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Brexit: A last testament

UK & Europe

Brexit: A last testament

In campaigners. London, 26 March.

[Jim Killock/Flickr]

To remain or to leave, that is the question. Before answering, try and distil what we have learned, Michael Emerson suggests.

Michael Emerson is Associate Senior research Fellow at the Centre for European Policy Studies (CEPS), Brussels.

One month to go now, before the fateful decision to be made on 23 June 2016, to Remain or to Leave, that is the question after four years of thinking about it by Prime Minister David Cameron’s government.

At least the question has been thoroughly studied and aired in all its dimensions, so much so that it suffices here to try and distil what we have learned.

  1. Cameron’s started by commissioning an encyclopaedic search for evidence over which competences might better be repatriated to the national level. None was the answer, because most of the EU’s competences are shared with member states, and the sharing is overall quite sensible. There is some trimming of detailed regulations to be done (cut ‘red tape’), and President Juncker’s Commission agrees.
  2. The room for further opt-outs and other special deals for the UK was very limited because of the extent of special deals it already has (euro, Schengen, budget rebate, etc). At the strategic level the UK is in what it likes (the single market, foreign policy and deliberations over main political orientations), and out of what it does not like (‘best of both worlds’).
  3. The combination of these first two points meant that Cameron’s so-called renegotiation of Britain’s place in the EU was bound to be a marginal affair, as was seen in the agreement made at the European Council in February 2016.
  4. The one exception to this was intra-EU migration, where there is strong pressure within the UK for limiting the EU-immigration that has surged ahead in recent years for two reasons: first, the 2004 and 2007 enlargements, and second the state of the UK economy, which is much closer to full employment than many EU economies. At least here there is a real argument, with immigration pushing up housing prices and straining some public services. On the other hand access to the European labour market is really needed both for low skill workers (in agriculture and construction, home help, etc) and high skill ones (in the City and the ‘creative’ service sectors); without this the UK’s economy would be pushed back to stagnation. However any fundamental reneging on the free movement of people proved to be the red line that other member states were not willing to cross. So the negotiated outcome saw some restrictions only on some secondary non-contributory social benefits for immigrant workers.
  5. The Leave camp for their part have failed to produce any serious agenda for how they would handle the economic and trade policy implications of secession. Their rhetoric is about continuing to have access to the EU market, and making better and faster free trade deals with the rest of the world. But there is a flood of informed comments and studies showing that this is not plausible on either account. The only variables under serious discussion is over the degree to which the UK lose access to the EU’s goods and services market, and how long it would in take for the UK to restore bilaterally the EU’s existing preferential trade deals with around 100 countries, and for it to follow on after the EU’s currently ongoing negotiations (with the US, Japan, India, Australia, New Zealand) are concluded. President Obama came to London to give his answer ‘you’ll be at the back of the queue’), and effectively he spoke for the others as well.
  6. There has been an impressive wealth of serious studies on the macroeconomic consequences of secession, short, medium and long-term (UK Treasury, Bank of England, London School of Economics, OECD, IMF), all of which point to significant damage to the UK economy. The Leave camp are reduced to vacuous arguments, like economists are always making incorrect forecasts, or that these are politically-driven results. Moving from the realm of studies to the real world, the prospects of immediate and tangible damage has come into focus, with the uncertainty factor to hit the exchange rate, dry up foreign investment, thus cutting the financing of the huge current account deficit, thereby pushing the exchange rate further down. The prospects of recession, inflation and loss of living standards are therefore realistic, starting on 24 June 2016 with what the Chancellor of the Exchequer is calling a ‘DIY’ recession. For the longer run it looks like the UK could be throwing away all three ‘crown jewels’ of its economy, namely the City, the service sector more generally, and its prime location for foreign direct investment targeting the EU market.
  7. On foreign and security policy aspects, there has been an unprecedented unison of statements by European and other world leaders deploring the prospect of UK secession. All the UK’s best and oldest friends say ‘don’t’ for your own sake, and also because the EU for all its faults still stands as a major instance of an advanced international order, combining peace, prosperity and democracy like no other world region. It won the Nobel peace prize recently for this.
  8. On top of all, Brexit threatens disintegration of the UK itself, with the prospect of a second referendum on Scottish independence, and possible destabilisation of the fragile peace in Northern Ireland. What to the English Brexiteers say about that? Nothing, just head in the sand. They don’t want to know, it seems.
  9. Why then, in the face of an overwhelming mass of serious economic and political arguments, do around half of the population seem to support Brexit? Several factors it seems: long-term political-cultural preference for free trade more than political integration from the EU’s start in the 1950s; the delayed accession resulted in initial features unfavourable to UK (agricultural policy); long-term anti-EU bias of the tabloid press; perceived failures of the euro and Schengen (even if the UK out of these); objective increase in EU legislation (but much is for the single market that the UK wants); the immigration point; and the rise on nationalist populism (as in much of Europe and the US), coupled now at the last minute to the blatant political opportunism of populist-in-chief Boris Johnson.
  10. What does the next generation want? Devastatingly clear. 74% of 18-24 year olds want to Remain, while 25% want to Leave (ORB poll, The Independent, April 2016). Middle-aged parents are in the middle, and the grandparent generation wants to Leave. How interpret this huge and alarming division of society by age? It would seem that young British people actually value the EU as their normal space for complete freedom to travel, study, work, and look for career and family opportunities, and socialise with other European cultures. They have grown up to take this for granted. Why else? Grandparents should be prompted by these findings to think more about what to bequeath to their grandchildren and future generations. They might respect the preferences of their grandchildren in drawing up their last testaments.