Leaving the European Union: The Single Market, the Rights of EU Citizens in the UK and the UK’s Future Economic Requirements

This House of Lords Library briefing has been prepared in advance of a debate that is scheduled to take place in the House on 26 January 2017 on the following motion:

Baroness Hayter of Kentish Town to move that this House takes note of the impact of the United Kingdom’s withdrawal from the European Union and potential withdrawal from the single market on the rights of European Union citizens living in this country and the United Kingdom’s future economic requirements.

The European single market is an internal market which currently encompasses all 28 EU member states. A number of other European countries outside the EU also participate in the single market, such as Iceland, Liechtenstein and Norway, who are parties to the European Economic Area (EEA) agreement, and Switzerland, which has a number of bilateral agreements with the EU. The UK joined the then European Economic Community (EEC) in January 1973, with the single market as it exists today being established in 1992. The single market provides for the ‘four freedoms’ within the EU: the freedom of movement for goods, services, capital and people.

In a speech on 17 January 2017, the Prime Minister, Theresa May, confirmed that the Government, in negotiating the UK’s withdrawal from the EU, would seek a bespoke model for future UK-EU relations. As part of this, Mrs May announced that the UK would not retain its membership of the single market. She said that the Government would seek to protect the rights of EU citizens living in the UK on the basis that the same rights were afforded to UK citizens living in EU countries.

This briefing explores the possible impact on the rights of EU citizens living in the UK following the Prime Minister’s announcement that the UK will not retain its membership of the single market on its withdrawal from the EU. It focuses on the current and future legal status of non-UK EU citizens in the UK and considers the possible effects of withdrawing from the single market on the UK’s labour force. In the context of the UK’s future economic requirements, the briefing concludes with an examination of the possible implications of leaving the EU for UK economy, trade and financial services.

It does not examine the different models that the UK may adopt once it has formally withdrawn from the EU. Nor does it examine the future implications for immigration between EU countries and the UK. The House of Lords Library briefing on Leaving the European Union: Future UK-EU Relationship explores both issues in further detail.