Saturday, June 25, 2016

Confusions and risks in the post-Brexit path

I watched the UK's Brexit vote first with interest then with fascination and then with a degree of horror. I was opposed to the original decision to join the EEC, but after forty years membership unpicking the whole thing becomes difficult. Further, the campaign itself and the consequent vote played to and accentuated divides in the UK.

Northern Ireland

Northern Island voted to remain, but it was a divided vote. The leave campaign was backed by the DUP and Chief Minister and gained more support in Protestant areas. The DUP's Edwin Poots said he was "absolutely delighted"."I believe that we will recover very quickly after the initial shock. The farming community has been in the doldrums... I would expect this will help them. I would expect it will help our manufacturers and our exporters at this time."

Sinn Féin's Declan Kearney called it "a pyrrhic victory", pointing to the way that the English majority had over-ridden the democratic wishes in Northern Island. Sinn Féin is already calling for an all-Ireland vote to determine new arrangements.

The Irish Times reports that the British and Irish Prime Minister have already spoken on on the need to develop a new border plan that will preserve the links between the two countries. Neither side wants a resurgence of the Irish troubles that cause so many deaths.


Scotland voted across the whole nation to remain by 62% to 38%, a sea of yellow. During the Scottish independence referendum, the EU was a key argument on the No side. You cannot assume, the No case said, that an independent Scotland would be able to join the EU. Best stay with Britain. 

In ruling out any immediate move towards another referendum, SNP Chief Minister Nicola Sturgeon made it clear that that position was conditional on the UK staying a member of the EU. As it became clear that the Leave side was heading for victory, she issued a statement saying the vote  had made clear "that the people of Scotland see their future as part of the European Union". She added: "We await the final UK-wide result, but Scotland has spoken - and spoken decisively."

Later, she told a media conference that a second independence referendum was "highly likely" after the UK voted to leave the EU.

The SNP manifesto for May's Holyrood elections said the Scottish Parliament should have the right to hold another referendum if there was a "significant and material change" in the circumstances that prevailed in 2014, such as Scotland being taken out of the EU against its will.

"It is, therefore, a statement of the obvious," Ms Sturgeon said, "that a second referendum must be on the table, and it is on the table." However, as in the Irish case, there is a desire to avoid rush, to try to think things through. Mr Cameron has undertaken to consult Scotland closely as the exit negotiations proceed. 

England and Wales

I have joined these two together primarily because I do not have sufficient information to make a sensible comment on Wales. Both voted to leave.

The English Leave vote dominated the total results. It was especially concentrated in areas that have not shared in growth or which have felt their way of life threatened. London generally voted Remain, but could not offset the Leave vote elsewhere. Manchester, a city undergoing reinvention, voted yes, but the former industrial areas to the North (original Belshaw country) voted to go.

This was also a generational conflict, with support for stay apparently higher among the more mobile young who have grown up with the EU.

Failure of the Political Classes

The Conservative Party split on this issue. So, to a much lesser extent, did Labour. Only the right wing UKIP was completely united and indeed is likely to have greatly strengthened its position. The  majority of the economic and political establishment who supported Remain failed to carry their normal supporters. The deep divisions were especially apparent within the Labour Party. 

Many of those in the UK and elsewhere on the right who argued for a Leave vote in the hope of a less regulated more dynamic Britain freed from the regulatory shackles of Europe will, I fear, be gravely disappointed. This was a vote against against change, a reaching to the past, a vote for protection. Expectations have been created that will be hard to fulfil, but the attempt must be made.

There is a lesson in this for Australia, for our main political parties and the political classes themselves have been insufficiently aware of the divides emerging in this country. 


It is, I think, no coincidence that within Europe it is the protectionist parties of the nationalist right who have cheered the results. They see it as legitimizing their cause. 

The more main stream parties still largely committed to the European project, the smaller countries especially in Eastern Europe who saw Britain as a balance, are all severely disappointed. They feel betrayed and see the English decision as an almost existential threat. This will play out during future discussions on British exit paths an its future relationships with Europe.

The stated European view is that the UK must negotiate an exit as soon as possible. The UK needs time to work through the consequences of its decision, to try to unify the country, to plan, but time is short.


In many ways, the debate over immigration has been one of the silliest elements of this campaign, one high-jacked by concerns about refugees and homogeneity.

Many million British including retirees live in Europe, many million EU citizens live in the UK. Following the vote, the position of all these people has become uncertain and needs to be resolved. This dwarfs any present refugee issue. 

To stay an economic member of the EU free trade area, Britain will have to accept continued free movement of people. This creates a significant political problem.

Economic Impacts

The present wild gyrations in markets following the vote will pass. The economic shock will remain, although the final size has still to be determined. Businesses across Europe and indeed the world are now attempting to work out what this means for them.

For the present, the formal structures will remain. Nothing will change but everything has changed. Flows of goods and services will continue, but decisions on the future will now be based on the new relationship.

At a machinery level, things continue while Britain and the UK attempt to define new relationships. Do not expect this to be easy. EU calculations will be based on a simple equation: how do we minimize the political and economic damage? The UK's negotiating position is quite weak. In a way, it wants the EU without having the EU!

The changes that will take place in the medium term are unclear because of the complexities involved. They depend not just on institutional arrangements, but on millions of response decisions. Firms for whom the EU is a key market, especially global firms, will reduce UK activities. There will be some shift of jobs to Europe, but I'm really unsure as to the end effect.

Political and Diplomatic Repercussions

The decision represents a major change in the Western and indeed global political infrastructure. In the short term, it weakens the influence of both the UK and EU. The Western Alliance has been based in part on a Britain within Europe.

In the longer term, I suspect the effects will be less here than might be expected because the underlying dynamics haven't changed. However, it will require a myriad of changes to existing institutional arrangements before things settle down. The big risk in the longer term is that a more inward looking EU will lead to a major diminution in the European role and influence.

The Future of the EU

Britain's decision leaves a weaker EU. The decision is is also a sign of political and institutional failure within the EU. Will the EU fall apart? I very much doubt it, but the EU that now emerges will be a different EU.

The desire of the proponents of the European project to expand the EU into a truly pan-European Union that would make Europe great over reached in institutional, cultural and political terms. There will be much soul searching. The need for compromise and reform will, I think, lead to a more inward looking EU, one less open to external influence, one less willing to become involved.

I say this because the EU has to focus on fixing itself and that is going to require political compromises and an internal focus if it is to balance the forces of nationalism, improve performance and allow time for change. The resulting compromises are likely to weaken the centre for the moment, but will also lead to a more insular EU.

A New Elizabethan Age?

One of the reasons why the Remain case failed lay in its focus on economics and risks. It all came back to the UK will be financially better of if we remain in the EU, the costs to you of leaving will be too high.

 Accepting that I am away from the detail, it was all negative campaigning. There was no articulation, at least that I could see, of any positive messages linked to the EU membership. As an outsider if one with a daughter working in the EU, as an outsider with a knowledge of history, I can see messages. EU membership gives our children more options. The EU has linked Europe together, reducing the risks of another major European conflict. The EU increases our influence in the world. We should stay in the EU and work to reform it, to make Europe great.

All this type of thing was lost in a debate which came back to we will be worse off if we go on one side, we don't care but we want to do our own thing on the other, we want to make Britain (really England) great again.

Can Boris Johnson and the other more expansive leave proponents create a new Elizabethan age as promised in the face of Nigel Farage and UKIP and the little England proponents?

I would like to think so, but am sceptical. There is a fundamental conflict between Mr Johnson's rhetoric of a more open deregulated UK trading with the world and the practical realities of English politics, with the practical realities of a leave campaign that oversold the benefits, with the desire of so many English people to preserve the status quo, to recover things that have been lost.

All we can say at the moment is that things will be different. The nature of that difference will only be revealed with time.  


Noric Dilanchian said...

Masterly overview Jim.

Jim Belshaw said...

Hi Noric and thanks. It's all very interesting if a tad depressing