Five challenges for the UK when leaving the EU

The campaign to leave the European Union has won the referendum. It means the UK is now committed to withdrawing from the group of 28 countries, a process that has come to be known as Brexit.

UK Special Deal Binned

The deal that Prime Minister David Cameron negotiated with the EU in February, giving the UK a special status as an EU member, will now be scrapped.

The UK won a guarantee that it would not suffer discrimination by being outside the eurozone.

That was to safeguard the City of London's authority, as Europe's biggest financial centre.

 In return, the UK pledged not to block deeper eurozone integration.

Withdrawal Negotiations

Prime Minister David Cameron has now said he will stand down by October 2016 and pass on to his successor the role of invoking the EU's Article 50 procedure to negotiate the terms of the UK withdrawal.

As soon as Britain formally notifies the EU of its intention to leave -- a step that might not happen for months -- it will enter into a two-year negotiating period in which the remaining EU states dictate the terms of their future relationship with Britain.

During this period, Britain will remain part of the EU and is expected to abide by its obligations as such, but it will be excluded from the other member states' discussions about the exit.

The final say rests with a "qualified majority" of EU member states, meaning at least 20 of the remaining 27 EU members, which must also comprise 65 % of the EU's total population.

If the EU fails to reach an agreement on Britain's exit in under two years, member states can extend negotiations by a unanimous vote.


Article 50 of the Lisbon Treaty, which has never been used before, sets a two-year time limit for reaching a deal. Generally seen as a tight deadline, it can be extended only if all 28 member states agree.

Once the UK tells the EU that it is withdrawing under Article 50, it "shall not participate in the discussions of the European Council or Council or in decisions concerning it", the rule says. So the UK will be cut out of EU decision-making at the highest level before it actually leaves.

The process requires the UK to unpick some 80,000 pages of laws binding the UK to the EU. Some will be kept, because some areas of EU policy are shared with non-EU countries, like Norway and Switzerland.

Under this "divorce settlement", as some have called it, the UK and EU must agree how to divide assets, resolve EU budget issues and set out the future rights of EU nationals in the UK and vice versa.

The settlement requires approval by a majority of EU members, plus the European Parliament and UK Parliament.


New Trade Relationship 

Talks to determine new UK-EU trading arrangements could start during the two-year negotiating period for withdrawal, but not necessarily.
If the EU waits until the UK's formal withdrawal, the negotiations might drag on for another five years or more. Pending a deal, the UK will trade with the EU under World Trade Organization (WTO) rules.
That would mean UK exporters paying new EU import tariffs and facing non-tariff barriers, in the same way that China and the US trade with the EU. UK services - accounting for 80% of the UK economy - would lose their preferential access to the EU single market.
Free trade deals that the EU negotiated with 53 countries, including Canada, Singapore and South Korea, will no longer apply to the UK. If the UK wants the benefits of them it will have to renegotiate with those countries

No More Budget Contributions

The UK will stop paying into the EU budget once it formally leaves the bloc.
So the UK's current net contribution of about £8.5bn (€11bn; $12.5bn) annually will stay at home.

Immigration Challenge

The UK will try to reduce immigration from the EU, probably with a points-based system like Australia's.

It means giving priority to high-skilled workers and blocking entry to low-skilled ones. Many jobseekers from the EU may be told to leave.

But first the UK will have to clarify the status of the nearly 2.2 million EU workers living in the UK. The rules for family reunions may get tougher.

But any block on freedom of movement is unlikely for at least two years, while the UK is negotiating Brexit.

Nearly two million UK nationals also live abroad in EU countries - so any British measures targeting EU workers could trigger retaliation against UK nationals abroad.

What the UK can start doing immediately, however, is tighten the rules for migrant benefits.