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"Brexit" is a portmanteau word meaning "British exit" and referring to a referendum by British voters held on June 23, 2016, to decide whether to exit the European Union. British voters decided to leave the EU in a 52 percent to 48 percent vote that shocked the world and left markets the following day reeling and the pound down to levels not seen since 1985.[1] Turnout was 72.2%, with more than 30 million people turning out to vote.

British Prime Minister David Cameron, who led the "remain" camp, announced he would resign, and Scotland’s first minister, Nicola Sturgeon, said that country would revisit the idea of holding a referendum on independence from Britain, given that an overwhelming majority of Scots voted in favor of staying in the EU.

The move opened up questions about regulation of the British markets, as well as about the stability of banks and currencies.

The main reasons cited for leaving were that the European Union had too large and bureaucratic over the past four decades and had diminished British influence and sovereignty. Immigration was also considered a key issue to the "leave" camp. [2] There has been growing disillusion with the EU over migration and problems with the euro.

Reasons to stay included the economic cost of leaving, which some economists warned would cut growth, weaken the pound and diminish the City of London as a financial center.[3]

The U.K. formally began the process of exiting from the European Union on March 29, 2017, nine months after the vote to leave the EU. The triggering of Article 50 of the Lisbon Treaty, the EU’s legal provision for countries wishing to leave the EU, opened a two-year window for Britain to negotiate the terms of its exit, a path from which British Prime Minister Theresa May said there would be no turning back.[4] The government did this following parliamentary approval in March 2017. (It’s possible that Article 50 could be extended or revoked.)

The U.K.'s exit was scheduled to happen at 11:00 p.m. UK time on Friday, March 29, 2019. The UK and EU have provisionally agreed on three issues: how much the UK owes the EU, what happens to the Northern Ireland border, and what happens to UK citizens living elsewhere in the EU and EU citizens living in the UK.[5]

However, disagreements over how to address a number of crucial issues in a U.K. exit caused delays in reaching a Brexit deal. The main cause of the delay was Northern Ireland. The idea of a backstop plan that would avoid a hard border in Ireland in all circumstances was accepted by both sides in December of 2017. But May rejected the EU’s interpretation of the agreement, which was to keep Northern Ireland in a customs union and in regulatory alignment with its single market. The backstop in the withdrawal agreement is to keep the whole United Kingdom in a customs union with the EU until an alternative is found.[6]

Members of Theresa May's cabinet held strongly opposing views about Brexit. The "Chequers Plan," drawn up in July of 2018 by May and the cabinet at her country house "Chequers" in Buckinghamshire, included proposals for the UK to mirror EU rules on goods and for the UK and EU to be treated as a "combined customs territory" which would mean the UK would apply domestic tariffs and trade policies for goods intended for the UK, but charge EU tariffs and their equivalents for goods which will head into the EU. This was intended to avoid the need for a visible border with the Republic of Ireland. The plan suggested that the UK would also be free to strike its own trade deals with countries around the world, something it is currently unable to do as a member of the EU customs union.[7]

In October 2018 the Bank of England issued a strong warning to the EU that lack of proper planning for Brexit had created a growing risk for £70tn in derivatives that could be rendered illegal the moment Britain leaves the Union. EU firms have trillions in outstanding derivatives contracts that clear in the UK.[8]

On November 14, 2018 the U.K. and the European Union confirmed the provisional text for the Brexit withdrawal agreement, which set out plans for addressing a range of key issues including citizens' rights, customs arrangements, the UK's financial settlement to the EU and a transition period out to the end of 2020. [9] The deal still needs to be approved by the British Parliament.[10] Just over 12 hours after May announced that her cabinet had agreed to the terms of the deal, Brexit minister Dominic Raab and work and pensions minister Esther McVey - and others - resigned, and some in May's Conservative Party said they had submitted letters calling for a vote of no confidence in her leadership, raising the risk that the deal would be rejected and Britain would leave the EU on March 29, 2019 without an agreement. Both sides criticized the agreement for effectively ceding power to the EU without securing the promised benefits of greater autonomy.[11]

The U.K. Parliament passed the EU Withdrawal Act in June 2018. It set out that, after the U.K. exits, the European Union will no longer be the source of any U.K. laws. That means new EU laws won’t affect the UK, although the government will transfer many existing EU laws over into UK law.[12]

In February 2019, U.K. and U.S. markets regulators finalized a long-term agreement to jointly oversee each other’s derivatives markets in the event of a Brexit, removing concerns huge disruptions to banks, institutional investors and corporations that use derivatives to hedge against movements in interest rates, currencies and commodities. Without such an accord, these users could have faced much higher costs.[13]

Also in February, the European Securities and Markets Authority approved EU customers to use a central securities depository known as Euroclear UK & Ireland, ensuring that investors in Irish markets can continue to settle trades in London after Brexit. It also approved the DTCC to run a derivatives trade repository in the EU to help contain potential upheaval from a hard Brexit. The EU extended its clearinghouse arrangement in November 2019, to run beyond the March 2020 deadline, allowing for trades to clear in the UK for a longer time frame.[14][15]

In April 2019, May announced that the deadline for leaving the EU was pushed back from June 30 to October 31, 2019. May's negotiated plan with the EU was rejected for a third time by Parliament in late March and led to her decision to step down from the prime minister's post on June 7, 2019. She was replaced by Boris Johnson in July 2019 with a vow to leave the EU with or without a Brexit deal on October 31, 2019.[16]

On August 28, 2019, Prime Minister Boris Johnson, who was named to the post in July 2019, moved to suspend the UK parliament for five weeks, from September 3, 2019 until October 14, 2019. This controversial and unprecedented suspension, called prorogue, was labeled by opponents as an attempt to stop any moves to block a no-deal Brexit.[17][18]

On December 13, 2019, Boris Johnson won the U.K. general election, giving his Conservative party an 80-seat majority and giving Johnson the mandate he needed to pull the U.K. out of the European Union in January 2020.[19]

The U.K. finally ended its ties with the EU on December 31, 2020. Trade agreements under Brexit took effect on January 1, 2021. Most exchange operators, including Turquoise, a trading facility owned by the London Stock Exchange Group, were prepared for the transition. On January 4, 2021, the first trading day of the year, a large portion of the trading volume in EU shares reportedly moved from London to centers in Amsterdam, Paris, Frankfurt and other European financial centers. [20] [21]

Post-Brexit, on March 21, 2021, U.K. and EU officials said they were close to a "memorandum of understanding" on financial sector dealings that would create “a stable and durable” forum to advance cooperation between the two entities. However, the EU continued to weigh granting “equivalence” to a wide range of British financial services rules, a move that would allow U.K. companies more direct access to EU customers. [22]


The European Union came from a movement after World War II to create unity between Germany and France which eventually laid the foundations for the EU forty years later.[23] Britain first joined what was then called the European Economic Community (formed in 1957) in 1973.

Over the years the political base of British "Euroscepticism" (the Leave camp) has moved from left to right. Labour was more suspicious of the EU in early years, and in 1962 its leader, Hugh Gaitskell, warned that joining the common market would end 1,000 years of British history. Labour was also in favor of withdrawal during the 1980s. But in 1998 Margaret Thatcher gave a speech attacking undue EU influence in the UK. Her denunciation of European Commission President Jacques Delors plan for closer EU integration and a single currency led to her downfall two years later, and the Tories replaced Labour as the party of Euroscepticism.[24]

Prime Minister David Cameron promised a Brexit in the Conservative Party manifesto for the May 2015 election, but as he never expected the amount of negative sentiment toward the EU, nor did he believe that leaving was in the best interest of the nation, he went on to back the "remain" camp.[25] Automobile companies, such as Toyota UK, Vauxhall, Jaguar Land Rover and BMW, as well as component makers GKN and Magal Engineering, also backed the remain campaign.

The “leave” camp was led by Michael Gove, the justice minister, and Boris Johnson, the former mayor of London. Nearly half the Conservative members of Parliament favored leaving, as did the members of the UK Independence Party, or UKIP, and its leader, Nigel Farage.


  1. Pound plunges after Leave vote. BBC News.
  2. ‘Brexit’: Explaining Britain’s Vote on European Union Membership. The New York Times.
  3. Sayeeda Warsi quits leave campaign over 'hateful, xenophobic' tactics. The Guardian.
  4. Britain Sets Historic Brexit Process in Motion. The Wall Street Journal.
  5. Brexit: All you need to know about the UK leaving the EU.
  6. The beginning of the end game for Brexit. The Economist.
  7. Brexit: All you need to know about the UK leaving the EU.
  8. Bank of England warns EU over Brexit risk to financial stability. The Guardian.
  9. Special Report - UK and EU withdrawal agreement text confirmed. FIA/Marketvoice.
  10. UK's May Gets Cabinet's Go-Ahead on Brexit Deal. The Wall Street Journal.
  11. May vows to fight for her Brexit deal and carry on. Reuters.
  12. The Brexit Timeline.
  13. US and UK strike long-term deal over derivatives. The Financial Times.
  14. EU gives investors in Irish assets the all-clear in hard Brexit. The Financial Times.
  15. EU gives investors in Irish assets the all-clear in hard Brexit. The Financial Times.
  16. EU To Extend Clearing Rights as Brexit Negotiations Continue, Commissioner Says. Bloomberg.
  17. Boris Johnson news: Thousands of protestors gather outside parliament, as MEPs plan investigation into suspension of government. The Independent.
  18. The Guardian view on proroguing parliament: an affront to democracy. The Guardian.
  19. Johnson Urges Healing After Winning Election That Upends Britain. Bloomberg.
  20. Brexit Forces Bankers to Shift Trading of European Stocks Out of London. The Wall Street Journal.
  21. EU share trading flees London on first day after full Brexit. The Financial Times.
  22. Britain and EU close to agreeing forum for financial services. The Financial Times.
  23. What is the EU, why was it created and when was it formed?. The Telegraph.
  24. The roots of Euroscepticism. The Economist.
  25. Economist Brexit Briefs: The roots of Euroscepticism. The Economist.