Despite comprehensive campaigning from both sides, prior to the referendum there was an underlying sense that the leave campaign was fighting a losing battle. Asides from the most staunch leave campaigner not many individuals had real belief in the UK actually voting to leave the European Union. However, much to the shock of much of the country as well as the overriding majority of Europe, in June, the UK decided its time as a member state of the EU had to come to an end.

How did the European Union develop?

The European Union’s formation can be traced back to agreements following the end of World War Two. These agreements created three major institutions: the Organisation for European Economic Co-operation (OEEC) in 1948, the Parliamentary Assembly of the Council of Europe (PACE) in 1949 and the European Coal and Steel Community (ECSC) in 1951.

The Organisation for European Economic Co-operation (OEEC) was born out of the Marshall Plan; a plan created by the United States which dedicated economic funds in exchange for loyalty against the communists. Upon its formation, OEEC had eighteen members including the United Kingdom. The organisation was committed to promoting co-operation between nations with regard to reconstruction programmes, developing trade agreements within Europe through reducing tariffs, which consequently would help promote free trade.

The Parliamentary Assembly of the Council of Europe (PACE) held its first meeting in August 1949 in Strasbourg and is one of the legal bodies of the Council of Europe. It is committed to maintaining democracy, the rule of law and human rights. The United Kingdom, Luxembourg, France, Belgium, Denmark, Greece, Ireland and Italy were some of the nations who attended this first session.

In 1951 Belgium, France, Germany, Italy, Luxembourg and the Netherlands created the European Coal and Steel Community (ECSC). This agreement resulted in a common market for coal, steal and iron. It was also an attempt to maintain peace within Europe, which some saw as being threatened due to the rise of Cold War tensions. This was then followed by the establishment of the European Economic Community or the ‘Common Market’ after the Treaty of Rome was signed in 1957. Both agreements were centred on rebuilding the economy and helping restore order to the battleground of World War Two. Whilst the ECSC was primarily economic in principle, its scope soon expanded, as both a European Defence Community and European Political Community were proposed. The European Defence Community was part of an attempt to prevent Communist threat within post-war Europe as many countries fell to communism during the years after 1945 including Czechoslovakia and Hungary. It was put forward by French politician Rene Pleven and caused much debate within Europe, with both France and Italy split upon the decision. Whilst it was eventually formed following a treaty in Paris in 1952, its power was limited by 1954 and ultimately it was replaced by the Western European Unity Treaty in 1955.

Nonetheless, the European Economic Community (EEC) was highly successful and by 1970 the free and common market that it created resulted in trade increasing by fivefold. What is particularly important to note from the latter is that the foundations of the European Union centred on economic drive of nations as they sought to rebuild post-war, in addition to the maintenance of democracy over the Communist threat. Similarly to ECSC, it created bodies of advisors and decision makers including a Council of Ministers, a Common Assembly. As a result of the Brussels Treaty in 1965, a civil service was created as the EEC, ECSC and Eurotom (European Atomic Energy Community) merged. The United Kingdom did not become a member of this body until 1973. Its decision to join the European Economic Community was a consequence of a lagging economy in comparison to the rest of Europe; economics drove the decision that would eventually have major political ramifications.

Moving forward, the European Union as experienced over the last twenty years was not created until 1st November 1993. The Maastricht Treaty established a political and economic union. Twelve countries from the European Community (EC) signed the Maastricht Treaty which committed them to a common foreign and security policy in addition to home and court affairs.

As previously explored, this complex structure has provided for a vast misconception of the European Union. Many believe that it is an institution that has existed for centuries, whereas in reality it is a relatively young union of just over two decades. What makes the institutions history so important to current debates is the potential of the EU, following Brexit, to reform and adopt one of its previous identities.

The Immediate Reaction to the Referendum

As we have all witnessed, the referendum led to a massive shock worldwide as very few leaders expected the outcome of the Brexit vote. However, what must be noted is that the predictions that the UK and European economy would slip into a recession, as of yet, have been inaccurate. The stock market did not crash to the extent of 2008 and in addition, whilst the pound did fall, the euro also suffered. Whilst these two currencies are yet to rebound to their former values, the drastic impact that was assumed has yet to be felt. Another important point to note is whilst the currencies have devalued, their current levels are not new lows or a shock when taking into account historic rates. Both respective currencies have faced downturns in the more recent years, in January when Britain announced the date of the referendum, they experienced a sharp fall in the value of the currency and similarly throughout the last few years, the Eurozone has faced increasing fluctuations due to Greece and its on-going bailouts. Many of the arguments surrounding Brexit suggested that economically the UK would be hindered. However, whilst this may still take place, the short term does not suggest such a picture. Britain’s economy grew in the lead up to the referendum and despite the Bank of England’s reduction in interest rates in early August; it has since revised up its growth forecasts for Q3 from 0.1% to between 0.2% and 0.3%. Additionally, the threats that London would face a flight of financial services to neighbouring European cities such as Dublin, Frankfurt and Paris remains a rumour of the past. Corporations and many large businesses have suggested that they will not move business areas unless absolutely necessary; they are not planning a mass upheaval and remain committed to Britain.

Nonetheless, whilst the economic reaction may not have been severe as many predicted, politically it was a bloodbath. Despite statements suggesting that UK Prime Minister David Cameron would remain until end of his term, he decided to resign from office resulting in a conservative political leadership race. This led to the competition between Theresa May (supporter of the in campaign), Michael Gove (supporter of the leave campaign) and Andrea Leadson (supporter of the leave campaign), which ultimately led to the new and current British Prime Minister Theresa May. This caused great uncertainty, however May has since sought to reinstate stability and pave a more secure future for Britain, helping restore some confidence. On the other hand, Brexit not only caused troubles for the Conservative party but also for the Labour party. Leader of the Labour party Jeremy Corbyn is now facing a leadership challenge from Owen Smith. Meanwhile the Scottish National Party is demanding another referendum considering the majority of Scotland voted to remain.

Overall, the impact of the referendum is still questionable. The immediate reaction created some upheaval, however when considering it in perspective it appears that we are not facing another 2008 economic crisis.

What next?

The impact of Brexit has been the subject of much debate over the summer. Many who held the opinion that Brexit would lead to a sharp economic downturn believe that this is still the case although it has been delayed due to delay in signing Article 50. Nonetheless, some remain optimistic, as no one truly understands the meaning of ‘Brexit’. What we do know now is that Brexit will be a long and painful process.

Unfortunately it is now a waiting game; until Article 50 is triggered the process cannot begin. Recent reports have suggested that British Prime Minister Theresa May will begin the formal process of a Brexit as early as February 2017. Whilst this will begin the two year process of negotiation, it will not be until at least 2019 that the UK formally leaves the European Union.

In the interim, the question still remains as to what is Brexit? From a very optimistic British point of view, it is hoped that Britain will be able to sever its ties with Europe, keeping current trade agreements. However, Europe has a lot to lose; could they use Britain as an example and attempt to punish her for leaving in order to deter other countries from holding a referendum? Europe currently is facing crisis. The migrant situation continues to worsen, with Angela Merkel facing particular criticism following a series of attacks this summer in Germany, in addition further pressure from the Visegrad group (Poland, Hungary, Czech Republic and Slovakia) as they have rejected and are appealing the migrant quota. Moreover, Brexit has proposed many questions to other nations across the European Union about the benefits of such an establishment, with discussion surrounding Italy, Denmark and other members potentially calling for a referendum of their own. Will there be a Europe Union in two years? Will we return to agreements such as OEEC and PACE?

With much still to decide, the true consequences of Brexit remain unknown. The next two years will certainly reveal a great deal.