Brexit would lead to game of blind man’s bluff

by Alan Wheatley | 01.05.2016

The Leave campaign seems convinced the UK is so important that EU governments would bend over backwards to be nice to us if we voted to leave. But all the evidence points to the contrary. Brexiteers will have their bluff called if we quit.

Far from agreeing to a velvet divorce, Europe has powerful incentives to make post-Brexit life as difficult as possible for us pour décourager les autres who might want to follow Britain’s lead or seek special deals within the EU. The resulting political upheaval could unravel nearly seven decades of European integration.

“We have to be clear that a Brexit will have consequences, otherwise that is the beginning of the dismantling (of the EU). Everybody who disagrees on one or two points will decide to do the same,” Emmanuel Macron, France’s economy minister, said in a BBC interview.

The UK generally takes a narrow transactional view of the EU. If free trade is good for jobs and incomes, the thinking in the Brexit camp goes: why on earth would Europe erect trade barriers against us if we left?

Brexiteers seem blind to the fact that for most of the other 27 members the EU is unashamedly a political project to bind former adversaries together. “Never Again” is their motto, emotionally committing them to integration.

Who has more leverage?

Some Leave campaigners have argued that, for bargaining leverage, Britain should not immediately activate the two-year window provided by the EU’s Lisbon Treaty for negotiating an exit. But Britain’s jilted partners will want a quick divorce, Reuters has reported. They could refuse to start negotiating until we activated the relevant clause in the treaty. In many ways, they have the stronger hand. 

And it would take many years to agree on new trading arrangements, despite the protestations of Brexiteers such as Tory cabinet minister Chris Grayling.

“We would have years of the most difficult negotiations,” German Finance Minister Wolfgang Schäuble told the BBC.

Single market access

The Eurosceptic view that Britain could easily negotiate new favourable terms for its trade with the EU, perhaps similar to arrangements reached by non-members Norway and Switzerland, was described by Belgian Prime Minister Charles Michel as “dreaming in Technicolor”.

What incentive would EU states have to reward a UK resignation from their club by renewing access to the single market without demanding a price?

“You can’t fool the Europeans,” Michel said. “You can’t have all the advantages of preferential access to the market, and assume none of the consequences of being a member of an economic market.”

The rest of the EU has a big trade surplus with the UK and so, in the eyes of Brexiteers, it has an incentive to offer us decent terms. But that, too, cuts little ice. “If the UK leaves Europe the main problem will be for the UK, for its businesses and citizens,” according to Italy’s Prime Minister Matteo Renzi.

Some are already gearing up to benefit from any Brexit pickings. Macron has spoken openly of France rolling out the red carpet for British bankers who, after a Brexit, would lose their automatic “passporting” right to sell financial services in the EU. Indeed, Paris is reported to have held private seminars on how France could cash in on a British vote to leave the EU.

True, barriers to trade would also initially hurt EU manufacturers that rely on British-made components. But the UK would be gradually cut out of their supply chains during the lengthy period it would take to reach a new trade deal.

No second chance

Senior German politicians have poured cold water on another Brexiteer fantasy – that a distraught Europe would grant us even better membership terms that would then be put to a second vote. After all, the EU has a history of holding repeat referendums if voters get it wrong the first time.

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Volker Kauder, leader of Chancellor Angela Merkel’s conservatives in the German parliament has stressed: “Out means out!“.

Gerda Hasselfeldt, parliamentary group head of the Christian Social Union, Merkel’s Bavarian allies, added: “To me, it is clear: exit means exit. Citizens have to know that with this decision there will be no special treatment for Britain.”

Statements by European leaders may well be posturing in advance of the referendum – the aftershocks of a vote to leave would affect all EU members. More likely, though, it will be the Brexiteers whose bluff is called, not Europe’s. Their bet that Europe is hiding a weak hand is a gamble too far for Britain.

This piece was amended shortly after publication to clarify that some Leave campaigners are advocating delaying the activation of the Lisbon Treaty’s exit clause and to remove the passage suggesting Britain’s partners could set the ball rolling.

Edited by Yojana Sharma

Categories: Articles, Brexit

3 Responses to “Brexit would lead to game of blind man’s bluff”

  • APPEAL TO ALL UK WORKERS in MANUFACTURING and FARMING SECTOR (regardless of political orientation): As it can be read from the article from THE SUN newspaper (not a pro-EU one!) about the interview from prof Minford (date 15 March 2016) and on the UK Reuters Article at the launch of the pro-brexit manifesto on 28 April 2016 (publicly endorsed by Nigel Farage as from his speech on 29 april 2016). Before voting please read carefully what the official pro brexit economic future would be for the Brirish workers in manufacturing and farming: 1) Prof Minford words (SUN article titled “Brexit will boost our economy and cut the cost of BMWs and even brie”): “Over time, if we left the EU, it seems likely that we would mostly eliminate manufacturing, leaving mainly industries such as design, marketing and hi-tech. But this shouldn’t scare us.
    Britain is good at putting on a suit and selling to other nations.
    Around half of young adults now go to university, ending up in professions such as finance or law, while the making of things such as car parts or carpentry has hugely shrunk — but there will always be jobs for people without sophisticated skills.” (my note: I wonder in such scenario what will be left to do for the persons who did not attend higher Education?)

    2) Prof Minford words (UK Reuters article titled: ” Pro-Brexit economists hail benefit of scrapping EU tariffs and rules” ): “FARMERS, as well as CAR MANUFACTURERS, would SUFFER from lower exports to the EU, Minford said. But the economy as a whole would benefit from being able to SCRAP EU REGULATION on WORKER’S RIGHTS and CLIMATE CHANGE, and FOCUS on SERVICES where it had a competitive advantage”. Therefore the pro-Brexit UKIP endorsed economic model (so far the only official one from the Leave camp) views the loss of farming and manufacturing jobs as an acceptable thing as far as to protect and push only for the service sector (for the skilled, high Education British people only). Therefore FORGET about any possibility of Government TATA STEEL PROTECTION for workers. Moreover, on the same article, prof Minford states: “By leaving the EU and unilaterally scrapping tariffs on imports of food and manufactured goods, Britain would be able to reduce average prices by 8 percent”. (My note: OK prices WOULD reduce 8% – if lucky but this attitude will mean opening to DUMPING from whoever country wants. WTO rules are restrictive insomuch that a country, for example UK, will be obliged to adopt the same tariff (or no tariff) to every country in the world, without possibility to adopt one tariff vs a country and another tariff vs a different country. NO! Whereas the other country does not need or simply can not reciprocate as bound also by the WTO rules).

  • IS EU ECONOMY REALLY CRUMBLING? Answer to be read here: official statistics about 2015 economics of the EU (source completely unrelated to any EU referendum debate) the EU economy as a whole grew more than the UK one. The intra EU country as well as the extra EU exports grew significantly (source: “International trade in goods – Statistics Explained – Europa.eu” dated 7 April 2016). All details are in the report as from the source posted (not intended for the EU referendum but as a summary of EU trade). Therefore the EU is far from crumbling economically. The problem is to ask why UK exports are falling to other EU countries. Most likely (my suspicion) is that this is in relation to fall in output (productivity) of UK goods. In brief: other EU countries cannot import what is not there and does not exist because it has not been produced (UK problem, not EU one)

  • See “we are Europe” facebook page promoting what is good or and from Europe, cred by tech people with the support of actors and artists. For a passionate positive argument in favour of urope and the EU. EU is not only economics for UK but more, much more in positive terms.