Brexit: How Did We Get Here? | Capital Group


Investment Insights

June 2016

Brexit: How Did We Get Here?

Great Britain joined the European Union’s predecessor, the European Economic Community, in 1973 and it has always been a somewhat reluctant member. The EU now includes 28 nations, 19 of which are part of the single-currency monetary union known as the euro zone.

Over the years, talk of Britain leaving the EU (or Brexit) has ebbed and flowed with the prevailing political tides. British Prime Minister Margaret Thatcher supported EU membership but famously opposed the adoption of the euro, arguing that the pound sterling served as a powerful symbol of the U.K.’s sovereignty and national identity. The pound remains the official coin of the realm today.

Fast forward to 2013: Facing a surge of anti-Europe sentiment within his own party, Prime Minister David Cameron promised to call a referendum on EU membership if the Conservatives won the 2015 election. They did win, overwhelmingly, and the referendum was duly scheduled for June 23, 2016.

The Brexit opposition camp features Cameron, U.K. finance minister George Osborne and many prominent world leaders, including German Chancellor Angela Merkel, U.S. President Barack Obama and President Xi Jinping of China. In addition to [Boris] Johnson, Brexit backers include U.K. justice minister Michael Gove, U.K. Independence Party leader Nigel Farage, French National Front leader Marine Le Pen and Russian President Vladimir Putin.

Following a dispute over the precise wording of the referendum, the ballot question will read as follows: “Should the United Kingdom remain a member of the European Union or leave the European Union?”

Recent polls indicate that Brexit support is growing, but the outcome is essentially too close to call.

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