06/02/2016 5:05 AM AEDT | Updated 03/01/2017 6:37 AM AEDT

A Brexit Breakdown: Here's What's Going On With The EU And UK

Half of Brits want to stay in the European Union, while the rest want out.

Yves Herman/Reuters
British Prime Minister David Cameron, right, hopes the threat of the United Kingdom's departure from the European Union will be enough to renegotiate its terms of membership. EU President Donald Tusk, left, drafted a reform deal in an effort to keep the U.K. in the group.

Brits will head to the polls in a national referendum on June 23 to weigh in on a question that will drastically impact Europe’s future: Should the United Kingdom remain a member of the European Union or leave?

As a potential British departure from the EU looms closer, The WorldPost takes a look at the terms, the stakeholders and the key facts in the debate leading up to the vote.

1. The Terms

The term “Brexit“ refers to Britain’s possible exit from the EU — the political and economic partnership of 28 European countries. 

The United Kingdom, comprising England, Scotland, Wales and Northern Ireland, is to hold a referendum, or nationwide vote, on a potential withdrawal from the EU.  

2. The Background

Cameron's promised referendum will happen on June 23. He sent a list of reform demands to the EU in 2015.

The U.K.’s resistance to EU policies isn’t new: it was hesitant to join in the first place, and Britain’s critics in the European Union have referred to it as the EU’s “awkward“ state — a phrase Stephen George coined in his 1998 book, An Awkward Partner: Britain in the European Community.

On Jan. 1, 1973, the U.K. finally joined the European Economic Community, the economic organization created in 1957 that was later incorporated into the EU. Two years after the U.K. joined the EEC, nearly 70 percent of Brits voted in a referendum to continue membership.

In 1999, 11 of the EU’s members joined the eurozone, a monetary union that adopted the newly-created euro as its sole currency. As membership grew to include 19 states, the U.K. kept its own currency, the pound sterling, instead.  

British Prime Minister David Cameron assumed office in 2010, amid criticism over the U.K.’s membership. Anti-EU sentiment increased following the European debt crisis and Cameron vowed in January 2013 that if his Conservative Party was reelected with a majority government, he would renegotiate Britain’s terms of membership with the EU. He pledged to schedule a referendum on a possible Brexit by 2017. After the Conservatives’ victory in 2015, the British Parliament followed-up and legislated the referendum.

If the U.K. does leave the EU, it will become the first member state ever to exit.

3. The Demands

Cameron aims to improve the U.K.’s terms within the EU without having to leave. “I don’t think [an exit] is the right answer,” he said in January.

Months after winning the election, Cameron wrote a letter to EU President Donald Tusk listing four main areas he wanted to renegotiate: economic governance, competitiveness, sovereignty and immigration.

Following lengthy discussions between U.K. and EU officials, Tusk published a response letter outlining a draft plan that addressed each of Cameron’s demands. 

4. The Proposal

Virginia Mayo/Associated Press
Tusk responded to Cameron's conditions in a public letter, noting that compromise will be needed on both sides.

Concerning economic governance, Cameron is seeking formal recognition that the euro is not the only currency of the EU. He is worried eurozone countries will impose unfair policies to non-euro members, like the U.K.

One week before Cameron issued his reform wish list to the EU, Britain’s finance minister George Osborne spoke at a business conference in Berlin to elicit cooperation between euro and non-euro countries.

“When it comes to the relationship between those who use the euro, and those who do not: here’s the deal. You get a eurozone that works better. We get a guarantee that the eurozone’s decisions and costs are not imposed on us,” he said as he proposed measures to protect non-euro economies.

Tusk agreed to establish principles that would “ensure mutual respect” between all EU member states and “pave the way for the further integration within the euro area while safeguarding the rights and competences of non-participating Member States.”

On competitiveness, Cameron wants deregulation across the Single Market, which refers to the EU as one territory without internal borders.

The British Chambers of Commerce wrote an open letter to Cameron ahead of his first European Union leaders’ summit since his reelection, asking him to protect businesses “from the regulatory burdens imposed by the EU.” 

Tusk said that such requests could be achieved. “We will regularly assess progress in simplifying legislation and reducing burden on business so that red tape is cut,” he wrote in his public response to Cameron’s letter.

Dan Kitwood/Getty Images
Some members of Britain's business community pushed for renegotiations to lessen EU red tape and allow the U.K. to veto certain EU policies.

In a “formal, legally-binding and irreversible way,” Cameron is also demanding British sovereignty. He wants the U.K. to be exempt from an “ever closer union” — a political integration ambition established in the EU’s founding treaty. He has demanded veto power against EU policies that Britain doesn’t agree with.

His concerns again echoed those voiced in the BCC’s letter: that most of the U.K.’s economic activity is not directly derived from trade with the rest of the EU, “and yet all of that activity is hit by the cost of European regulation.”

Tusk’s draft deal “reinforces respect for subsidiarity,” and proposes the U.K. not be committed to further political integration.

Immigration is a bit trickier. Cameron’s concern is that the flow of migrants into Britain is not sustainable at its current rate, from within and outside the EU. “Right now, the pressures are too great,” he wrote to Tusk, noting that the U.K.’s population — estimated to increase from 64.6 million in 2014 to 70 million by 2027 — is expanding more quickly than those of some other EU member states. 

Cameron asked for a crackdown on the abuse of free movement, including a four-year ban on in-work benefits and social housing for immigrants, and for child benefit payments being claimed for children living outside of the U.K. to stop.

Tusk said these demands needed to be discussed further and insisted that current treaties be respected. “To succeed we will all need to compromise,” his letter concluded. “To fail would be compromising our common future.”

In the weeks leading up to the February negotiations in Brussels, the leaders of several member states also hit back at Cameron’s demand for a four-year ban on in-work benefits and social housing for immigrants, including those coming from other EU countries.

“We made it clear that we are ready to compromise, but always on the basis that we safeguard the core European principles, which include non-discrimination and free movement,” German Chancellor Angela Merkel said, though she added a common solution was still achievable.

5. The Deal

After a two-day summit in Brussels, EU members agreed to a deal on Feb. 19, which allows the U.K. more political autonomy within the Union. All 28 members of the EU approved the plan, which required unanimous support in order to move forward.

Among the terms of the deal are limits on the amount of benefits that immigrants to the U.K. are eligible to receive, as well as an exemption for Britain from the EU’s goal of creating an “ever-closer union” between member states. 

Lithuanian President Dalia Grybauskaite took to Twitter on Friday to announce her relief.

Despite compromises to Cameron’s initial demands, the agreement “addresses all of Prime Minister Cameron’s concerns without compromising EU fundamental values,” according to a statement posted on the EU website. It will come into effect once the U.K. government informs the EU that Britain will continue its membership. Should the U.K. decide to leave after its referendum in June, the deal will be cancelled.

Notable parts of the agreement included: a “more integrated governance” of the eurozone, allowing the U.K. to keep the pound sterling as its currency, permitting the “non-participation” of member states in certain EU policies and objectives, and allowing Britain to apply border control measures.

6. The Brits’ Response

LEON NEAL/AFP/Getty Images
Brexit supporters want greater independence and to be freed from EU bureaucracy.

Public opinion on the issue has hovered around an even split — a September poll shows 51 percent of Brits want to stay in the EU and 49 percent wish to leave.

Eurosceptics, like members of the U.K. Independence Party, believe an independent Britain could conduct its own trade negotiations more effectively without “EU bureaucracy.”

The pound sterling plummeted to a seven-year low on Feb. 22 after London mayor Boris Johnson wrote an article announcing he will support a Brexit.

“There is only one way to get the change we need, and that is to vote to go, because all EU history shows that they only really listen to a population when it says No,” he wrote. “The fundamental problem remains: that they have an ideal that we do not share.”

Widespread anti-immigration sentiment across the U.K., which has grown since the summer when more than one million migrants and refugees entered Europe, is also yielding support for a Brexit. A separation from the EU would leave the U.K. free to slow its flow of immigration.

Chris Ratcliffe/Bloomberg via Getty Images
Those who oppose Britain's departure are concerned the separation would weaken the U.K.'s international influence.

Those who oppose a Brexit, including Cameron, fear it would create trade barriers between the EU and U.K., harming its economic prosperity. 

“I will campaign to keep Britain inside a reformed European Union. I will campaign for it with all my heart and all my soul because that will be unambiguously in our national interest,” Cameron said in November. “But if we can’t reach such an agreement and Britain’s concerns are met with a deaf ear — which I don’t believe will happen — then we will have to think again about whether this European Union is right for us. I rule nothing out.”

There is also concern among members of the Labour Party, Scottish National Party and Liberal Democrats that British influence over international affairs would suffer, as many world leaders have spoken out against the separation.

7. The Global Response

Pablo Martinez Monsivais/Associated Press
U.S. President Barack Obama said the U.K. will have greater international influence if it remains in the EU.

When serious talks of a Brexit began in 2013, German politician Thomas de Maiziere warned strongly against the proposed move, saying it would diminish Britain’s standing within NATO and weaken the treaty organization

In 2015, U.S. President Barack Obama told the Guardian that Britain’s membership in the EU gives Americans “much greater confidence about the strength of the transatlantic union. ... We want to make sure that the United Kingdom continues to have that influence.”

Later that year, the U.S. ambassador to the U.K., Matthew Barzun, told the BBC that the United States “would love a strong U.K. in a strong EU.”

In early 2016, Irish Prime Minister Enda Kenny warned that Britain’s departure from the EU could pose great challenges to Northern Ireland, and could disrupt political settlement and economic development.

“From our perspective [Brexit] would be a serious difficulty for Northern Ireland. I don’t want to see that happen,” he said. “We work on the positive end of this — future benefits and potential coming from a strong Britain being part of a strong Europe and Ireland associated with that north and south.”

 This post has been updated throughout to reflect new developments in the debate over Brexit.

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