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EU Referendum: analysis of the UK's new EU Settlement

Published Thursday, May 26, 2016

This Commons Library briefing looks at the new Settlement for the United Kingdom within the European Union agreed at the European Council on 17-19 February 2016. The Settlement consists of seven texts: a Decision and a Statement of Heads of State or Government and five Declarations.

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Government reports

After the Settlement was concluded, in accordance with sections 6 and 7 of the European Referendum Act 2015, the Government published three reports:

Is the Settlement ‘legally binding and irreversible’?

It is not a binding EU treaty or EU law in itself. Most legal opinions consider the first part of it, the Decision of Heads of State or Government, to be a binding treaty under international law, largely because the parties to it have declared that they intend it to be legally binding. But even if the Decision binds the parties under international law, it does not bind the EU institutions, and is not necessarily legally enforceable under either EU or domestic law.

It could be problematic if either the Court of Justice of the EU or a domestic court found an inconsistency between the Decision and the EU Treaties.

The Decision probably cannot be reversed without the consent of the UK. But it cannot guarantee all of the outcomes envisaged in it. This is because some depend on factors outside the control of the parties to the Decision, such as national referendums on Treaty change.

The Preamble of the Decision

This refers to the Prime Minister's letter of 10 November 2015, notes the existing UK opt-outs, exemptions, qualifications and opt-in arrangements concerning the Euro, Schengen, border controls, police and judicial cooperation in criminal matters, and the Charter of Fundamental Rights, and also the European Council Conclusions of June 2014, which acknowledged that in the context of the UK’s proposed reforms the concept of “ever closer union” allows for different paths of integration for different countries.

Economic Governance

Section A of the Decision is about Economic Governance. Its principles are that there should be no discrimination against non-eurozone countries (such as the UK) because they are outside the eurozone.

Non-eurozone countries will not impede further integration in eurozone matters and will not face financial losses due to eurozone ‘bail-outs’. Discussion of matters that affect all EU Member States, such as Eurogroup matters, must involve all EU Member States, including non-eurozone members.

The Bank of England will remain responsible for supervising the financial stability of the UK.


Section B concerns Competitiveness.

The Decision confirms the aims of the single market and free movement of people, goods, services and capital. The EU and member States “must enhance competitiveness” and take steps to lower the regulatory burden on businesses. The Commission will review the EU acquis for compliance with subsidiarity and proportionality and will consult national parliaments.

The Commission will introduce by the end of 2016 a new burden review mechanism (building on the Regulatory Fitness Programme), will monitor progress against the targets set and report to the European Council every year.  The EU remains committed to an “ambitious trade policy”.


Section C is about sovereignty. The UK will not be committed to further political integration in the EU and the concept of “ever closer union” will not apply to the UK.

National parliaments will have 12 weeks in which to object to a legislative proposal on subsidiarity grounds.

There will be a ‘red card’ procedure: 55% of national parliaments will be able to prevent further discussion in the Council of EU legislative proposals, where they believe power should lie with national legislatures (‘red card’).

The UK will retain its opt-out and opt-in arrangements in measures on policing, immigration and asylum policy and national security will remain the sole responsibility of the UK Government.

Social benefits and free movement

Section D concerns social benefits and free movement. It refers to some clarifications of the interpretation of current EU rules, including that Member States may take action to prevent abuse of rights or fraud, such as marriages of convenience, and that in assessing the potential threat of an individual’s behaviour, Member States may take into account the individual’s past conduct and act on preventative grounds.

The Commission and Member States will improve efforts to prevent abuse and fraud. It acknowledges the UK’s position on restricting free movement rights with future EU enlargements.

The free movement rights of non-EU family members of EU citizens will be restricted by amendments to the free movement directive.

Another EU law amendment will provide an ‘emergency brake’ to limit full access to in-work benefits by newly arrived EU workers if a Member State is experiencing an “exceptional situation” (the UK already meets the criteria for this).

A third amendment will give all Member States an option to index exported child benefits to the conditions of the Member State where the child resides.


In addition to the above changes EU legislation, parts of sections A and C of the Settlement (economic governance and sovereignty) will need to be incorporated into the EU Treaties at the next opportunity for Treaty revision.

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