A blog post by Danielle Johnson, Junior Associate.
On June 23, 2016, the E.U. Referendum was held to decide whether the United Kingdom will remain a member state of the European Union.[1] Remarkably, over 33 million United Kingdom citizens took part in the vote, with 51.9% ultimately voting to leave the E.U.[2] This vote sparked a multi-year parliamentary controversy, including two Prime Minister resignations and multiple proposals of the Brexit Deal.[3] After over three years of arduous debate, Boris Johnson finally received parliamentary approval of his Brexit Deal on December 20, 2019.[4] This new Brexit law will undergo another vote in the House of Commons and is projected to win approval in the House of Lords.[5] This process is expected to be easily completed early next month, allowing the country to quit the E.U. at the end of January.[6] The approval of the European Parliament will also be needed, but luckily for the U.K., such approval is not in question at this time.[7]
Although parliamentary approval is one major step in the right direction to the U.K. not leaving the E.U. without a deal, the U.K’s economy will nevertheless feel major implications as a result of leaving the E.U. The reactions of many major corporations and banks in anticipation of a No-Deal Brexit have proven already to be quite significant. According to a study on the impact of Brexit on banking and finance published by capital market think tank New Financial, more than 275 financial firms in London have already made plans to relocate, or have set up entities outside of the U.K. in preparation for Brexit.[8] The New Financial study further acknowledged that financial firms who were once located in London have already moved £900 billion in assets out of the U.K., which is the equivalent to $1.2 trillion USD.[9] The U.K. economy is projected to take a substantial hit as a result of such a mass exodus of corporations.[10] The Bank of England conducted their own study, and calculated that in a worst-case scenario, Brexit could shrink the U.K.’s economy by 8 percent.[11]
All in all, even though there have been a lot of negative reactions to the U.K. leaving the E.U., the fact that Boris Johnson now has Parliament’s approval means the U.K. is finally on track to leave the E.U. with a Brexit deal. Many experts warned that leaving the E.U. without a deal would be catastrophic for the economy of the U.K., so this approval is seen as a major win for Boris Johnson.[12] Ultimately, Parliament’s approval of his deal truly symbolizes a light at the end of this multi-year Brexit struggle, and if all goes according to plan, the U.K. will leave the E.U. on January 31, 2020.
[1] Brexit: All you need to know about the UK leaving the EU, BBC News (Oct. 29, 2019), https://www.bbc.com/news/uk-politics-32810887.
[2] EU Referendum: Final Results, Bloomberg, https://www.bloomberg.com/graphics/2016-brexit-referendum/.
[3] William Booth and Karla Adam, Theresa May Resigns, Boris Johnson Becomes U.K. Prime Minister, in Elaborate Transition of Power, Wash. Post (July 24, 2019), https://www.washingtonpost.com/world/europe/boris-johnson-uk-prime-minister/2019/07/24/42bce126-ac93-11e9-9411-a608f9d0c2d3_story.html.
[4] Max Colchester, U.K. Parliament Backs Boris Johnson’s Brexit Deal, Clearing Major Hurdle, Wall St. J. (12/20/2019), https://www.wsj.com/articles/british-parliament-votes-to-support-boris-johnsons-brexit-deal-11576852565.
[5] Id.
[7] Id.
[8] Joanne Faulkner, Hundreds of Firms Leave City as Brexit Deadline Nears, Law360, (Mar. 11, 2019), https://www.law360.com/articles/1137272/hundreds-of-firms-leave-city-as-brexit-deadline-nears.
[9] Id.
[10] Id.
[11] Amie Tsang and Matthew Goldstein, For Wall Street Banks in London, It’s Moving Time, N.Y. Times (Feb. 17, 2019), https://www.nytimes.com/2019/02/17/business/brexit-banks-wall-street-london.html.
[12] Brexit: All you need to know about the UK leaving the EU, BBC News (Oct. 29, 2019), https://www.bbc.com/news/uk-politics-32810887.