Brexit Glossary - Brexit Jargon and Terms Explained
Brexit Glossary - Brexit Jargon and Terms Explained
As the Brexit saga continues, so too does the complexity of the terminology surrounding the UK’s stated mission to leave the EU. To better understand the jargon and common Brexit terms – and help improve your trading decisions - our glossary provides a basic overview of Brexit from A to Z.
On June 23, 2016 the United Kingdom and Gibraltar voted in a referendum to decide if the country should remain a member of or leave the European Union (EU). The result saw the UK vote to leave the EU by 51.9% to 48.1%.
The UK started the withdrawal process on March 29, 2017 and was due, originally, to leave the EU on March 29, 2019 at 22.00 GMT when the two-year Brexit negotiation period finished. As it stands, Brexit negotiations are still ongoing, and an end date is unclear.
Brexit Jargon to Bookmark
- Article 50 – Treaty on European Union (TEU)
Article 50 of the Lisbon Treaty is the legal and political process whereby any European Union member state may decide to leave the Union in accordance with its own constitutional requirements.
The backstop - or Irish backstop - is part of the Withdrawal Agreement that aims to prevent a hard border in Ireland after the UK leaves the EU and is intended to protect the Good Friday Agreement. The backstop would see all the UK enter a single customs territory with the EU and not able to leave until the EU approved any new workable border solution.
What is the Brexit Backstop and How Does it Impact the British Pound?
An abbreviation for 'British Exit' from the European Union.
- Customs Union
The EU Customs Union is a binding agreement between all EU member states which applies the same duties and tariffs on goods entering the EU and that member states agree not to impose additional duties or tariffs on goods travelling within the union, clearing the path for free trade.
- Divorce Bill
The divorce bill or Brexit settlement bill is the amount of money the UK is expected to pay the EU to settle all outstanding liabilities when the UK leaves. The overall figure is expected to be around GBP39 billion, but UK lawyers have said the figure may be as low as GBP7 billion if the UK leaves the EU without a deal.
- European Council (EC)
The European Council is made up of the heads of state or government from all EU countries, the European Council President and the European Commission President. The European council meets four times and a year and represents the EU to the world.
- European Union (EU)
The European Union is a political and economic union between 28 EU countries (including the UK) and is the largest trading block in the world covering an estimated population in excess of 513 million people. EU policies ensure the free movement of people, goods, services and capital – the Four Pillars - within the block.
- Free Trade Agreement
Defined by the World Trade Organisation as an agreement between countries that removes tariffs and other restrictions on goods traded between them. Free Trade Agreements differ from customs unions in that they remove tariffs between themselves but do not apply the same tariffs to goods imported from other countries.
- Good Friday Agreement
The Good Friday Agreement, or Belfast Agreement, was a peace treaty agreed between the British and Irish governments toend 30 years of violence.As part of this agreement, all border security barriers and checkpoints were removed. However, after the UK leaves the EU (Brexit), the only land border between the twowould be between Northern Ireland and the Irish Republic, a situation unacceptable to both the UK and the EU.
- Hard Brexit (No Deal Brexit)
In a Hard Brexit, the UK would not allowfor freedom of movement of EU nationals, contribute to the EU budget nor be subject to the rules of the European Court of Human Justice. The UK would look to sign a new trade deal with the EU, but if that was unavailable - a very likely scenario - the UK would revert to trading under World Trade Organisation (WTO) rules. The UK would be able to negotiate its own trade deals.
- Soft Brexit
In a Soft Brexit, the UK would stay/be part of either the Single Market and/or the European Customs Union. The UK would have to contribute to the EU budget, allow free movement of EU citizens and be subject to the rules of the European Court of Human Justice if it remained in the Single Market. The UK would be unable to negotiate any of its own trade deals if a part of the Customs Union.
- Lisbon Treaty
The Lisbon Treaty came into force on December 1, 2009 and amended the two existing treaties, the Treaty of European Union and the Treaty on the Functioning of the European Union to allow the necessary changes to be made for a fully functioning and enlarged European Union of 27 member states.
- Meaningful Vote
Section 13 of the government’s EU Withdrawal Act states that the UK government will not be able to ratify the Withdrawal Agreement unless Parliament is given a vote on the deal. There were three meaningful votes on Theresa May’s Withdrawal Agreement – January 15, 2019, March 12, 2019 and March 29, 2019. All three votes were defeated.
If a firm is authorised to undertake certain business activities by the regulator of one EU member state, it can apply for a passport to enact business with other EU member states without the need for further authorisation.
Prorogation is the period between the end of a session of Parliament and the State Opening of Parliament the begins the next session. The State Opening is the formal start of the parliamentary year with the Queen’s Speech setting out the governments agenda for the coming session, outlining policies and legislation. UK PM Boris Johnson prorogued parliament for five weeks from September 9 until October 14.
- Regulatory Alignment
The degree to which UK and EU trade rules will be similar or the same post-Brexit. When/if the UK leaves the EU, it will be considered a ‘third country’ and would create a land border between the UK and the EU. This border would be between Northern Ireland and the Irish Republic.
- Single Market
The single market refers to the European Union as one territory without any borders or obstacles to the free movement of goods and services. The EU single market accounts for over 500 million consumers and 21 million small and medium sized enterprises.
Which Countries Might Want to Leave the EU After Brexit - Analysis
- Transition Period
A period of time after the UK leaves the EU, when all current UK-EU arrangements are wound down to allow for a smooth transition between the two parties. During the transition period the EU will continue to treat the UK as a member state. Under the current Withdrawal Agreement, the transition period lasts until December 31, 2020.
- Withdrawal Agreement
The Withdrawal Agreement sets out the terms of the UK’s departure from Europe and is designed to facilitate an orderly withdrawal and legal certainty once EU laws and treaties no longer apply to the UK. The Withdrawal Agreement endorsed by Theresa May and by the EU27 has been rejected three times by the UK Parliament.
- World Trade Organisation (WTO)
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. WTO agreements are negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments to ensure that global trade flows as smoothly, predictably and freely as possible.
Operation Yellowhammer is the UK government’s contingency planning, covering 12 key areas of risk, for its response to the most severe short-term disruptions under a no-deal Brexit.
Stay up to date with all the Latest Brexit News, and how it impacts various financial markets.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.