Brexit – A Last Testament

One month to go now before the fateful decision on 23 June 2016, to Remain or to Leave. At least the question has been thoroughly aired, so it suffices here to distil what we have learned.

1. Cameron started his election manifesto project to redefine Britain’s relationship with the EU by commissioning an encyclopaedic search for competences which might better be repatriated from the EU to Britain. None, came back the answer.
2. The room for further opt-outs and other special deals for the UK was also very limited, not least because of the extent of the special deals Britain already enjoys – opt-outs of the Euro and Schengen, and the UK budget rebate among them.
3. These first two points meant that Cameron’s so-called re-negotiation was bound to be a marginal affair.
4. Intra-EU immigration has emerged as a major flashpoint. Yet, the UK economy is much closer to full employment than other EU economies and to sustain its above-average growth, it needs immigration – of both low-skilled workers (in agriculture and construction, or in home help) and of high-skilled ones (in the City, the NHS and the ‘creative’ industries). But Cameron quickly found that free movement of people was a red line for other EU member states. As a result, his negotiation could only produce some restrictions on secondary social benefits for immigrant workers.
5. The Leave camp have failed to articulate a serious agenda for how they would handle the economic and trade policy implications of secession. Their rhetoric is about continued access to the EU market, and making better and faster free trade deals with the rest of the world. But a flood of informed comment and research suggests neither policy is plausible. The only variables under serious discussion are the degree to which the UK would lose access to the EU markets for goods and services, and the time it would take Britain to replace the EU’s preferential trade deals – the existing ones, as well as those under negotiation with the US, Japan, India, Australia and New Zealand – with bilateral ones. President Obama gave his clear answer: ‘You’ll be at the back of the queue’.                                                                                              
   

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6. There has been an impressive wealth of serious studies on the macroeconomic consequences of secession (by the UK Treasury, the Bank of England, the London School of Economics, the OECD, the IMF, to name but a few). All point to significant damage to the UK economy. The Leave camp’s response has been short on substance, rebutting all studies with comments like “economists are always making incorrect forecasts”, or “these are politically motivated results.” In the short term inflation, higher interest rates, a drop in foreign investment levels and reduced living standards are realistic prospects in what the Chancellor has called a ‘DIY’ recession. Longer term, secession would seriously damage the UK economy’s three ‘crown jewels’ – the City, the broader services sector, and also Britain’s privileged position for attracting foreign direct investment targeting the EU market.
7. On foreign and security policy aspects of Brexit European and world leaders have shown an unprecedented degree of consensus. All Britain’s best, oldest friends say: ‘Don’t’ – for Britain’s own sake, but also because for all its faults, the EU still stands as a major instance of an advanced international order combining peace, prosperity and democracy like no other in the world. It won the Nobel peace prize for this achievement in 2012.   
8. Brexit also threatens the disintegration of the UK itself with realistic prospects of a second referendum on Scottish independence and a possible destabilisation of the fragile peace in Northern Ireland. The English Brexiteers prefer to ignore these dangers, 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? I see several factors: a long-term political-historical preference for free trade rather than for political integration; the long-standing anti-EU bias of the British tabloid press; the perceived failures of the Euro and Schengen zones (even though the UK was never a member of either); the objective increase in the volume of EU legislation (much of it for the single market that the UK wants); immigration; and the rise of nationalist populism as embodied by UKIP’s Nigel Farage and opportunist populist-in-chief, Boris Johnson.
10. What does the next generation want? This is devastatingly clear: 74% of 18-24 year olds want to Remain (ORB poll, The Independent, April 2016). Middle-aged parents are split, while at the other end of the age range, a large number of grandparents wants to Leave. It would appear that young British people actually value the EU, taking it for granted as their normal space, one where they enjoy complete freedom to travel, study, work and look for career and family opportunities, and where they can socialise with other European cultures. We grandparents, who will be leaving this earth in any case in the not so distant future, might as last testaments respect the predominant wishes of our grandchildren to Remain

 Michael Emerson, who contributed this article to InFacts, is an Associate Senior Research Fellow at the Centre for European Policy Studies (CEPS). A longer version of this article appeared on the CEPS website.

Edited by Geert Linnebank