Brexit: Status and Outlook

The United Kingdom (UK) formally withdrew from membership in the European Union (EU) on January 31, 2020. Under the withdrawal agreement negotiated by the two sides, the UK is to continue applying EU rules during a transition period scheduled to run through the end of 2020. During the transition period, the UK and the EU are expected to begin negotiating the terms of their future relationship, including trade and economic relations as well as cooperation on foreign policy, security, and a range of other issues.

Overview of Developments

After the 2016 referendum in which 52% of voters in the UK favored leaving the EU, Brexit was originally scheduled to occur in March 2019. In early 2019, Parliament repeatedly rejected the withdrawal agreement negotiated between then-Prime Minister Theresa May’s government and the EU. Boris Johnson became prime minister in July 2019, following May’s resignation. Given continued deadlock over Brexit in the UK, the EU granted the UK a series of extensions.

In October 2019, EU and UK negotiators reached a new withdrawal agreement altering the Northern Ireland backstop provision, which was a main sticking point to Parliament passing the original deal. Under the new deal, Northern Ireland (part of the UK) is to maintain regulatory alignment with the EU (essentially creating a customs border in the Irish Sea) to preserve an open border with the Republic of Ireland (an EU member state) while safeguarding the rules of the EU single market. At the end of the transition period, the UK (including Northern Ireland) is expected to leave the EU customs union and pursue an independent national trade policy.

Prime Minister Johnson encountered difficulties in securing Parliament’s approval of the new deal. Seeking to break the deadlock, the UK Parliament agreed to set an early general election for December 12, 2019. Johnson’s Conservative Party won a decisive victory in the election, winning 365 out of 650 seats in the UK House of Commons. The result allowed the UK to ratify the new withdrawal agreement and end its EU membership.

Brexit, Trade, and Economic Impact

Brexit has considerable implications for the UK’s trade arrangements. Outside the EU customs union, the UK would regain an independent national trade policy, a major selling point for many Brexit supporters who advocate negotiating new bilateral trade deals around the world, including with the United States and the EU. The unlikely prospect in which the UK remains a member of the EU single market or customs union would provide more barrier-free access to the EU, but the UK would have to follow most EU rules without having a say in how those rules are made. Analysts predict the disruption resulting from Brexit likely will have at least a short-term negative economic impact on the UK, and many businesses in the UK have been taking steps to mitigate potential economic losses.

Northern Ireland Many observers have expressed concerns that Brexit could destabilize the Northern Ireland peace process, especially if it resulted in a hard border with physical infrastructure and customs checks between Northern Ireland and the Republic of Ireland. Conditions have improved considerably since the 1998 peace accord (known as the Good Friday Agreement or the Belfast Agreement), but many analysts assess that peace and security in Northern Ireland remains fragile. Concerns about a hard border developing have receded in light of Johnson’s election victory and Parliament’s approval of the renegotiated withdrawal agreement. Still, Brexit has added to divisions within Northern Ireland and continues to pose challenges for Northern Ireland’s peace process, economy, and, possibly in the longer term, its constitutional status as part of the UK.

U.S.-UK Relations and Congressional Interest President Trump and Administration officials have expressed support for Brexit. Members of Congress hold mixed views. The UK likely will remain a leading U.S. partner.     Purchase this report.