A pocket guide to Brexit - Business
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We're going to run through the basics of Brexit. For anything more, tap any text that's underlined to do some deeper reading on that topic.
You can also tap on the following to jump between sections. We'll look at:
The European Union (EU) was formed in 1993 but traces its origins back to an
economic treaty that followed World War II. It’s a collection of 28 countries (soon to be 27) that operates a bit like
an extended family.
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Each member country has its own government, laws and culture, but together the EU operates as a single continent where
goods, services and people can move freely.
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There's a
European Parliament made up of elected representatives from each member country and a Council made up of the governments of each member country.
The
Parliament and Council make the policies that apply to the EU. Both have to review and agree on new policies for them to be made law (similar to our Lower and Upper Houses).
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The size of the majority needed to support a policy in the Parliament and Council
depends on what it is. For example, a policy regarding EU membership needs unanimous support from the Council.
Most other issues can pass with
a qualified majority.
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EU policy can override domestic laws in each member country. For example, the EU mandates a minimum four weeks' paid leave each year for full-time workers. The UK's domestic minimum leave is five weeks. This means that while the UK is part of the EU, workers will get five weeks' paid leave but
the UK cannot change it to less than four.
The EU
doesn't cover all workers' rights, however. It doesn't have a policy on sick pay or minimum wage for example, so it's up to individual countries to decide those for themselves.
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During the Brexit campaign, Boris Johnson made a series of claims about
restrictions the EU imposed on member countries, including that it banned the recycling of teabags.
The
BBC fact-checked the future prime minister's claim and found the
EU had the power to ban the composting of teabags and any other food waste if authorities were worried about the spread of disease.
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Each country
pays 'membership fees' which go towards funding projects within the EU.
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One of the EU-wide projects is for a transition to a
climate-neutral continent by 2050, which will impact energy, transport and business in every country.
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The membership fee is different for each country. It's based on the size of the country's economy, how much tax the government gets in VAT (the EU’s version of GST) and on extra fees on imported goods.
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In 2018, the UK paid
13.2 billion pounds ($24.95 billion) in membership, making it the
third-largest contributor. In that year, the EU spent 4.3 billion pounds on public projects in the UK.
That sounds like an enormous loss, but bear in mind it doesn't take into account the
trade, jobs and investments that come with being a member of the EU.
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Citizens of EU countries and their families
can move and live freely across the EU.
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That means someone who grew up in Denmark can holiday in Greece, go to university in Spain, or settle down with their family in Germany
without worrying about a visa.
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A dairy farmer in Austria can sell their milk to cafes in France, Italy and Bulgaria without paying extra charges or being stopped at customs each time their truck crosses a border.
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One of the things that makes this freedom easier is the
single currency:
the euro. The euro was adopted by most EU countries in 1999.
The
UK chose to stick with the pound rather than adopt the euro for a number of reasons including control over its own interest rate and independence in the face of a financial crisis.
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For
a long time, some Conservative politicians argued that
the UK put more funding into the EU than it received in benefits.
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During his term as UK Prime Minister, David Cameron
faced immense pressure to address the UK's place in the EU from the right of his party.
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So, in 2016, David Cameron
held a referendum that asked, "Should the United Kingdom remain a member of the European Union or leave the European Union?"
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The
result was
52 per cent voted to leave, and 48 per cent to remain. David Cameron himself had voted to remain, so he
stepped down as Prime Minister and Theresa May took over.
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The referendum showed that the UK wanted greater independence from the EU, but many still wanted some of the benefits.
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One of the
sticking points was how Ireland (a member of the EU) and Northern Ireland (part of the UK) would operate with a
hard border between them.
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So, Theresa May presented a deal that included a "
backstop" that would allow many
previous EU freedoms to remain between the two.
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After
three failed attempts to pass the deal through the UK Parliament,
Theresa May stepped down as Prime Minister and was replaced by Boris Johnson.
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Boris Johnson passed his Brexit bill, mandating a
transitional period of 12 months, during which the finer details of the new relationship between the EU and the UK can be sorted out.
If no agreement can be made by January 2021, the UK will face a "
hard Brexit" and crash out of the EU.
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This means the UK will no longer pay any membership fees and lose the special benefits for countries within the EU.
It will essentially operate like any other outside country.
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EU citizens currently living in the UK, and vice versa, will need to apply for settlement or move back. The UK will likely be bound by the same European visa agreements as Australia.
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Goods and services imported into the UK will have a lot more hoops to jump through. Countries like Australia will need to export to the UK and the EU separately.
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Just like in the
first experimental explainer, we'd love your thoughts as we develop this new kind of storytelling.
Tap here to email yours.
Credits
- Research and production: Jacqueline Howard
- Development: Nathanael Scott