Pros and cons of Brexit

With the UK set to leave the EU by 31 January 2020, the debate over the terms of its departure continues. Learn about the key points from both sides, and why the debate is important to traders.

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Benefits of being in the EU: the debate

The Brexit process began with the United Kingdom (UK) voting to leave the European Union (EU) in a 2016 referendum. Since then, there has been heated debate from both the remain and leave camps about the best scenario for Britain moving forwards.

With speculation playing a part in almost every claim for or against the EU, it’s sometimes difficult to distinguish between legitimate risks and doom-mongering. As the process of negotiating a withdrawal agreement nears its end, there is still uncertainty surrounding the UK’s exit from the EU, and the debate on the pros and cons of Brexit continues.

Learn about the opportunities Brexit offers traders

Benefits of being in the EU: the debate

The Brexit process began with the United Kingdom (UK) voting to leave the European Union (EU) in a 2016 referendum. Since then, there has been heated debate from both the remain and leave camps about the best scenario for Britain moving forwards.

With speculation playing a part in almost every claim for or against the EU, it’s sometimes difficult to distinguish between legitimate risks and doom-mongering. As the process of negotiating a withdrawal agreement nears its end, there is still uncertainty surrounding the UK’s exit from the EU, and the debate on the pros and cons of Brexit continues.

Learn about the opportunities Brexit offers traders

Remain

Though unsuccessful in garnering enough votes in the referendum, the remain camp have continued to advocate for a close relationship with the EU in the form of a departure from the EU with a deal in place.

The arguments for remaining in the EU focus on the benefits of being part of a wider union, and the security and favourable trading relationship made possible through EU membership.

Key arguments for remain

Foreign affairs

As part of a community of 500 million people, Britain has greater influence over international matters as a member of the EU.

Sovereignty

Britain has proved that it can opt out of some EU policies which it considers counterintuitive, such as adoption of the euro, the Schengen Agreement and enforced migrant quotas.

Security

A union better equips Britain to tackle threats to security, including terrorism and cross-border crime.

Money

European businesses invest billions of pounds in the UK every year, both in the public sector and private sector.

Trade

EU membership gives Britain access to the European single market, which is invaluable for trade and enables the easy movement of goods, services and people across member states.

Business

Free trade within the EU reduces barriers and enables UK companies to grow.

Jobs

Millions of jobs linked to Britain’s membership would be put at risk. Some sectors such as nursing and manufacturing could experience a slump in skilled labour.

Consumer goods

The average person in Britain saves hundreds each year thanks to lower prices of goods and services facilitated by the EU.

Leave

While the leave campaign succeeded in the referendum, there has been less success in negotiating with the EU. To dissuade other members considering their own withdrawals, the EU have been firm in their approach to the negotiation process so far.

Leave supporters are unyielding in their resolve that the referendum result is final, and that the UK must now leave the EU. However, while some on the leave side advocate a hard Brexit – gaining more sovereignty, taking control over immigration and reducing red tape – others are more moderate.

Key arguments for leave

Foreign affairs

EU membership limits Britain’s international influence, ruling out an independent seat at the World Trade Organisation (WTO).

Sovereignty

Britain would have more control of its laws and regulations, without risk of having counterintuitive policies forcefully imposed.

Security

Britain’s domestic security could benefit from full border controls, which it would gain outside the political union.

Money

Britain contributes billions of pounds in membership fees to the EU every year.

Trade

Membership of the EU keeps Britain from fully capitalising on trade with other major economies such as Japan, India and the US.

Business

The EU subjects Britain to slow and inflexible bureaucracy, making it more prohibitive for smaller companies to do business.

Jobs

Improved global trade agreements and more selective immigration could have a positive effect on the British job market.

Consumer goods

The average person in Britain loses hundreds of pounds each year due to EU VAT contributions and agricultural subsidies policies.

Remain

Though unsuccessful in garnering enough votes in the referendum, the remain camp have continued to advocate for a close relationship with the EU in the form of a departure from the EU with a deal in place.

The arguments for remaining in the EU focus on the benefits of being part of a wider union, and the security and favourable trading relationship made possible through EU membership.

Key arguments for remain

Foreign affairs

As part of a community of 500 million people, Britain has greater influence over international matters as a member of the EU.

Sovereignty

Britain has proved that it can opt out of some EU policies which it considers counterintuitive, such as adoption of the euro, the Schengen Agreement and enforced migrant quotas.

Security

A union better equips Britain to tackle threats to security, including terrorism and cross-border crime.

Money

European businesses invest billions of pounds in the UK every year, both in the public sector and private sector.

Trade

EU membership gives Britain access to the European single market, which is invaluable for trade and enables the easy movement of goods, services and people across member states.

Business

Free trade within the EU reduces barriers and enables UK companies to grow.

Jobs

Millions of jobs linked to Britain’s membership would be put at risk. Some sectors such as nursing and manufacturing could experience a slump in skilled labour.

Consumer goods

The average person in Britain saves hundreds each year thanks to lower prices of goods and services facilitated by the EU.

Leave

While the leave campaign succeeded in the referendum, there has been less success in negotiating with the EU. To dissuade other members considering their own withdrawals, the EU have been firm in their approach to the negotiation process so far.

Leave supporters are unyielding in their resolve that the referendum result is final, and that the UK must now leave the EU. However, while some on the leave side advocate a hard Brexit – gaining more sovereignty, taking control over immigration and reducing red tape – others are more moderate.

Key arguments for leave

Foreign affairs

EU membership limits Britain’s international influence, ruling out an independent seat at the World Trade Organisation (WTO).

Sovereignty

Britain would have more control of its laws and regulations, without risk of having counterintuitive policies forcefully imposed.

Security

Britain’s domestic security could benefit from full border controls, which it would gain outside the political union.

Money

Britain contributes billions of pounds in membership fees to the EU every year.

Trade

Membership of the EU keeps Britain from fully capitalising on trade with other major economies such as Japan, India and the US.

Business

The EU subjects Britain to slow and inflexible bureaucracy, making it more prohibitive for smaller companies to do business.

Jobs

Improved global trade agreements and more selective immigration could have a positive effect on the British job market.

Consumer goods

The average person in Britain loses hundreds of pounds each year due to EU VAT contributions and agricultural subsidies policies.

Pros and cons of no deal vs deal

There are two ways that Britain can leave the EU: with a deal, or without a deal. A scenario in which Britain leaves with a deal is sometimes referred to as a ‘soft Brexit’, and a scenario in which Britain leaves without a deal is known as a ‘hard Brexit’.

Pros and cons of no deal vs deal

There are two ways that Britain can leave the EU: with a deal, or without a deal. A scenario in which Britain leaves with a deal is sometimes referred to as a ‘soft Brexit’, and a scenario in which Britain leaves without a deal is known as a ‘hard Brexit’.

No deal

A no-deal Brexit would result in a rigid position on all the issues outlined above. It would likely entail full and immediate severance of the relationship between the UK and the rest of the EU once the departure date of 31 October arrives.

Argument for: a no-deal Brexit would see the UK leave the free trade zone, do away with EU regulations, and eradicate the need to accept the free movement of people. This would provide the opportunity to negotiate new trade deals with other countries.

Argument against: the EU is Britain’s biggest trading partner, and there’s no guarantee the UK will get better trade deals once it leaves. Adding to this, the UK could still end up being forced to comply with EU laws and regulations, as is the case with Norway and Iceland.

Deal

Leaving with a deal, sometimes called a ‘soft Brexit’, would aim to keep the relationship between the UK and the EU intact. This could be done by keeping Britain in the single market or, at the very least, arranging the terms of some sort of free-trade agreement before the 31 October deadline arrives.

Argument for: staying in the single market would make trading easier. Many commentators have stated that it is within the interests of the City and the UK as a whole to maintain free trade with the EU. Leaving with a deal in place would also prevent the uncertainty that surrounds a no-deal Brexit.

Argument against: staying inside the single market and customs union is regarded by many as a betrayal of the referendum result. By staying in the single market and customs union, the UK would be liable to EU rules and legislation regarding the free movement of goods, services and people across borders. Plus, it could put the UK in the dangerous position of still having to accept EU economic and political policy, while at the same time denying the UK a seat at the negotiating table.

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