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[quote=Anonymous][quote=Anonymous]Can someone explain Brexit to me like I am in fourth grade?

I understand what the EU is.
I understand there was a referendum and the British people voted to leave the EU.

Why did they want to leave the EU?

What I really  don't understand is "deal or no deal".  Didn't they have an outlinei in the agreements when they  formed the EU, how that divorce happens?  A prenup if you will?

So "deal" Brexit is Britain negotiates for some stuff they want in leaving the EU, right?

What is "no deal" Brexit and what are the consequences to Britain?

Thanks.

[/quote]

The people of UK wanted to leave the EU in order to regain their sovereignty. There was considerable frustration among the UK people feeling that they have relinquished some of their rights to self-determination to a supranational governing body that is not accountable to them. I'm not here to debate whether this feeling is justified but to point out that this was frustrating enough for them to call for a referendum, and vote to leave the EU.

There was no outline of how a divorce will happen in the EU articles - no prenup. The only thing that Article 50 says is that a member state may decide to leave the EU. What the deal/no-deal refers to, is the set of agreements and procedures that would result in an orderly exit by UK from the EU. This is multifaceted, involving many issues such as the status of non-UK citizens inside UK, winding down of various financial commitments and obligations, the status of the border between Ireland and Northern Ireland, and the biggie: the trade agreement between UK and the EU.  Remember that one of the key features of the EU is that it establishes a free trade zone among all member states. If a member state withdraws from the EU, then it would lose the benefit of being within that free trade zone. Therefore, UK seeks to establish a trade deal with the EU, or the at least the terms of negotiating such a trade deal, prior to it finalizing its exit from the EU. The alternative is that UK leaves without establishing a trade deal, therefore "no deal", which would result in the UK-EU trade deal being default WTO terms. Presumably, if such an event were to pass, UK would then hold ensuing negotiations with the EU much like how the US negotiate trade deals with the EU.

Long term consequences of a no-deal Brexit is small. Just as the EU trades extensively with non-EU nations, there is nothing that prevents EU from trading with the UK after Brexit. It's not as if trade between UK and EU will just cease to exist or dwindle to some insignificant amount. Short term consequences, however, are severe. The business community thrives on stability and predictability. A no-deal Brexit will shift UK to trade with the EU on WTO terms, with no predictable time table for reaching a new negotiated result. Trade terms have significant effects on the planning and scheduling of not just production and hiring, but also capital investments, supply chain, etc. The short term uncertainty will be very painful and result in economic inefficiencies both inside UK and EU. Coupled with a slowing global economic outlook, this is not a good time to inject additional chaos into the system.

There are some dynamics at play here, of course:

1. Both EU and UK want a deal. A no-deal Brexit is not good for either. 
2. EU cannot give UK a good deal, because it would cause other member states to consider leaving the EU. 
3. UK needs the no-deal option on the table as leverage to extract as good a deal as it can from the EU.

My prediction:

UK will leave without a deal, but with the promise of a deal, and the EU will move quickly to cooperate with UK to establish a deal post-Brexit to minimize economic damage. The UK will suffer significant economic turmoil in 2-3 years following Brexit, but ultimately regain their footing. Other EU nations will ponder leaving the EU, but the EU governing body in Brussels will have enacted changes in the meantime that gives more control to member states. 
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