14 November 2019

Joergen Oerstroem Moeller: Brexit: British General Elections and What next?

At stake in the upcoming General Elections is not only Britain’s future in Europe, but its societal model, economic policies, and place in the world. Furthermore the UK may break up, losing Scotland and Northern Ireland in its way towards the EU exit.

British General Election in December

[...] The outcome will be determined by what the electorate see as the key issue. Is it Brexit, Boris Johnson’s handling of Parliament or domestic policies?

Prime Minister Boris Johnson focus on Brexit. What else can he do as everybody knows the election was called because he couldn’t get a majority for his deal? He blames the Parliament for derailing his tactic and thwarting his efforts to take Britain out by 31 October 2019 ‘deal or no deal’. He seems to have support among voters for such a line with an earlier survey revealing that 83 percent of voters blame Parliament for a Brexit delay. On top of that he will cast himself as the ordinary citizen’s spokesman up against the establishment trying to reverse the result of the June 2016 referendum. If opinion polls are correct such a platform may win an election.

He is, however, open for attacks from two flanks. The Brexit Party may lure hard core Brexit Conservatives away, capitalizing on his unfulfilled pledge to take Britain out of EU on 31 October and not seek another extension.[...] 

The Liberal Democrats may also tempt pro EU Conservatives to join their camp as it is the only party with a consistent and coherent policy in favour of remaining in the EU. [...] 

If the election focus is switched to respect for Parliament and the Prime Minister’s sometimes arrogant posture it may be a different story. Over the preceding month there is a good deal of evidence that he tried to bypass or circumvent Parliament, and did his best to force the withdrawal agreement bill (WAB) through with a timetable out of tune with the requirements of such a massive piece of legislation.  [...] 

Many voters are fed up with Brexit and do not want to vote on that theme again after a referendum in 2016, a general election in 2017 and European Parliament elections in May 2019 – two months after Britain according to the original timetable should have left the EU. In their eyes, what matters now is the future of Britain and, on that score, it cannot be taken for granted that Boris Johnson will win. In fact, Labour achieved a surprisingly good result in 2017 precisely because it managed to draw attention away from Brexit and convince voters that it paid more attention than the Conservatives to many domestic issues – education, health and social welfare. According to newspapers Labour is storming ahead of the other parties in the general election's social media campaign by using 'short, clear, strident' messages which hammer the Establishment.  [...]

Britain’s Future Societal Model

When future historians ponder why Britain left the EU, they will probably point to the different societal models as the main reason. Britain’s, or England’s to be precise, societal model is very much free market, as little regulatory frameworks as possible and low standards for protection of workers.  [...]

British membership of the EU was an attempt to see whether these two different societal models could be reconciled. The answer was given with the Brexit vote. It could not be done. The majority of the English voters rejected the continental model and preferred to stick with the English free market model.

As a consequence of this, Britain may in the future move closer to the U.S. despite the gravity model for trade telling that its most important economic partners are found on the other side of the channel and not the other side of the Atlantic Ocean.

The reason to speak of England instead of Britain is that Scotland may secede from Britain because the Scottish societal model is closer to the European one.

Scotland and Northern Ireland

Scotland may demand a second vote about seceding from the UK. In the first vote in 2014, 55 percent voted to reject independence. At the Brexit referendum in 2016, 62 percent of the Scottish electorate voted to stay in the EU. It will not be easy for many Scots to live in a world outside the EU knowing that it happened against their will. Nicola Sturgeon, the First Minister of Scotland has already raised the demand for a second vote for Scotland to secede from UK. 

The process of Northern Ireland becoming part of the Republic of Ireland will gain pace albeit it is difficult to predict precisely when and how it will happen. Demography favours such a move as forecasts tell the current majority of Protestants will disappear in 2021 when the majority will be Catholic. Although the attitude vis-a-vis joining the Republic of Ireland does not automatically follow religious lines, it is normally assumed Catholics are more likely to welcome such a step.

Thus, Brexit may catalyse the breaking up of the United Kingdom. 

Britain’s Economic Future

[...]There are many uncertainties over a forecast for the British economy outside EU, but the main point is that all hard facts point to a dismal future while those seeing a bright future outside has very little evidence to support such a view.  [...]

Many Brexiteers want to create a kind of low-cost, low-wage and low tax economy with less stringent regulatory framework enhancing competitiveness. But such a model is a pipe dream. The EU will be adamant in the trade negotiations that Britain shadows its rule set if it is to gain privilege access to the single market.

It is foreseen that a new deal for future relationship shall be agreed before end 2020. Wisely enough, recalling how time consuming such negotiations are, a possibility for an extension to 2022 was built into the Withdrawal Bill agreed by both Boris Johnson and Theresa May. To get Nigel Farage to withdraw candidates in constituencies held by the Conservatives, Boris Johnson promised to rule out an extension to 2022 and to pursue a Canada style free trade agreement. Experience from international trade negotiations makes the expectation that such an agreement can be negotiated and agreed before 2022 immensely unrealistic. The worrying observation is that as long as a deal is not clinched, uncertainties remained.

The argument is sometimes forwarded, that Britain out of the EU can boost exports to countries like the U.S., China and India, but it has never been explained why out of the EU would make that easier than as a member of the EU. Surely, few economists see Britain prosper as a low cost producer up against China and India and even more on their home markets.

Furthermore that require access to these countries’ home market, which is not available as Britain used to trade as an EU member state. Britain would have to enter into free trade agreements with countries around the world instead of being ‘shackled’ by agreements negotiated by the EU on behalf of all 28 member states.

Such agreements usually take five to ten years to negotiate. Uncertainties in this period about future terms for trade and investment will make it difficult for Britain to attract foreign investment not to forget the hesitation of domestic companies to invest in such a climate.

On top of that, other countries know very well that Britain needs an agreement more than they do. They can afford to play the long game and wait for Britain to give in to their demands. An example is the U.S. stance with President Trump and others saying that a free trade agreement can be negotiated fast while other sources reveal that the price will be access to the British market for some agricultural products – hormone beef, and chlorinated chicken – which is banned in Britain. The idea of being allowed to bid for parts of Britain’s National Health Service has also been mentioned.

The lesson to take away from the whole Brexit saga may well be that in today’s world it is hard for a country to do well by breaking away from institutionalized economic integration with adjacent countries. This becomes even more risky as the prevailing economic sentiments anti-globalisation sentiments portends weaker globalization and a stronger regionalization trend.  

Full article on EU Centre in Singapore website

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