What Even Is Brexit?
With all the talk recently about Brexit and its effects on the global economy, it's a good time for some of us who are a bit behind on the news to figure out what it even is in the first place. Brexit is a shortened term for British exit, the exit of course referring to its position as a member of the EU.
What's Going On?
First, we have the Treaty of Lisbon. Signed on December 13 th , 2007 and put into effect on December 1 st , 2009, this treaty is the constitutional basis of the European Union.
Article 50 of the treaty is notable, as it allows a member state to notify the EU of its withdrawal, and forces them to create an agreement with the state. Brexit will be completed through the activation of Article 50. After the article is invoked, the U.K. has two years to negotiate the logistics of its withdrawal.
Thursday evening, citizens of the United Kingdom participated in a referendum concerning whether or not their nation should remain in the EU. A referendum is a vote open to all citizens of voting age within a population concerning a single political question that has been referred to them for direct decision.
The result of the referendum shocked the market and the world, with 51.9% of the U.K. voting to leave the EU. Voter turnout was very high, with a turnout of 71.8%, or 30 million people voting.
How Did This Happen?
The U.K. had already opted out of the EU's monetary union years back, meaning that it would use its own currency, the British pound, instead of the Euro. Two movements characterized Brexit: "Remain," a movement to remain in the EU, and "Leave," their counterpart. The "Leave" group cited Brussels' bureaucracy and EU laws as a threat to British sovereignty, along with other gripes.
Brussels is the capital of Belgium and of the EU. Many of the decisions concerning member states occur in Brussels, with those against the EU unhappy about the U.K.'s diminished autonomy.
Further unhappiness stemmed from the general sentiment that the EU makes it far too easy for those from other member nations to immigrate. Within the U.K., many have been dissatisfied about the rising populations of immigrants from Poland and Romania, amongst other nations, who have come to search for work.
There has been some amount of support for a Brexit-like idea for many years in Britain, mainly on the Conservative side of the Parliament. U.K. citizens believe that their nation can survive without the economic cooperation that comes with the EU. This coupled with nativist sentiment led to the "Leave" victory that has since made global headlines.
The news has shocked the market, driving down stock prices and creating plenty of uncertainty about Britain's economic future, as we address here .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.