On 23 June 2016, the people of the United Kingdom will vote in a referendum on whether their country should remain in, or leave, the European Union. If a majority votes to leave (or ‘Brexit’, for ‘British Exit from EU’), then the UK will indeed have to leave the EU.
This is one possible timeline for what would happen after the UK votes in favor of Brexit.
24 June to 31 December 2016
On 24 June, the referendum results are declared in the UK:
The UK Cabinet and Parliament decide that the country will indeed leave the European Union by 1 January 2017.
Negotiations between the UK and the EU are held.
They agree to maintain the free flow of goods and services between the UK and the EU; and to allow for visa-free travel between the UK and EU on the condition: that the UK will continue to adhere with EU product standards, financial and employment regulations; and that the UK makes a substantial annual contribution to the EU budget. The contribution would be similar with the arrangement the EU has with Norway (i.e. around Euro 100 per citizen), the UK will contribute Euro 7 billion/year (compared to its Euro 12 billion contribution at present)
The value of the British Pound will decline relative to the Euro.
The EU budget for 2017 and beyond is adjusted to compensate for he loss of the UK contribution by increasing country contributions from 1.23% of Gross National Income to 1.29%.
The UK opts to maintain agricultural subsidies at the same level as that of the EU’s CAP (Common Agricultural Policy), at least for a transition period of 3 years.
EU free trade talks with the US are suspended, because of the pending Brexit.
Foreign investments into the UK are greatly reduced during this period, due to uncertainty over the effect of the Brexit.
UK exports to the EU increases, as well as tourist arrivals, as a result of the Pound’s devaluation. Prices of all goods imported into the UK rise.
British companies are excluded from bidding for government contracts in the EU.
UK goods entering the EU are subjected to border contols, checking of documents and VAT payment.
The number of EU citizens working in the UK reduced by half (from 3 million to 1.5 million), the number of UK citizens working in the EU are halved as well (from 1 million to 500 thousand)..
The UK continues to allow skilled workers to enter and work, but blocks the entry of unskilled workers. As a result, a lot of unskilled jobs go to British citizens.
Wages for skilled workers from the EU rise because the Pound has devaluated relative to the Euro. At the same time, unskilled British workers get paid more because of the tighter labor market.
The people of the UK feel that their lives have gotten better as a result of the Brexit.
The UK holds early elections, the Conservatives win.
Foreign manufacturers (e.g. in the auto industry) do not establish new plants in the UK, but instead locate within the EU. Some plants in the UK are downsized.
Multinationals transfer their Europe headquarters from London to within the EU.
Many UK medium-sized service companies transfer to the EU, in order to be able to access the EU market.
The exodus of many companies and the restricted entry of foreign workers cause the UK real estate market to collapse.
UK inflation rises significantly higher than the EU’s 2% (due to higher cost of imported goods, less efficient production, etc).
UK reduces agricultural subsidies to farmers by half. Agricultural production, and exports to the EU, decrease.
The UK signs a free trade agreement with the US. The EU does not.
The UK feels significantly non-EU. The exodus of companies, cut in agricultural subsidies and production, etc are viewed as natural results of asserting sovereignty. (at least, this is what politicians tell the people).
The European Council (composed of the heads of all EU member countries) abolishes the need for unanimity for any of its decisions. Decisions that previously required unanimity will then be decided by qualified majority. This will greatly facilitate decision making.
The Eurogroup (the group of countries with the Euro currency) also decide to abolish the need for unanimity.
The European Parliament acquires the power to supervise the European Commission. The EP could now approve the nomination of individual Commission members, and could depose them by a vote of no-confidence.
UK trade with the EU declines.
The EU welcomes Turkey as a member. Accession talks with Ukraine begin.
Sweden and Denmark adopt the Euro.
EU establishes a Common Energy Policy, which reduces import prices for imported energy (especially from Russia), and coordinates alternative energy development.
EU Finance Ministry is established. The EUFM supervises the implementation of fiscal guidelines across the EU. Tax rates can only vary within limited ranges. Government expenditure.are allowed to vary only within limited ranges. (For example, a country could not have a disproportionately large military budget)
The EUFM issues EU Bonds. These will gradually replace bonds issued by national governments.
Frankfurt grows in importance as a financial center, rivalling London.
The exodus of foreign companies from the UK hurt Scotland the most within the UK; the Scots then pushes for another referendum on independence. In May 2022, the Scottish vote to leave the UK, starting on 1 January 2025.
Being outside the EU irritates the people of Northern Ireland. With the secession of Scotland, they have two EU countries as neighbors; meaning that there are border controls on both sides of their country. Then, the cut in agricultural subsidies hurts them. Both Protestants and Catholics want to secede from the UK and join the EU.
In Northern Ireland, people are inspired by the Scottish example, and demand to also have a referendum on independence.
EU integration accelerates; the UK starts to disintegrate.
The Euro is adopted throughout the whole EU. New members are required to adopt the Euro upon entry.
All EU countries are required to join the Shengen agreement on the free flow of persons.
Scotland becomes independent. It then applies for membership in the EU, and is accepted within a year.
Corsica and Catalonia secede from France and Spain respectively. They are accepted into the EU as new members. Cyprus reunites.
Northern Ireland becomes independent after majority of its citizens vote for it in a referendum. The country then forms a federation with the Republic of Ireland.
Moldova forms a federation with Romania, effectively joining the EU.
Ukraine and Serbia become members of the EU. EU Accession talks with Bosnia, Iceland Norway, Montenegro, Kosovo, Macedonia and Georgia begin. Association agreements are signed by the EU with Belarus, Armenia, Albania and Azerbaijan.
The name ‘United Kingdom’ is dropped after the secession of Scotland and Northern Ireland. The country is renamed ‘England & Wales’.
The EU is growing to finally encompass all of Europe except for Russia and England & Wales.