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07 January 2016

Policy Network: Neither settled nor secure: Britain after Brexit

The campaign for Britain to remain part of the EU cannot rely solely on the economic arguments for membership, however convincing they may be.

The major political event in British domestic politics in 2016 looks set to be the referendum on UK membership of the European Union. The consensus view among the British political establishment is that UK voters will decide to remain in the EU: after all, economic self-interest is at stake; in a risky and uncertain world, a departure would be a step into the unknown. The achilles heel of the leave campaign has been its inability to paint a compelling picture of what the UK would look like outside Europe: how would it do business with the rest of the world? What would be its core strategic and diplomatic relationships? And what would be the long-term impact on British jobs and businesses? The Norwegian and Swiss models of ‘associate membership’ remain oblique to most voters. Positioning a vote to leave as an unpalatable and risky choice ought not to be difficult. 

[...] the National Institute for Economic and Social Research estimates that the impact of a UK departure would be similar to the 2008 financial crisis, a permanent loss of six to eight per cent of national income. Certainly investment and confidence would be severely hit in the immediate aftermath of Britain voting to leave. The long-term effects, however, are much harder to predict. The Bank of England’s assessment in October 2015 concluded there were a ‘wide variety of estimates’ of the quantitative impact of UK withdrawal from the EU on the British economy. The consequences of a Brexit would be asymmetric, with a variable impact on different sectors and regions: export-driven industries such as motor vehicle manufacturing would be weakened, as would the financial services sector clustered around the City of London. The impact on high-value business services and the burgeoning sector of hi-tech industries, as well as the so-called ‘stagnant’ low wage sectors, is less clear-cut. Relying on economic risk to clinch the argument for remaining in is itself a major gamble. Pro-Europeans should not put all their eggs in the basket of economic risk; they must define sharper political arguments for continuing EU membership. For instance, the claim that national security would be imperilled by Brexit has greater currency given the threat posed by Islamic State.      

[...]Europe’s cities live in fear of a major terrorist attack alongside Islamic extremism. And all the while, across western representative democracies, voters are becoming more alienated from established parties and politicians, giving rise to new insurgent populist movements, from Podemos in Spain to the Freedom party in the Netherlands. A UK referendum on EU membership in 2016 would take place against the backdrop of this perfect storm. It is impossible to rule out the possibility of British exit from the EU.

What would be the consequences of Brexit for the future of British politics? The first is the almost certain departure of David Cameron as prime minister. Having lost a referendum on a matter of fundamental national importance, he would be compelled to resign triggering a leadership contest within the Conservative party. [...]Neither would Labour be immune from such tensions: were Jeremy Corbyn to be seen as not campaigning enthusiastically for continuing British membership, the settled view of the majority of the party, Brexit may trigger the disintegration of Labour, and the formation of a new party embracing the centre and centre left of British politics.

The second consequence of Brexit would be a further shake up of the UK. At present, Scottish voters are significantly more likely to vote to stay in Europe: a recent survey by the National Centre for Social Research showed that while English voters are finely balanced with 52 per cent supporting in against 48 per cent out, 64 per cent of Scots want to remain in the EU (in Northern Ireland, the figure is 75 per cent, and 55 per cent in Wales). The ruling Scottish National party (SNP) remain powerful advocates of continuing EU membership. If English voters were to trigger a UK departure from Europe, the consequence would be another independence referendum on Scotland remaining in the UK. Brexit might be the tipping-point for constitutional disintegration.

The third impact of Brexit would be a major shift in British foreign policy. Outside the EU, the UK would be perceived as a diminished global power: the EU conducts trade negotiations with the United States and Japan on behalf of 500 million citizens. Britain has a population of 65 million. The current US administration, while paying lip service to the special relationship, wants Britain inside the EU where it can balance French and to an extent, German influence. It is difficult to see how Britain could retain its seat on the United Nations Security Council and its influential role within Nato outside the EU, as global power shifts irreversibly eastwards. The EU political landscape would be further recast after a British departure: the alliance of northern European countries (notably Sweden and the Netherlands) committed to deregulation, a dynamic internal market, free trade and liberalisation would be weakened. The EU power balance would be tipped ever further towards France and Germany; far right populists including Marine Le Pen’s Front National would gain a fillip from British departure. The EU has functioned best historically when Germany, France and Britain have collectively driven the European project. British withdrawal would fundamentally destabilise the European polity.

[...] Without far-reaching political reform, even if it voters decide to stay in, Britain’s European future will be neither settled nor secure.

Full article on Policy Network

© Policy Network

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