What could be the implications of a Brexit on expats?

A lot has been said on the implications of a Brexit or British exit from the European Union on people living in the United Kingdom themselves, but it’s also worth considering the potential impact on expatriates or expats.

At the time of writing, there were some two million Britons working and living in other EU member states. They could have a lot at risk depending on the outcome of the Brexit referendum.

The latest report from Statista showed the top locations for British expats worldwide, revealing there were approximately 86,938 Brits living in Germany, 172,806 in France, 381,025 in Spain, 253,605 in Ireland, 73,030 in the Channel Islands, 305,660 in South Africa, 1.28 million in Australia, 313,850 in New Zealand, 758,919 in the United States, and 674,371 in Canada as of 2013.

These Britons could stand to lose the special benefits guaranteed by EU law if a Brexit is made, such as access to pensions, health care, and public service.

“There would be no requirement under EU law for these rights to be maintained if the UK left the EU. Should an agreement be reached to maintain these rights, the expectation must be that this would have to be reciprocated for EU citizens in the UK,” a report from the Cabinet Office indicated. In addition, it might take the British government up to 10 years to negotiate a new set of regulations that could maintain these benefits for expats.

What rights could be affected?

For one, British pensioners living elsewhere in the EU might have their pensions frozen unless there is a reciprocal agreement made between the UK government and the governments of these nations. Also, British pensioners might not enjoy the annual state pension increase unless otherwise mandated.

In addition, experts on UK and EU law have also noted that British expats stand to lose rights to work, set up businesses, buy property or bring family members to live with them outside the UK if there are no bilateral agreements made beforehand. As it is, the details of the Brexit plans haven’t been fully disclosed in public, leading to a cloud of uncertainty on the economic outlook of the UK and its citizens living outside the country.

Another main concern is that of healthcare, as British expats residing in EU countries might be forced to pay higher costs or give up certain benefits. However, it’s also worth noting that the UK government has been paying other EU countries to shoulder the treatment of British pensioners living there while receiving funds from other nations to pay for the treatment of their citizens in the UK. This suggests that healthcare abroad might not be affected by any Brexit, although this is still mostly speculation.

British expats might even need to secure visas to enter EU nations, making travel more costly and burdensome. This could adversely affect Britons with businesses all over Europe, as more paperwork and permits might be required for them to continue operations. Some expats are even considering applying for dual citizenship, which can allow them to enjoy rights as a UK citizen and as part of an EU member nation.

Apart from these social benefits, another repercussion that is already being felt at the moment is the drop in confidence in the UK economy and the resulting decline in the pound’s value. This has caused British pensioners and expats to take a hit in their incomes or benefits that are denominated in pounds, thereby affecting their living conditions. In addition, these uncertainties have led some expats to consider returning to the UK, resulting in a drop in property values for areas where they usually reside.

Analysts have also noted that property prices in London are starting to decline, which might hurt the passive income of British expats and pensioners who have invested some of their hard-earned funds in real estate and rental properties. Declining business investment has also weighed on the stock market, also spurring lower returns for expats’ portfolios.

Is it just a scare tactic?

Despite the fact that no other country has attempted an EU exit before and the unprecedented environment it brings, many politicians are still lobbying for a Brexit. One such politician is London Mayor Boris Johnson who claims that these Brexit concerns are nothing but a campaign by the Conservative Party to provoke fear.

Experts have also noted that British expats would not instantly become illegal immigrants when a Brexit is made, as the Vienna Convention on the Law of Treaties in 1969 says that the acquired rights of these individuals would be maintained despite any changes in future treaties enacted.

“Generally speaking, withdrawing from a treaty releases the parties from any future obligations to each other, but does not affect any rights or obligations acquired under it before withdrawal,” indicated the House of Commons library note. This was the case in Greenland’s withdrawal from the European Economic Community, as the European Commission retained the free movements rights for workers.

What’s next?

The date of the actual referendum is set for 23 June but UK officials and EU leaders have worked on a draft agreement as a compromise for addressing the issues surrounding immigration, legislation, sovereignty and governance. More meetings are scheduled throughout this month and all the way up to the referendum, giving officials time to iron out the details and possibly ease the uncertainty surrounding their plans.

So far, early surveys have indicated that it’s a close call between an actual Brexit and a vote to stay in the EU, as British citizens are waiting for more information. UK Prime Minister David Cameron has been lobbying for a vote to remain in the EU, especially since Britain’s largest corporations have come up with a joint letter outlining the dire economic consequences of exiting the union.

Economists have already projected that a Brexit could shave off as much as 2.2 percent of the UK GDP by 2030 if Britain is unable to come up with an agreement against protectionism or one that still allows them to take advantage of trade agreements in the EU. 

Nikolas Xenofontos, Easymarkets.com / Expatica