Even after the result of the Brexit referendum, the argument over the pros and cons of leaving the European Union continues. Find out the key points from both sides of the debate – and why they are important for traders – here.
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Pros and cons of leaving the EU
Benefits of being in the EU: the debate
The process of Brexit began with the United Kingdom voting to leave the European Union (EU) in the 2016 referendum – but there is still a lot of debate surrounding whether or not it is the right decision, and what form Brexit should take.
With speculation playing a part in almost every claim for or against the EU, it’s a big ask to distinguish between legitimate risk and doom-mongering. As the process of negotiating an exit deal continues, there are still many ‘what ifs’ in play, and either camp could ultimately be proved right or wrong.
Stay
Though unsuccessful in garnering enough votes in the referendum, the stay campaign have continued to advocate for a close relationship with the EU. This could be achieved either by reversing the decision to leave – though this has been criticised as undemocratic – or through a soft Brexit.
The arguments for remaining in the EU tend toward the benefits of being part of a wider union – and the security and favourable treatment that come with it.
Key arguments for stay
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Foreign affairs
As part of a 500 million-strong economy, Britain has greater influence over international matters.
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Sovereignty
Britain has proved that it can opt out of EU policies it considers counterintuitive, such as the euro, the Schengen Agreement and enforced migrant quotas.
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Security
A union better equips Britain to tackle threats to security, including terrorism and cross-border crime.
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Money
Europe provides Britain with billions of pounds’ worth of investment each year.
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Trade
Membership in the EU gives us the strength to negotiate favourable trade agreements with countries around the world.
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Business
Free trade within the EU reduces barriers and enables UK companies – particularly small ones – to grow.
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Jobs
Millions of jobs linked to Britain’s membership would be put at risk.
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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 capturing the imaginations of the UK, there has been less success negotiating with the EU. To dissuade other members considering their own withdrawals, the EU are being stringent on their idea of what Brexit means.
Some on the leave side advocate a hard Brexit – gaining more sovereignty, taking control over immigration and reducing red tape – while others are more moderate.
Key arguments for leave
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Foreign affairs
EU membership limits Britain’s international influence, ruling out an independent seat at the World Trade Organisation.
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Sovereignty
Britain would have more control of its laws and regulations, without risk of having counterintuitive policies forcefully imposed.
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Security
Britain’s domestic security would benefit more from greater border control than political union.
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Money
Britain contributes billions of pounds in membership fees to the EU every year.
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Trade
Membership in the EU keeps Britain from fully capitalising on trade with major worldwide economies like Japan, India and the UAE.
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Business
The EU subjects Britain to slow and inflexible bureaucracy, making it more prohibitive for smaller, more innovative companies.
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Jobs
Improved global trade agreements and more selective immigration would have a positive effect on the British job market.
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Consumer goods
The average person in Britain lose hundreds each year owing to policies regarding VAT contributions and agricultural subsidies.
How to leave the EU
The referendum was intended to decide the UK’s position on membership of the EU, but if anything it has made opinions more blurred. The debate has moved on from whether to leave or stay to how we should leave – a so-called ‘soft’ or ‘hard’ Brexit.
Hard Brexit
A hard Brexit would take a rigid position on all the issues outlined above – it would likely entail full severance of the relationship between the UK and the rest of the EU.
- Argument for: a hard Brexit could 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 of getting better trade deals once we leave. And we could still end up being forced to comply with EU laws and regulations about product quality and financial policy
Soft Brexit
A soft Brexit would aim to keep most of the relationship between the UK and the EU intact, keeping Britain in the single market.
- Argument for: staying in the single market would make trading easier – it has been frequently stated it is within the interests of the City and the UK as a whole keep free trade. It would also prevent the uncertainty that surrounds a hard exit
- Argument against: staying inside the single market and customs union is regarded by many no Brexit at all – with a strong likelihood that Britain would have to accept the continued free movement of people. Plus, it could put the UK in the dangerous position of still having to accept EU economic and political policy, but with no seat at the negotiating table
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