To Brexit or not to Brexit: That is the question

Given that it is the great Bard’s 400th. Anniversary, a Shakespearean soliloquy seems apposite. What are the arguments for and against a British exit from the EU, and what are the views of Booman Tribune contributors on the subject?

President Obama has just swung by on his way back from being snubbed in Saudi Arabia, before giving Merkel some much needed succour on the refugee problem.  His emphatic endorsement of Britain staying within the EU inspired Brexit lead campaigner Boris Johnson to the heights of Trumpian abuse.  Basically Obama said Britain should stay in the EU to maximise its global influence, and suggested that the UK would have to go to the back of the queue if it wanted bi-lateral trade deals post Brexit. And in case anyone should think that Obama is on the way out and therefor cannot speak for the USA on this issue, it should be noted that Eight former republican and Democratic Treasury Secretaries have just written a letter endorsing his point of view.

This struck at the heart of the Brexit case – which has always maintained that Britain could have all the benefits of EU market access, without the costs of EU membership.  Britain, the argument goes, is so important in its own right, that other countries including the rump EU Block would be falling over themselves to cut bilateral trade deals with a newly independent UK.

To those who suggested he shouldn’t be interfering in an internal UK debate, Obama noted that there where thousands of Americans in European graves giving testimony to the fact that no Nation is an Island….

And that, perhaps, has been part of the problem.  The debate appears to have been carried out largely within England amongst English nationalists who want to wrest more political power back from “Brussels Bureaucrats” with little regard to the impact of Brexit on Scotland, Wales, and N. Ireland; and on the millions of British expats living abroad – many of them within the EU.

Opinion polls are giving the remain side a slim lead, although that has risen from 2 to 7% since Obama’s intervention. However, they were notoriously wrong when predicting the result of the last general election and can be influenced by day-to-day events and media coverage.  Experience in Ireland and elsewhere suggests that referenda often become referenda on the popularity of the Government of the day, almost without regard to the substantial issue being voted on.  In addition, the more committed side tend to prevail, especial in a lower turnout vote.  No one can claim that the no side are not vociferous in their cause, with many simplistic and counter-factual arguments to make their case.  

For many it simply comes down to a case of identity:  Do you want to be British or European?  And there is little doubt that there is a lack of identification with the European project, particularly amongst older, English, and less educated voters.

Cameron’s political problems with the Budget, the Panama papers, and the refugee crisis could not have come at a worse time for the remain campaign – as has the move to the right in many central and eastern European EU members.  Everywhere, Xenophobia and nationalism seems to be on the rise, perhaps as austerity has sapped the legitimacy of ruling elites and made people more fearful of their own circumstances.

But perhaps more crucial still has been the loss of any vision in the European project:  It has become, at best, a technocratic endeavour devoid of any rallying cry beyond the fast fading memories of the Second World War and its aftermath.  As W.B Yeats said of an earlier era:

Are full of passionate intensity”

–The Second Coming

Some analysts have suggested that the Brexit referendum is just yet another gambit by the UK to renegotiate the terms of membership to it’s own advantage and to force the EU to remodel itself more in the UK’s image. The suggestion is that the UK Government may not necessarily trigger the two year exit negotiations  provided for by Article 50 of the Lisbon Treaty, but seek to negotiate a better deal for the UK to be put to the electorate again in another referendum in due course.

Again the Irish experience of referenda may be instructive: After initially rejecting the Lisbon Treaty in a low turnout Referendum, the Irish Government negotiated some minor clarifications (which seemed so minor, they have escaped almost everyone’s memory) and put the Treaty to a Referendum again.  Despite much resentment that people were being asked to vote again on substantially the same Treaty until they gave the right answer, the Referendum was passed the second time around in a higher turn-out vote.

I think there is a great flaw in this analogy. First of all, there will be great resentment that people are being asked to vote on essentially the same question twice.  Many who voted to remain first time around might change their vote to exit in protest at this abuse of democracy.

Secondly, there is no guarantee that the terms of membership on offer as a result of the negotiations will be substantially better from the point of view of UK voters who wish to leave the EU. The damage done to the UK and EU economies by the ensuing prolonged uncertainty are unlikely to make continued membership more attractive. Indeed, the EU will be in an existential crisis at that point, with threats of exit by other nations gathering force should the UK be seen to get an even more advantageous deal. Why would the EU reward those threatening to disintegrate the Union?  Indeed, why should Frankfurt and other financial services centres go out of their way to help their major competitors in London?

My guess is that the EU could be quite vindictive towards the UK in those circumstances, and make Brexit as difficult and painful as possible.  Anything else would be to encourage others to go down the same route. Any Brexiteers who think they can get a better or even good deal for the UK post a successful vote for Brexit might be in for a very rude shock indeed.  The EU leadership might just grow a backbone when its own future existence and stability is threatened.  The UK might not even get the deal currently available to Norway or Switzerland, and thus the current UK Treasury median estimate of a 6.2% reduction in GDP (equivalent to a £4,300 loss per annum per household) on exit may prove to be unduly optimistic.

That is not to say that a Brexit would not also be damaging to the EU as a whole, and particularly to a small, open, economy like Ireland. The UK remains Ireland’s main trading partner, despite Ireland’s trade with the UK going down from 70% of our exports to c. 15% since we entered the EU in 1973.  Ireland is the only EU country which shares a land border with the UK and all kinds of administrative and political problems will ensue even if special arrangements are put in place to avoid reigniting the N. Ireland troubles.  Dublin will however be keen to capture any FDI which might otherwise have gone to the UK, and the damage to the Irish economy may not be anything like as great as it would have been in years gone by.

All in all, a period of potentially great uncertainty, and hence short term economic damage may ensue if the Referendum is passed.  Cameron will probably have to resign and be replaced by Boris Johnson or some other anti-EU figure.  Sometimes political decisions are simply not reversible even if they prove to have been manifestly wrong headed. We live in interesting times.  Let us hope there are better times and leadership for Europe as a whole in the future.