Ever since the UK became a part of the European Union, its membership has been a topic of strong debate. Currently the imminent EU referendum in the United Kingdom has become one of the most common topics of discussion among Brits.
On Thursday June 23rd 2016, British nationals will participate in a poll to decide if the country should continue to be a part of the EU or should exit.Voters will have to answer the question “Should the United Kingdom remain a member of the European Union or leave the European Union?” by choosing one of two options, Leave or Remain.
It is not the first time that people will be participating in a ballot on this issue: in 1975, when the EU was still the European Economic Community (EEC), citizens of the UK cast their votes on the same subject. Back then, around 67% of the population was in favor of the membership and the country did not leave the Union.
However, the EU’s objectives and agenda have changed a lot since then, and so have the people’s opinions. The outcome of the upcoming referendum is therefore expected to be much closer than the last one. Going by current statistics from Natcen Social Research, almost 55% of eligible voters would like to remain within the EU and about 45% would like to leave. Surveys also show that many British citizens are waiting for more information on the pros and cons of both options.
British Prime Minister David Cameron has stated that Article 50 will be initiated if the results of this plebiscite show that a majority of the voters support the Brexit (a portmanteau word for British Exit). This is a formal mechanism through which the country will leave the EU, and it starts the two-year negotiation period for the end of the membership. However, the actual separation of the UK from the EU is expected to take a lot longer.
No state has ever pulled out of the European Union so far, and it is therefore difficult to predict the exact impact of Brexit on the country’s residents and expats. Of course, there are a number of positive and negative consequences associated with either of the options. Both sides have their own political lobbyists too. Conservative figures such as London Mayor Boris Johnson, Iain Duncan Smith, and Michael Gove are campaigning for a Brexit. On the other hand, David Cameron and three former British Prime Ministers: Gordon Brown, Tony Blair, and John Major, are lobbying for a vote to stay in the EU.
A lot of discussions have taken place around the implications of Brexit on the people who live in the UK. However, it is also essential to consider its potential impact on British citizens that reside in the other 27 EU countries. All EU citizens, including Brits, enjoy the right of free movement within the Union. This means that no member state can bar or expel nationals of another member.
Reports claim that currently, there are close to two million Britons living and working in various EU countries (mainly Spain, France, Italy and Cyprus), which equates to almost 3% of the UK’s population. The result of the referendum will no doubt affect their lives in a huge way. According to Europe Minister David Lidington, the Brexit would bring about a change in everything EU citizens are currently taking “for granted” about access to the single market. This includes the right of British nationals to live in places like France, Italy or Spain.
So, should you fear Britain’s exit from the EU if you are an expat? Unfortunately, the changes that may take place are not just limited to you requiring a permit for living or working within the European Union. Several other policies are likely to undergo revisions, which could have a positive or negative impact on you and your situation.
Under EU law, Great Britain has to grant relocation rights to any citizen from another member state. This has increased immigration to the UK, mainly from Southern and Eastern Europe. Of course, Britons too benefit from the same freedom to live in any of the member states.
In case of a Brexit, you will have to apply for a visa to live, work, study, and retire in other EU nations. This could be a time-consuming and expensive procedure.
There is a fear among expats that they may be “deported” if the majority opts for a Brexit. However, that is not likely to happen. There is a general consensus, under the Vienna Convention 1969, that Brits who are already living in the EU will be able to continue doing so. There is a possibility that you may need to get your paperwork in place within the proposed transition period.
After the exit, your ability to move to another EU country may be a bit more restricted and subject to obtaining a visa, depending on the new agreements between the UK and other nations.
All expats from EU countries enjoy the right to work or set up their business in any member state. If the UK decides to leave the EU, you probably won’t be able to take up a job in another member state without first acquiring a work permit. Since this comes at an additional cost, employers may also prefer hiring locally.
On the other hand, as the number of EU immigrants in the UK reduces, more jobs are likely to open up locally for British citizens. Wages are also expected to increase in case of Brexit. While this is good news for employees, it could mean a significant increase in cost for employers.
As a citizen of the UK, you can claim your state pension in any country, as long as you have made the required number of UK National Insurance contributions. According to the laws of the EU, all citizens living in any of the 28 member nations have guaranteed access to state pensions.
If Brexit happens, senior British expats may have their state pensions “frozen”. This means that the amount you are paid every year remains at the value it was when you stopped making your contribution. This controversial policy is already in place for Brit expat pensioners living in certain other countries, including New Zealand and Australia.
In the current situation, state pensions for British expats only increase every year if they live in the EU, the EEA, Switzerland, or any country that has a social security agreement with the UK (except New Zealand & Canada). If the UK ceases to be a part of the EU, all retirees are likely to fall under the pension freeze. If you return to the UK at any time in the future, your pension payout will go up to the current rate on a permanent basis.
This aspect is one of the biggest concerns for expats from the EU. In the present scenario, you can receive free medical treatment within the EU as long as you have a Europe Health Insurance Card, or by filling out the SI form. If the UK leaves the EU, the existing provisions could be withdrawn and you might have to either purchase private health insurance or pay for your medical treatments when you are in another country. Unfortunately, both of these options come at a considerable extra cost.
However, many experts claim that healthcare isn’t likely to be affected in a big way by the Brexit since the UK pays a lot of money to EEA countries to cover healthcare for Brits. The UK’s Department of Health has stated that it reimburses Switzerland and other EEA nations for the cost of treating people whom they “feel responsible for” under the European Union Law, regardless of their nationality.
Withdrawing access to healthcare will be of no benefit to citizens. It is therefore best for both the parties involved to agree upon reciprocal healthcare options while discussing the exit.
Owning property and mortgages
An exit from the Union may cause British owners of European property to fall under different taxation rules, such as inheritance tax or buying and selling tax. A different set of regulations is already in place for citizens of non-EU countries.
Moreover, according to the present EU laws, Brits don’t require residency permits to own property in EU nations. However, this may change if any of the countries tighten their borders. There is no guarantee that the right to stay will be upheld for British citizens.
In terms of mortgages, Brits are usually charged high interest rates and are required to make bigger deposits in comparison to the others. This will also apply to you if you live in another country.
Fortunately, because of Britain’s global financial profile and the large number of British property buyers living in EU member nations, banks in Spain, Portugal and France are not likely to increase their mortgage rates. Doing so may have a negative effect on their economic growth.
The current tax situation for expatriates is expected to stay the same because of bilateral arrangements between the UK and other EU nations. These agreements have nothing to do with the rules laid down by the EU and should therefore not be affected by Brexit.
Local property taxes are also likely to stay the same even after Brexit. This is because the taxes are often based on the duration for which the owner stays at the property, rather than the country they come from. However, there is no guarantee that the taxation rules will stay the same.
Since the UK’s EU referendum has brought about some amount of uncertainty about the future, inward investments are bound to slow down in the run-up to the vote. The same trend was observed before the referendum for Scottish independence in 2014.
In contrast, Brexit lobbyists have suggested that if Britain is free from the rules and regulations set by the EU, it could reinvent itself as a supercharged economy, like Singapore.
Tax revenues are expected to drop if companies that do a large amount of business with Europe move their headquarters back to EU nations.
However, Barclays, a leading bank in the UK, has put forth a scenario that benefits the ‘leave’ campaign. The claim is that the departure of such a powerful economy as the UK will hit the EU’s financial situation and boost anti-EU movements in other places. This may then result in the “collapse of the European project”. In such an instance, the UK could become a safe haven from risks and the country will attract investors, boosting the pound.
The pound has been getting weaker since the end of 2015. To some extent, this fall is because of concerns around a Brexit. Exchange rates have a major impact on purchasing power overseas and on repatriating money from the EU to the UK.
Some of the larger investment banks have issued warnings about a potential slump in the value of the pound if international investors shy away from the UK because of uncertainty created by the Brexit. A short while ago, the National Institute of Economic & Social Research claimed that the Pound Sterling may plummet up to 20% against the major currencies if Britons vote to leave.
Moreover, economists have projected that the Brexit may shave off up to 2.2% of the UK’s GDP by the year 2030 if Britain doesn’t come up with an agreement that is against protectionism or one that lets them take advantage of EU Trade agreements.
To summarize, if a majority of voters opt for a Brexit on June 23rd, it would indicate the beginning of a long process. The exact outcome of this decision is still unpredictable, although there are several suggestions and a lot of speculation around what may happen to residents and expats. In all probability, the UK will come to a series of agreements with the EU member states so that the rights of all current expat citizens are maintained in spite of the exit.