Brexit Negotiations at a Standstill Despite Vote

U.K. and EU flags in Brussels
The United Kingdom flag flutters next to the European Union flag in Brussels, Belgium, June 24. EU officials are calling on the U.K. to speed up the process of leaving the continental bloc. JOHN THYS/AFP/Getty Images

Why are we discussing this?

After the drama of the June 23 U.K. referendum vote to leave the European Union, the difficult challenge of how to put the decision into effect now has to be confronted.

Formally, the U.K. has to invoke Article 50 of the EU Treaty, which sets out the procedure for how a member state leaves. The article prescribes a two-year period for disentangling the departing member from all the rules, obligations and entitlements of belonging. It is bound to be a complex process, and there are many who expect it could take much longer.

Separately, even though negotiations are likely to proceed in parallel with the "divorce" negotiations, the U.K. will need to establish a new trading relationship with the rest of the EU.

What is Brussels' position?

Europe's leaders, both in Brussels and in national capitals, are anxious to avoid a prolonged period of uncertainty from which all sides would lose, and have been pressing the U.K. to decide quickly on invoking Article 50.

Although taken by surprise by a result that most of them never quite believed would happen, the reality has now dawned on Brussels that some very tricky bargaining lies ahead. Both Brussels and key national leaders also will want to avoid having to spend an excessive amount of time and political capital on Brexit, at a time when other crises need their urgent attention.

The European Commission is adamant that it will not engage in informal talks in advance of a formal request by the U.K., yet it also knows that there is nothing it can do to force the U.K. to act rapidly.

What is the U.K.'s position?

In his resignation speech, David Cameron announced that it would be up to his successor to decide when to launch the formal process of leaving the EU, immediately building in a delay until after the summer. This gives the new prime minister and the government she will head time to prepare the negotiations which may well not start until the New Year.

Perhaps the greatest difficulty for her will be how to reconcile potentially incompatible demands for, on the one hand, curbs on migration from the EU, and on the other, the call from the business world to maintain full access to the EU single market.

She will also have the delicate balancing act of demonstrating to the EU that she cannot be rushed or pushed around, while acting swiftly enough to keep markets happy.

What is likely to happen?

The U.K. will face a tense few months during which the rest of the EU could lose patience with what may be seen as British procrastination. It has become increasingly clear that there will be both immediate and medium-term economic risks from delay. The U.K. will be anxious to retain the confidence of investors alarmed by the uncertainty associated with Brexit and to dampen financial instability.

Political uncertainty is also likely, not least because U.K. voters will be faced with the realities of life outside the EU and this may give rise to efforts to reverse the referendum decision, albeit with the risk of a precipitating a constitutional crisis. Eventually the EU and the U.K. will start to negotiate in earnest, but about the only safe prediction is that it will be messy and fractious.

Iain Begg is a professorial research fellow at the European Institute, London School of Economics and senior fellow at U.K. in a Changing Europe Initiative.