with the EU and rest of the world will be important in determining Brexit’s impact on the economy.

Most economists believe that the final post-Brexit settlement will leave the UK economy less open and therefore with lower long-term growth rates compared to the UK staying in the EU.

What will happen to the UK’s structural funds?

The UK stands to lose the funding that it receives from the EU. The Treasury has guaranteed full funding for structural and investment fund projects signed before the 2016 Autumn Statement and has urged British businesses and universities to continue to bid for competitive EU funds.

There have been mixed messages from local government as to whether regions and devolution deals will be compensated in full for any loss of funding in the 2014-20 round following Brexit.

Agriculture funding

More information is expected in the Autumn Statement on support for Pillar 2 grants for this current Common Agricultural Policy (CAP) period, as some of these span long time frames, e.g. five years.

Trade relations

We do not yet know what the trade arrangements with the EU will be after Brexit. The Government has ruled out some options, rejecting the Norway model (membership of the European Economic Area) and the Swiss model (lots of bilateral agreements with the EU).

The UK and Ireland

Brexit will mean a geographical EU border between the UK and Ireland, but whether there would be a physical border is not known.

UK staff in the EU institutions

The fate of UK staff in the EU institutions after Brexit is not clear. Once the UK is not an EU Member State, there should be no UK representatives in the EU institutions, although UK nationals might work in the institutions as scientific experts working on EU projects, for example.

The European Parliament will not support seconded national experts from non-EU States.

2019 European Parliament elections

If the UK Government triggers Article 50 by the end of March 2017, in theory the two years of negotiations should end by the end of March 2019.

EP elections will be held in May or June 2019, so the UK would no longer be a member of the EU if the two-year deadline is maintained.

But if the negotiations continue beyond March 2019, the UK might still be in the EU at the time of the elections, and eligible, if not required, to participate in them. It seems unlikely that the UK would be expected to participate if it was on the verge of leaving the EU, but the EU would have to agree a different arrangement for the UK.

Further reading

Commons Library Briefing Paper 7213, Brexit: impact across policy areas, 26 August 2016, looked at a range of policy areas that will be affected by Brexit.

Further analysis is also available in Commons and Lords Briefing Papers and Select Committee reports on the Parliament website at Brexit: the next steps for the UK’s withdrawal from the EU.

Further information Publication details