Disentangling Britain's 43 years of EU membership will take at least 2 years

A British Union Jack flag and a European flag fly

Dubai - There is a very real risk that Scotland at least could leave the United Kingdom. This would substantially aggravate political and economic instabilityHoward Archer, chief UK and European economist at IHS Global Insight

By Muzaffar Rizvi

Published: Fri 24 Jun 2016, 10:56 AM

Last updated: Sat 25 Jun 2016, 8:30 AM

Disentangling Britain's 43 years of EU membership will not be an easy process and will take at least two years to implement the decision, experts say.
Nigel Green, founder and CEO of deVere Group, said there is likely to be two years of varying degrees of market volatility because of the plethora of unknowns. At this stage there are still question marks hanging over so many different areas.
"What we do know, however, is that disentangling Britain's 43 years of EU membership will not be an easy process. The UK will remain part of the EU until it invokes Article 50 of the Lisbon Treaty, which has a two-year deadline to work out an exit," Green told Khaleej Times.
Howard Archer, chief UK and European economist at IHS Global Insight, said economic uncertainties relate not only to what will happen after the United Kingdom leaves the European Union, but also to when exactly the divorce will occur.
"The United Kingdom will exit two years from when it formally notifies the European Union that it is leaving (under Article 50 of the Lisbon Treaty), but the "Leave" side has indicated that notification may not occur until 2018 given the time needed to negotiate trade and other agreements with the European Union (especially given a need to also negotiate many trade agreements with non-EU countries)."
Archer said this delayed exit could prove unacceptable to European Union countries. The more messy and antagonistic the negotiations with the European Union prove (particularly over new trade agreements and access to the European single market), the more the UK economy is likely to suffer during 2016-2018.
"IHS suspects that UK negotiations with the European Union will prove difficult, given that EU leaders will not want to set a precedent for an easy withdrawal for other countries that could reconsider their status such as Denmark. Mitigating this, the European Union will be keen to protect its significant trade surplus with the United Kingdom," he said.
"Over the long term, how the United Kingdom economy fares outside the European Union depends on many factors. This notably includes the extent of the trade agreements that are reached not only with the EU but also with other regions/countries; how much the UK is affected by non-trade barriers when exporting to the EU; the amount of deregulation that is undertaken in the UK; what immigration policy is followed, how the City of London's role as a dominant financial centre is impacted; and how foreign direct investment into the UK is affected.
"It could take 5-10 years for all of these matters to be sorted. In the meantime, there is a very real risk that Scotland at least could leave the United Kingdom. This would substantially aggravate political and economic instability," Archer concluded.
--- muzaffarrizvi@khaleejtimes.com