Written by: Keith Williams
British PM David Cameron’s spectacularly ill-conceived referendum on EU membership is highly unlikely to lead to actual Brexit. Here are ten reasons why:
- The terms of the referendum were incorrect, from inception. Foremost, simple majority is far too small to provide potential Brexit leaders the kind of political cover that they need to carry out such a difficult shift in policy. Parliamentary procedure typically requires a supermajority -either 2/3, 55% or similar- for any decisions that fundamentally affect governance. For this reason alone, the British parliament could, and probably should, set the vote aside. In fact, a petition to require a supermajority, as well as 75% turnout, has gathered more than three million signatures as of this writing, far exceeding the threshold for consideration by Parliament.(Ironically, that petition was conceived by a Leave campaigner.) The supermajority standard is not arbitrary: substantial changes in governance are inherently difficult; hence leaders need (and should indeed want) a clear and overarching mandate. Lacking a supermajority, leaders tend to face no-confidence motions on a routine basis.
- After the vote, PM Cameron made it clear that he will pass the task of triggering Article 50 (concerning secession from the EU) to his successor. As noted by many, this is a very poison pill, because that successor must thus inherit market turmoil and all of the other short-term effects. It is very unlikely that Leaveleadership will retain any reasonable level of public confidence while exercising the Article. Without clear confidence, the new government will fall. Repeatedly.
- Numerous details have emerged since the vote, including misstatements regarding NHS financial inputs and [im]migration policy. Galling admissions by Leave leaders such as Nigel Farage will fatally undermine the credibility of subsequent leadership and contribute to (2)…making it almost impossible for a hypothetical Leave PM to actually execute separation from the EU.
- The referendum vote isolated London and exposed a very strong regional divide between England (outside London), Scotland, and Northern Ireland. So enormous is the difference of opinion across that border that Scottish independence is again on the table: Scotland certainly wants to remain within the EU. Thus the United Kingdom will formally disintegrate, should Brexit actually occur. That prospect alone is sufficient to turn popular support very strongly against a new, post-Cameron government.
- Leave advocates (and some Remain advocates too) have tried to assuage the public’s fears by implying that the separation from the EU would take place over ~two years. That is almost certainly incorrect: the markets could not possibly wait for two years for certainty. A two-year period of uncertainty would be fatal to the British economy, and quite possibly the Euro economy as a whole. Hence…
- The countries intending to remain within the EU will press for immediate separation of Britain, even as current and new British leadership cry “not so fast.” It is clearly in the EU’s interest to press for immediate separation, even before various trade and immigration agreements are reached. This is for at least two reasons:- (i) to tamp down market uncertainty; and, perhaps more importantly, (ii) to set a very clear precedent that warns other member states (e.g. the Netherlands) of the consequences of exiting the EU. Britain is to be made an harsh example, to make it difficult for fringe leaders like Geert Wilders and Marine Le Pen to build upon the Brexit result.
- Financial markets tend to act in accordance with Newton’s Third Law. The British trade imbalance has been cited repeatedly by Leave campaigners as evidence that the EU needs Britain more than vice versa. However, that trade deficit was computed in terms of pre-Brexit currency. The currency will rebalance, as will the trade, and Britons will find themselves, overnight, with a drastically weaker currency. That will quickly erase the trade deficit and leave Britain in a very weak position.
- [Im]migration was given far too little attention in the debates prior to the Brexit referendum. After the referendum, Britons are learning that they have strongly benefited by the [im]migration of many young and educated Europeans to the UK, as well as departure of older Britons to the south. Brexit would cut off critical channels of immigration and leave England with an aging workforce that saps their entitlement accounts. Those seeking good prospects will simply depart England.
- The “Norway Model” has been cited as one possible outcome of the referendum. However, Norway is vicariously subject to various EU regulations, even though it has little voice or no in their determination. Such an outcome would clearly be unacceptable to the majority of Britain, as it amounts to taxation without representation.
- There are two kinds of immigration into Britain, but Leave campaigners have carelessly lumped them together. It has now become clear that Leave campaigners have wielded a Trump-esque, xenophobic ploy to block certain kinds of immigration (ahem) rather than present a rational economic strategy concerning immigration as a whole. In actual fact, Britain desperately needs the inflow of young educated talent from other parts of Europe, and that will be crimped off, should Britain actually leave the EU. In fact, record numbers of Britons have already applied for Irish passports, in the hours and days following the referendum. They will consider immigration to Scotland as well, should a second Scottish referendum occur and succeed. The result would be an exodus of youth, at a time when post-Baby-Boom Britain can least afford it.
In summary, numerous very difficult obstacles remain, any of which are individually sufficient to block or at least delay Brexit. However, a delay would be financially fatal; the markets will demand clarity, immediately. The onus is now firmly upon PM Cameron’s successors to spell out a mechanism to resolve all of these issues on an expedited schedule – and they will certainly fail. This leaves Britain with two options: (i) that Parliament sets the referendum aside, and/or (ii) a second referendum requiring a supermajority is announced.
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