24 June 2020

EPC: The UK’s decision to leave the EU poses a long-term threat to the European project.

This seems counterintuitive at this moment in time: whatever the outcome of the current negotiations, it is already clear that the fears that were raised in the aftermath of the Brexit referendum in June 2016 – that other countries will immediately replicate the UK’s example – were unfounded.

No country is likely to follow in the UK’s footsteps out of the EU any time soon, not least because of the apparent political, economic, social and societal costs the UK is imposing on itself.

This conclusion is, however, premature: in the long term, this challenge might very well re-emerge. The EU and its member states must, therefore, continue to address the challenges Brexit poses, way beyond the end of the transition period.

A bad example

The UK’s decision to leave the EU in June 2016 raised fears among many that the example of Brexit could challenge the unity of the Union and might even lead to a domino effect, leading to wholesale disintegration. The Brexit vote was celebrated by Eurosceptics across Europe, who perceived this as their moment; the beginning of the end of the reviled EU.

In reality, Brexit has brought the EU27 closer together. The level of unity in the withdrawal process has been remarkable, and the UK has not been able to divide and conquer. Even those countries that a priori were seen to be politically close to the UK turned decisively against London, not least because their overarching priority was to preserve the Single Market. Ironically, this is the policy area where the UK arguably had the greatest influence during its EU membership. Populations started to see the Union more positively, driven, at least in part, by the realisation of the enormous costs of leaving the EU.

Conversely, the UK has descended into political chaos, with structures and institutions seemingly unable to cope with the stresses of leaving the EU. Economically and socially, the negative impact of Brexit is already apparent, and will likely become even more pronounced after the UK exits the transition period, which is expected to happen at the end of 2020. Politically, and as a society, the UK is deeply polarised. Different parts of the UK, notably Scotland and Northern Ireland, even voted to remain in the EU.

Over the past four years, Brexit has become the example no member state wants to follow. When the situation worsens after the end of the transition period, it seems even less plausible that others will want to follow a similar path. However, this conclusion could well be premature.

In the long run…

Time is likely to alter the perception of Brexit. Even in the short term, the focus of the EU and its populations will no longer be on Brexit. At the same time, the political class in the UK will claim that Brexit has been a success – or, as most of the opposition will say, that it could have been a success if they had been in charge. The government will tout any progress, for example, in terms of international trade agreements or foreign direct investment, as positive indicators of the logic of leaving the EU. And while there will undoubtedly be a negative economic impact because of Brexit, it will be masked as a consequence of the COVID-19 crisis.

Over time, it will become even harder to separate the negative impact of Brexit from COVID-19. At some point in the future, the UK economy will grow again, and the negative implications will be absorbed. While there will be permanent losses associated with Brexit, the recognition of these effects will fade over time. After the immediate fallout from Brexit – for example, the demise of many UK manufacturing companies that are oriented towards supplying the Single Market –, the UK economy will reorient itself, finding new areas of competitive advantage. This might take some time, but it will happen.

All of this does not imply that Brexit makes economic sense, nor that the costs of leaving the EU are somehow not real, as claimed by some Brexiteers. Leaving the EU will cause irrevocable damage. But it does indicate that the longer Brexit is a thing of the past, the less likely that neither the UK population nor populations across Europe will perceive it as the cataclysm it really is. Not only does this make it unlikely that the UK will re-join the Union at some point, but, in future, it might well also lead to Eurosceptics pushing it as a success story others should emulate.

What the EU should do

However, it is not inevitable that Brexit re-emerges as the vanguard of Euroscepticism. One of the main lessons the EU must learn is that Brexit will and should remain a key concern for the Union and its member states long after the UK has left. Long-term evidence of the real impacts of Brexit, untainted by biased and polarised politics in the UK, might not have any impact on the debate within the UK. Nevertheless, it might well help convince EU populations that leaving the Union continues to be a bad idea, even once the immediate economic crisis in the UK has been overcome.

This long-term perception challenge also implies that the EU should take a rather hard line in the current negotiations, to ensure that a third country cannot benefit from the Single Market or other EU achievements. This will be difficult, not least because the UK can contribute many positive impulses if it remains integrated. However, giving up on EU principles – including that member states must be able to benefit significantly more than non-members – could prove very costly in the long term.

This is not about punishing the UK for deciding to leave the EU. It is about making sure that there are proportionate consequences if a country no longer wants to fulfil the obligations of membership.

The biggest determinant of whether Brexit will be held up as a success story will be domestic developments in the UK. While it is unlikely that economic losses will continue to demonstrate that Brexit was a bad idea, despite the very real costs that it generates, the more fundamental question is whether Brexit will cause further political ruptures in the UK.

In particular, the developments in Northern Ireland and the possible independence of Scotland would make a material difference to how Brexit is perceived in the long term. While the EU should not become involved in domestic constitutional issues of a third country, if Scotland does decide to leave the UK in a constitutionally approved manner, it will be in the EU’s interest to integrate Scotland as a full member state as soon as possible. In the long run, if the United Kingdom falls apart as a consequence of Brexit, it will be hard to argue that it was a success, especially since Brexiteers have always emphasised the nationalistic motivations for leaving the EU.

Brexit’s fundamental challenge to the Union

Although we are in the final phase of the Brexit process, with the transition likely to be concluded at the end of 2020, the UK’s decision to leave the Union will have long-term repercussions for the EU. Despite the initial costs Brexit will impose on the UK (and EU27), the perception of the severity of these costs is likely to fade over time. Brexit might well re-emerge as a challenge to European integration, held up by Eurosceptics as an example to follow, especially if the UK’s domestic politics stabilise. For this reason, Brexit will remain fundamentally important for the future of Europe. The EU must already consider this long-term challenge in its current negotiations with the United Kingdom.

That is why the EU27 must continue to engage with the challenge posed by Brexit, even beyond the end of the transition phase. Brexit is not the most important challenge the EU faces at this moment. Nevertheless, if neglected, it might well rear its ugly head again in the future, giving Eurosceptics potent ammunition to attack the European Union.

 
Fabian Zuleeg is Chief Executive of the EPC.

EPC

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