- The Norwegian Model By staying in the looser European Economic Area, the U.K. would still have access to the EU’s single market and participate in free movement of workers—but without any say in how they evolve—and it would still contribute to the EU budget. Banks prefer this model because it would preserve their access to EU customers.
- New Deal Negotiating its own free-trade agreement would limit most trade tariffs between the U.K. and the 27-nation bloc but it would take years to work out the extent of Britain’s market access. The EU’s trade agreement with Canada took seven years to negotiate and still isn’t ratified.
- WTO Rules Trading with the EU under World Trade Organization rules would avoid the hassle of setting up a complex new agreement and the U.K. could set its own trade tariffs just like Russia and Brazil do. But it would have no favorable relationship with the EU or any other country.
What Now? Brexit Win Sets Stage for Two Years of Bitter Talks
By: Ian Wishart and Matthew Campbell | Jun 24 2016 at 12:16 AM | International Trade
While final votes are still being tallied, it’s clear that British voters have opted to walk out on the European Union, setting up at least two years of bitter talks. Here’s a road map of what’s to come.
Will David Cameron Resign Immediately?
Possibly, but even the prime minister’s opponents have said they want him to stay on for a few months because an immediate resignation would only spell more instability. Eighty-four pro-Brexit Conservative Party lawmakers sent him a letter on Thursday saying they wanted him to continue no matter the result. So he may stay on for long enough to start negotiations with the EU.
What Happens Next?
Exit negotiations start as soon as Cameron tells the bloc’s other leaders he’s triggering the secession process under Article 50 of the EU treaty. Most leaders will want him to do that as soon as possible—perhaps even at a summit of EU leaders in Brussels on June 28—but British lawmakers may urge him to delay for several weeks or months to give them time to work out the way forward.
Either way, the other national leaders will want to know what sort of relationship the U.K. wants to have with the EU. Before then, there may be an emergency meeting of finance ministers over the weekend.
Once Article 50 is set in motion, the U.K. formally has two years to negotiate its way out of the bloc. Analysts say it’s unlikely that this will be long enough to work out the more complex trading accords and talks are likely to continue long after the U.K. officially leaves.
Who Will Lead the Negotiations?
Cameron’s successor is most likely to be one of the leaders of the Brexit campaign, such as former London mayor Boris Johnson or Justice Secretary Michael Gove. Their presence may harden the stance of other EU governments. The Leave vote may also prompt calls for a general election to clear the decks and elect a government specifically charged to negotiate with the rest of the EU.
What Sort of Deal Does Britain Want?
That’s still to be decided, and something that the Leave camp couldn’t answer definitively during its winning campaign. Three issues in particular will be in focus for investors and executives: What new agreement will regulate the $575 billion of annual trade between Britain and the rest of the EU? On what terms will U.K. companies be able to access the EU’s $13.6 trillion single market? And will banks domiciled in the U.K. continue to be able to do business in the rest of the EU?
There are three broad options: