Brexit: The Aftermath

In the unpredicted and unprecedented result of the June 24 referendum, the people of the United Kingdom decided to exit the European Union. The immediate aftermath of the vote was a fall in the value of the pound sterling – the sharpest in the last 30 years – as well as freefall in the financial markets and uncertainty across the EU.

The decision to exit the EU has already affected the UK and the broader European economy and sparked a chain of negative events around the world.  International companies and banking institutions are already working on plans to possibly move parts or even all of their operations and entities from the UK to other jurisdictions within the EU.

The UK’s decision has also raised numerous concerns amongst the other EU member states, since the result has already initiated talks and discussions in other countries, with proposals and arguments being put forward from some quarters for a similar referendum on whether to stay or leave the Union.

The EU needs to take into serious consideration the reasoning behind the British people’s decision. Even if the result of the vote had been to remain in the EU, European institutions and agencies should still consider their policies, which led a member state to proceed with a referendum to exit the EU, whose concept of unity and solidarity appears to have lost its value.

At this moment, the UK is still a full EU member state and will possibly continue to be so for some years to come. In order for the result of the referendum to take effect, all the parliaments of the UK (in England, Wales, Scotland, and Northern Ireland) have to vote on it and transpose it into legislation or an executive decision.

From the referendum result, it is evident and clear that a majority of the people of Northern Ireland and Scotland are against leaving the EU. If their respective Parliaments refuse to approve the result, that will possibly create deadlock and the UK will not be able to trigger Article 50.

The process to leave the EU cannot be initiated until and unless the British Government provides an official notice, subject to Article 50, informing the EU of its intention to exit the Union. When and if that happens, the UK will have two years to conclude the negotiations and terms of its exit. If this is not achieved within two years, the timeframe can be extended but only by unanimous decision by the other Member States of the EU.

A certain amount of panic has spread to Cyprus regarding the consequences of the UK referendum. In the short term, it is true that uncertainty might create certain issues regarding UK pensioners residing in Cyprus and British tourists to the island. But Cyprus is a commonwealth country and, as such, Cyprus and the UK have signed multiple bilateral treaties and, additionally, even if the UK finally exits the EU, it will be able to enter into alternative arrangements with Cyprus and the EU, which will bypass any possible short-term negative effects.

Moreover, if it correctly manages the current situation in the UK, Cyprus can actually benefit from the uncertainty that has been created. Companies can relocate to Cyprus, investors, while banks and other financial institutions can choose the island as the base for their headquarters.

Info: Michalis Economides,

CEO,Economides Kranos Chambersfield

Advocate/Legal Consultant