Yesterday marked a tectonic movement in the UK’s relationship with the European Union when almost 52% of voters voted ‘leave’ as their choice in a historic referendum.
The result of the vote has already led to market turmoil with the value of the pound dropping to its lowest level against the dollar since 1985 amidst early concerns that the financial sector was going to suffer a credit squeeze along the lines of the 2008 financial crisis and given the announcement that David Cameron will resign as Prime Minister. The mood is one of economic and political concern because the decision to leave marks the beginning of a period of unprecedented uncertainty both for clients based in the UK and those abroad who do business in the UK and in the EU. Although the outcome of this referendum is not legally binding, the UK government has indicated that a vote for ‘leave’ marks the beginning of the process in which the UK will exercise its Article 50 rights of withdrawal under the Treaty on the European Union. The UK will now need to negotiate a new agreement requiring the approval of 20 of the remaining 27 Member States representing 65% of the population of the EU. It has been suggested that the withdrawal and negotiation process with the EU of a new relationship can occur in tandem, but there is no guarantee that this will be the route chosen.
The regulatory and legal implications of the decision to leave are significant, as EU and UK law have become increasingly intertwined over the last several decades.