“What are we gonna do now?”
Joe Strummer of The Clash wrote that line about Britain in 1979 on the album “London Calling” and it is perhaps more applicable today than ever. It was soon after London’s, “winter of discontent” and now many are worried about what Britain just did in leaving the European Union.
We will get to the legal issues soon and the questions about how a country leaves from a trade and political pact after 50 years. The simple answer is, it won’t won’t be easy. The hard reality is, nobody really knows where to go from here. The legal language is not in place and the language that is in place, nobody wants to follow. This is what the lawyers are struggling with.
Where is this Brexit going?
With the June 23 vote to leave the European Union the United Kingdom has put itself in an unknown situation that could have drastic implications for the world economy.
Despite 75 percent of Londoners voting to remain and most Scots ready to jump ship from England, the UK voted to leave the EU and lost more money in one day than all the money they contributed to the EU in 15 years, despite the EU kickbacks.
So now Great Britain, and particularly England, has a serious amount of work ahead in regards to the future. And no one in the ‘Leave” part of this seems to have thought about the ramifications that much.
But yet this whole strange scenario gets stranger every day. It is hard to keep up. Depending who you talk to the result is either dire or not so bad.
Basically this could be huge and the drastic scenario set out by the Tory Conservative party is becoming clear. England could be left alone without Scotland, Gibraltar and perhaps Northern Ireland, according to experts.
This is not a political opinion. it is more along the lines of, this is interesting and a quick analysis.
The Prime Minister David Cameron has said he will step down and everyone else behind “Leave” has said they will not step up. The EU wants Britain to just go away at this point.
While there is talk of reversing or ignoring the referendum results, Dorothy Livingston, a consultant at London’s law firm Herbert Smith Freehills, called the reversal scenario “highly unlikely.” While the percentage of the “Leave” vote was slim it was still almost one million votes.
“It is not legally binding,” she said, “ But the government has said it will [honor the vote].”
Livingston said it will take about two years for the country to exit the EU, but that will be clearer around October when a new government is in place. Prime Minister David Cameron is stepping down and possible successors are also stepping down. In Britain’s Conservative Party “mainstream means out,” Livingston said. But …
But now the former favorite and former London Mayor Boris Johnson, says he will not step up. He compared being PM to being reincarnated as an olive and finding Elvis on Mars. So if all this doesn’t sound a bit odd given that they just convinced a former empire to vote leave and now want nothing to do with it, it begs the question of how this will all play out? From Home Secretary Theresa May to Justice Secretary Michael Gove, not one seems to want this job.
But let’s look at some legal stuff
Britain’s EU exit is historic and a breaking point. So since this is a legal publication, what does this mean for law firms, financial institutions, the EU and even the future of Britain itself? For law firms and financial institutions it probably won’t mean much, although they expect to set up shop on the continent with new licenses. The EU has been clear that it is basically Euro or nothing. A new Euro stock exchange in London has been scrapped.
“Financial institutions operate on an EU passport,” Livingston said. “They can simply transfer the relevant registration. Law firms will carry on as before.”
She said it is no different than what the big firms in the United States and other global firms do and that makes sense.
The big question here is, how do you exit the EU? No one really knows. The UK-drafted Article 50 doesn’t apply well. Not even the divorce contract makes sense — to Britain or Europe. Law firms benefit here by trying to explain this scenario to clients.
And there are legal issues that clients need guidance on, particularly Article 50, the EU exit clause. Britain is trying to avoid triggering the clause in the 2009 Treaty of Lisbon. That is because if the law is triggered it takes a unanimous vote to go into effect and any EU member state can veto it. Britain wants no part of this even though they wrote it.
“Clients are obsessed with Article 50,” Livingston said. “The constitution is not a very precise thing and there is no constitutional principal that is a position they are well suited to adapt to.”
The UK Leave vote is new territory and this has never happened before.
That said, lawyers in London I spoke with, did not seem so pessimistic.
Although the pound dropped like a rock and the EU now has to deal with not only the first exit from the union and the possibility of more countries following suit, it gets weirder. Who is taking over? Boris Johnson is out. Most other conservative names and potential successors want nothing to do with this.
Great Britain is not exactly Greece. It is a major economy and a key source of EU funding. It also had the sweetest financial deal in the EU and that involved getting the biggest kickbacks of all EU countries even if this vote was focused around immigration, which will not change. The vote just hurt the country even more and the EU has already told them to go away. Or has at least started that process.
The EU was founded on the ashes of post-world War II Europe as a trading bloc and a way to keep peace in Europe and the recent developments are a bit shocking for many and likely hurtful for years to come. Time will tell.
Britain has been in the EU for more than four decades and the EU buys half of the UK’s exports. By June 24 the pound had dropped to a 30-year low.
It can be argued that a drop in the pound helps exports short term and also law firms short term since someone needs to figure this out for clients.
But given that that the UK is being shunned by the EU and the United States and the UK has no leadership after this vote it doesn’t seem to be able to say, “oops.”
I would love some thought pieces from UK lawyers.
Give me your thoughts at Kevin.livington@gcgrapevine.com
Al the best,
Kevin Livingston
