Loading the player...

What is 'Brexit'

Brexit is an abbreviation of "British exit" that mirrors the term Grexit. It refers to the possibility that Britain will withdraw from the European Union. The country will hold an in-out referendum on its EU membership on June 23.


David Cameron, leader of the Conservative Party and Prime Minister since 2010, announced support for a referendum on Britain's EU membership in 2013. He said that the country would hold the vote before 2017 if the Conservatives were re-elected in the May 2015 general election. They were, and Cameron pursued a renegotiation of the terms of Britain's membership, to be followed by a vote on Brexit. 

Cameron supports the "in" or "remain" side (sometimes dubbed "Bremain"), arguing that the renegotiated terms he secured with European Council President Donald Tusk are favorable to Britain. Skeptics on both sides see the renegotiation as political theater, which Cameron was forced to perform as a result of his prior sympathy to euroskeptic (anti-EU) arguments. They reason that this skepticism was not completely genuine, but at least partly calculated to head off electoral challenges.

The UK Independence Party in particular presented a challenge to the Conservatives leading up to the 2015 election. The movement was founded in 1991 (under a different name) to oppose Britain's EU membership and saw its popularity surge in 2013. UKIP's arguments, and euroskepticism more generally, also appeal to elements of the Tory base, and following the renegeotiation a number of prominent Conservatives have come out in support of the "leave" side. These include London Mayor Boris Johnson and Justice Secretary Michael Gove

Others see merit in the terms Cameron secured with the EU, which include exemption from the principle of "ever-closer union," enhanced recognition for the pound, a four-year "emergency brake" on in-work benefits to EU migrants and a "red card" system that would allow a bloc of EU parliaments to block legislation from Brussels. Most supporters of the "in" camp base their opinion on the largely unforeseeable economic consequences of exit, rather than an emotional attachment to the EU. Bank of England Governor Mark Carney called Brexit "the biggest domestic risk to financial stability." 

Supporters of Brexit base their opinion on a variety of factors from the global competitiveness of British businesses to concerns about immigration. Britain has already opted out of the EU's monetary union (meaning that it uses the pound instead of the euro) and the Schengen Area (meaning that it does not share open borders with a number of other European states). "Out" campaigners argue that Brussels' bureaucracy is a drag on the British economy and that EU laws and regulations are a threat to British sovereignty.

Popular support for Brexit has varied over time, but the "in" and "out" sides have mostly been about evenly split. Popular referendums are, however, notoriously difficult to predict through polls. Some pundits have argued that greater enthusiasm on the "leave" side will result in a win for Brexit, since even "in" campaigners are not generally enamored of the EU, while "out" campaigners are often passionate about their stance. Others counter that the status quo will win out due to the uncertainty of Brexit's implications.

Brexit is tied in with Scotland's membership in the United Kingdom. In the wake of a "no" vote on the 2014 Scottish independence referendum, the Scottish National Party (SNP) gained unprecedented support. The party's leader, Nicola Sturgeon, opposes a UK-wide referendum on EU membership, saying that Scotland, Wales, England and Northern Ireland should vote separately, and that a unanimous "out" vote should be required for Britain to leave the EU.

  1. European Monetary System - EMS

    A 1979 arrangement between several European countries which links ...
  2. European Union - EU

    A group of European countries that participates in the world ...
  3. Centre For European Policy Studies ...

    An organization started to debate and research European Union ...
  4. European Community - EC

    The European Community is one of the three pillars of the European ...
  5. GBP

    The abbreviation for the British pound sterling, the official ...
  6. Supranational

    An international organization, or union, whereby member states ...
Related Articles
  1. Investing

    Brexit: Could Boris Johnson Keep Britain out of the EU?

    London mayor Boris Johnson's backing of Brexit causes increased uncertainty and precipitates a sharp fall in the GBP.
  2. Investing News

    Trump Advocates Brexit Due to Migration Concerns

    Presumptive Republican nominee Donald Trump has followed Barack Obama into the Brexit morass, weighing in on Britain's June 23 referendum on membership in the EU.
  3. Investing News

    Goldman Sachs Opposes Brexit (GS)

    Goldman Sachs Group Inc. (GS) is in the process of building its European headquarters in London, but the bank is in the awkward position of wondering whether London will still be in Europe when ...
  4. Investing

    The Implications of a Brexit

    Learn about the implications of a Brexit: The United Kingdom remaining as a member of the European Union (EU) or leave it.
  5. Economics

    What To Expect Following The Tory Triumph

    The decisive Conservative victory in the UK's recent general election removes some of the near-term political uncertainty that many were anticipating.
  6. Investing News

    Odds of European Brexit Rise After Terror Attacks

    Tuesday's terror attacks in Brussels have seen the odds of a British exit from the European Union rise.
  7. Investing News

    Brexit Looms as Cameron Admits to Offshore Funds

    David Cameron's leadership has come under attack as he admits to having owned shares in father's offshore investment fund; also his campaign against Brexit takes a hit.
  8. Economics

    3 Reasons Germany Would Be Better Off Without the Euro

    Explore the arguments in favor or against the idea that Germany would be better off leaving the European Union and abandoning the euro.
  9. Investing News

    Could 2016 Be the Year the EU Collapses?

    The EU is facing its strongest test since the potential "Grexit." Are pressures now severe enough to break it up?
  10. Economics

    Is David Cameron's Austerity Working for Britain?

    Although growth picked up in 2013 and 2014, contrary to Chancellor of the Exchequer George Osborne’s claims, austerity is not working for Britain.
  1. What currency is affected by the interest rate decisions of the Bank of England (BoE)? ...

    The Bank of England (BoE) is responsible for the interest rate decisions that affect the economy of Great Britain. As with ... Read Answer >>
  2. How did George Soros "break the Bank of England"?

    In Britain, Black Wednesday (September 16, 1992) is known as the day that speculators broke the pound. They didn't actually ... Read Answer >>
  3. How do wholly owned subsidiaries operate in the European Union?

    Find out how wholly owned subsidiaries and their parent companies are treated in the European Union, specifically regarding ... Read Answer >>
  4. How did mercantilism contribute to the American Revolution?

    Learn more about how the British imposed restrictions on the American economy and how British mercantilism contributed to ... Read Answer >>
  5. If I own a stock in a company, do I get a say in the company's operations?

    You don't get a direct say in a company's day-to-day operations, but, depending on whether you own voting or non-voting stock, ... Read Answer >>
  6. Why doesn't England use the euro?

    Understand why the United Kingdom has opted to not join the eurozone in adopting the euro over the pound sterling as its ... Read Answer >>
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center