The withdrawal procedure

The withdrawal rules are laid down in Article 50 of the Treaty on European Union (TEU). A Member State which wishes to withdraw from the European Union must notify the European Council of its intention to do so. A referendum does not automatically trigger the withdrawal procedure.

The EU, represented by the European Commission, then negotiates a withdrawal agreement containing the details. The agreement must obtain the consent of the European Parliament and be concluded by the General Affairs and External Relations Council - excluding the United Kingdom - acting by a qualified majority.

During the negotiations, which will last for a period of up to two years pursuant to Article 50 TEU, the United Kingdom will remain a full member of the EU. Its rights and obligations as a Member State of the EU will continue to apply, and it will continue to participate and have voting rights in the discussions of the European Parliament and the Council - except for the discussions on its withdrawal. The United Kingdom must continue to observe EU law and must not adopt any legal provisions that are not in line with EU law.

The European Treaties continue to apply to the United Kingdom until a withdrawal agreement enters into force. The future provisions applying to the United Kingdom will depend on the results of the negotiations.

If no withdrawal agreement is concluded within two years, the European Treaties will no longer apply to the United Kingdom. The European Council can, in agreement with the United Kingdom, unanimously decide to extend the two-year period.

The outcome of the referendum is not legally binding for the UK government and UK parliament. However, the then Prime Minister David Cameron had announced that the United Kingdom would trigger Article 50 TEU in the case of an exit vote.

During the withdrawal negotiations, the United Kingdom will remain a full member of the EU. The United Kingdom will maintain its voting rights in the Council except for the voting rights regarding the withdrawal agreement. Furthermore, the United Kingdom must continue to observe EU law and cannot repeal it unilaterally. In view of the precedence of EU law, the United Kingdom must not adopt any rules that are not in line with EU law.

The United Kingdom must continue to pay its financial contributions to the EU budget until its withdrawal. The United Kingdom will remain a member of the EU until the conclusion of a withdrawal agreement or two years after it has notified the European Council of its intention to withdraw. The European Council can, in agreement with the United Kingdom, unanimously decide to extend the two-year period.

Impact on businesses and citizens during the negotiation period

No direct impact on German citizens is expected during the negotiation period. The United Kingdom will remain a full member of the EU (except for discussions on its withdrawal) and part of the European internal market until it officially leaves the EU.

This means, for instance, that the fundamental freedoms of the European internal market (feedom of movement, freedom of establishment, free movement of services and capital) will continue to apply during the withdrawal negotiations. The United Kingdom must observe EU law (e.g. the EU Treaties, Directives and Regulations) and the jurisdiction of the European Court of Justice. Furthermore, it must not adopt any rules that are not in line with EU law during this period.

  • What does the outcome of the Brexit referendum mean for German employees in the United Kingdom and for UK employees in Germany?
    During the withdrawal negotiations, German citizens can make further use of the freedom of movement in the EU and live and work in the United Kingdom. The relevant EU provisions continue to apply. The same applies accordingly to UK citizens in Germany.
  • What happens to deposits on accounts in the UK?
    German citizens can still transfer their savings to UK accounts and transfer them back again. The EU rules on a national deposit guarantees system are not affected by the outcome of the Brexit referendum for the time being.
  • How will the outcome of the Brexit referendum impact on German tourists in the United Kingdom?
    Freedom of movement of EU citizens will continue to apply in the United Kingdom during the withdrawal negotiations. German citizens can travel to the United Kingdom for their holidays (and vice versa) just like before. They do not need visas or anything else.
  • Are new labelling obligations, tariffs or longer delivery periods to be expected?
    During the withdrawal negotiations, the United Kingdom will remain a full member of the EU (except for discussions on the withdrawal) that must observe applicable law. The fundamental freedoms of the European internal market, including freedom of establishment and the free movement of services and capital, will continue to apply during the withdrawal negotiations. And during that period, the United Kingdom must not adopt any rules that are not in line with EU law. Thus there must be no tariffs or any new labelling obligations. As regards border controls, the United Kingdom is not a member of the Schengen Agreement on the abolition of checks at common borders. Therefore, it has never abolished border controls.
  • Will Brexit impact on trade with the United Kingdom? What will be the consequences for companies exporting products to the United Kingdom?
    During the negotiation period, EU provisions will also continue to apply to the business activities of German companies. German firms can export their products to the United Kingdom and import goods from there just like before. The functioning of the internal market is not jeopardised. The United Kingdom currently ranks fifth in terms of Germany's trading partners; the main trading goods include motor vehicles and vehicle parts.

    The long-term economic impact after Brexit will depend on what the future relationship between the United Kingdom and the EU will look like.

  • What will change for companies that are located or have subsidiaries in the United Kingdom?
    Subsidiaries of German companies can do business in the United Kingdom according to the same rules as before.
  • Can UK investors still rely on the free movement of capital?
    During the withdrawal negotiations, the principle of the free movement of capital continues to apply; this means that payments to and from the United Kingdom continue to be possible (e.g. SEPA transfers). As the United Kingdom is not a member of the eurozone, the exchange from euro to pound is nothing new. German businesses can still invest in the United Kingdom and vice versa. Investment that has already been made is not affected by the outcome of the Brexit referendum.

The extent to which individual sectors will be affected by the withdrawal of the United Kingdom from the EU depends on the future model of cooperation between the EU and the UK. It is, however, clear that there will be no changes for companies during the withdrawal negotiations, as the United Kingdom will remain a full member of the EU and part of the European internal market.

In the last few years, the German economy has proven robust vis-à-vis external factors. It is expected that German companies will be able to cope with the possible impact of the UK's withdrawal from the EU.

In the last few years, the German economy has proven robust vis-à-vis external factors. It made a good start to 2016, with economic growth being based on strong domestic demand. Therefore, it is expected that German companies will be able to cope with the possible impact of the UK's withdrawal from the EU. During the negotiations, the United Kingdom will remain a full EU member (except for discussions on its withdrawal) and part of the European internal market.

The long-term economic impact of the United Kingdom's withdrawal from the EU on German companies will depend on what the future relationship between the United Kingdom and the EU will look like. This will become clear in the course of the negotiations of the EU with the UK government.

During the withdrawal negotiations, the United Kingdom will remain a full member of the EU. Its rights and obligations as a Member State of the EU will continue to apply, and it will participate and have voting rights in the discussions in the European Parliament - except for discussions on its withdrawal.

This means that during the withdrawal negotiations, the United Kingdom will continue to be involved in the negotiations on TTIP and the approval of CETA.

Further long-term cooperation after Brexit

The impact of the United Kingdom's withdrawal from the EU on German companies will largely depend on what the future relationship between the United Kingdom and the EU will look like. And this will depend on the outcome of the withdrawal negotiations and the objectives of the UK government and of the EU. This cannot yet be foreseen.

One thing, however, is clear: Germany and the United Kingdom have been close trading partners for decades. Their trade relations, which had already been good before the United Kingdom joined the EU, have become considerably closer over the last 40 years. Therefore, the United Kingdom is expected to remain an important trading partner of Germany after a possible withdrawal from the EU.