Tuesday, July 12, 2016

Brexit: What on earth happened?

Readers of the blog come from all over the world and they may have heard some surprising tidings from the United Kingdom over the last few weeks. As most of international news reporting has painted events as either a revolt by xenophobic peasants or just complete chaos, I thought it was worth setting down what has really happened and the reasons behind it.

First, my biases. Although I am, I suppose, a member of the globalised neo-liberal order, I campaigned hard in my local area for a vote to leave the European Union, commonly called the EU, at the referendum on 23 June. I have been a sceptic of the EU since 16 September 1992, ‘black Wednesday’ when the German central bank provoked the markets to devalue the British pound against the will of the British Government. In the meantime, we have seen the EU bring in the single currency that, in the aftermath of the financial crisis of 2008 has turned into a rack upon which the economies of many of its members are slowly being broken. In essence, the EU has become an oligarchy, and not even a very effective one.

Second, some history: back in 1975, the British overwhelmingly endorsed their membership of the European Economic Community or EEC, the predecessor organisation of the EU. On balance, the British decided that membership of a huge market on their doorstep was worth sacrificing some of their self-rule for. Besides, back in the 1970s, the UK was in a bad way, with widespread labour disputes, high inflation and shaky Government finances.

However, in 1992, the EEC was turned into the European Union by the Maastricht Treaty, which was intended to be the first step towards a federal United States of Europe. The British Prime Minister at the time, John Major, declined to obtain a democratic mandate for this. The previous Prime Minister, Margaret Thatcher, had been deposed a couple of years before when she effectively threatened to veto the plans for a federal Europe. The combination of Maastricht and Black Wednesday turned the majority of the Conservative Party against the EU. They also destroyed the credibility of Mr Major and his Government, which lost the 1997 election by a landslide.

From 1997 to 2010, Tony Blair’s Labour Party was in Government and was determined that the UK would play a full part in the EU. In 2005, in an effort to increase the democratic legitimacy of the EU, a series of countries held referendums on its new constitutional treaty, which was a further step towards a federal Europe. However, when the EU lost the votes in France and the Netherlands, the results were ignored and the constitutional treaty was pushed through anyway with a different name. Both Mr Blair and the new Conservative leader, David Cameron, also promised a referendum on the constitutional treaty but both reneged when it became politically inconvenient to give the people a say. The grand plan to provide the EU with democratic legitimacy ended up destroying its credibility because the people declined to give the answer they were required to.

In 2013, now in Government, Mr Cameron again promised a referendum. He said he would renegotiate the UK’s relationship with the EU before the referendum and then ask the people if they wanted to Leave or Remain, based on the new terms. He hinted that, if the negotiation didn’t go his way, he might campaign to Leave. But when his negotiations duly failed to achieve anything of substance in February 2016, he announced he would, after all, campaign to Remain. His credibility as honest broker was instantly destroyed and British voters stopped listening to a word he said. They also got sick of every international bigwig, from President Obama downwards, telling the UK was doomed if it voted to Leave.

On 23 June, we voted 17 million to 15 million to Leave the EU. Everything about the vote was a surprise. No one thought Leave would win. Even after the polls closed, the betting markets implied a 90% chance of a Remain vote. Turnout was 73%, the highest in a national vote for 25 years. In short, more of the British voted to Leave the EU than had ever voted for anything else in our history.

So what happened and what happens next? The Leave vote was a coalition of three disparate groups. The campaign was led by a relatively small group of internationalist libertarians, including Boris Johnson, Michael Gove and Daniel Hannan. They saw the EU (correctly, in my view) as an anti-democratic and corporatist racket that was immune to reform, as the failure of Mr Cameron’s renegotiation had shown. The shock troops for Leave were supporters of Nigel Farage and the UK Independence Party: mainly paleo-conservatives who objected to uncontrolled immigration (the UK must accept unlimited numbers of immigrants from the EU).

The third element of the coalition for Leave was whose participation nobody could predict in advance. It was also the one that all my local canvassing was aimed at winning over. This final group consisted of working class people who nominally supported the Labour Party, but in practice rarely voted. Sick and tired of being ignored, and not seeing the benefits of globalisation, they came out to vote on 23 June and delivered the verdict of Brexit.

Now the UK embarks on an exciting journey. We will continue to trade freely with the EU, but also sign free trade deals with the rest of the world as fast as we can. We’ll continue to welcome many new immigrants to the UK, but they won’t have an automatic right to reside here. And the democratic control of farm subsidies, fisheries and taxation (the UK currently can’t even abolish the tax on sanitary towels) will return to Westminster. Of course, plenty of the British have valid concerns about the effects of Brexit. And it is to be expected that many people will have invested in the status quo of EU membership, especially if the status quo has lasted for over 40 years. That does not make it a good thing. Indeed, institutional inertia and the fear of short-term consequences over long-term benefits is one of the most damaging of political motivations. 

As for the rest of the EU, it needs to reform quickly to gain democratic legitimacy while also, somehow, undoing the immense damage done by the single currency. Is that possible? Probably not. But we British wish the EU well. With Brexit, we cease to be a truculent tenant and become a friendly neighbour.

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Anonymous said...

The Brexit vote lacks all credibility as none of the varied groups who voted on it agrees on what it means and many admit they did not actually mean to leave the EU. Boris Johnson who swung many votes towards Leave certainly did not intend to win.
The proof of the pudding is in the eating. A month on, the Vote Leave leaders have either disappeared, or like Daniel Hannan and Iain Duncan-Smith said that what people thought they had promised were not promises at all.
The ultimate humiliation for the Leavers is that they had to find someone who voted Remain to lead them! With no coherent Leave position in place, Theresa May will simply make sure that we keep in the single market in the 'Norway' solution, go on paying contributions as before, go on accepting unrestricted migration as before, accept all EU regulations over what we export there, as before, but have no say in any of this. As the majority of the members of Parliament were Remainers they will support this as the closest we can get to staying in the EU. It is quite possible ,of course, that Parliament will reject invoking Article 50.
The Vote Leave leaders have only themselves to blame after they have totally failed to take advantage of the opportunities the referendum offered them and will have to make do with what they are offered. Talk about blowing one's chances!.

James said...

I'm intrigued about the many Leavers who didn't mean to win. Could you point me to their admissions. It is true that many Leavers, including me, did not expect to win. But that is rather different.

You are right that Leave was a coalition of views. So was Remain given it included most members of the Tory government, and almost all Greens, Labour MPs and the SNP. About the only thing they agreed on was staying in the EU, but not on what staying in the EU should mean.

If the EU drop their silly fixation on free movement I'd be happy with EEA membership combined with controlling our borders. Given they are already talking about an emergency brake, I think that is quite likely. The emergency brake itself is not acceptable (that horse bolted back in February) but it does show the EU realise that Brexit hurts them more than it hurts us.

Incidentally, we have to accept EU regulations over what we export there no matter what, as we must accept US regulations on what we export there and Japanese regulations on what we export there.

Anonymous said...

We have a retired civil service friend who has many contacts within Whitehall- he confirmed to us that Boris was absolutely crushed by the Vote Leave success and did not know what to do next. I talked to many Vote leavers as a matter of interest before the vote as we live in a Leave area and none of them had the least idea of what the actual process of leaving would involve. I did not come across anyone who had even heard of Article 50. It seems to have been assumed that one simply told the EU one was leaving!!
We will see how things pan out but one has to accept that the east European nations will insist on free movement as, it ,seems, will the EU as a whole as an intrinsic element of the single market. I think that the Brexiteers are hopelessly naive in their hopes that the EU will accommodate them. It is only slowly becoming clear just how dramatic that moment at the end of two years of possibly unresolved negotiations will be. In particular it is being assumed that free trade agreements will fall into our lap, but it would seem that after several years of negotiations we may simply agree to let cheap Chinese goods flood the market and undermine our manufacturing base still further.
Of course, it was silly to have a referendum as the thousands of different issues that leaving the EU will involve will make the process of leaving very messy. Virtually every different interest group in the UK is going to be involved in one way or the other and will demand protection, in the sense of continuing subsidies and protection of programmes such as Erasmus. How anyone is going to work out all this when the civil service is already being cut, I simply don't know but the betting is that there will be a massive revolt against leaving perhaps even as early as December. It will be interesting,and perhaps frightening, to see what actually will happen.
I am keeping an open mind on the outcome but day by day the outlook seems more bleak. In desperation Parliament may assert its sovereignty and say no to Brexit.
In future if we want to use referendums, let's make clear what their legal status is as many other nations do. At the moment this remains, legally, only advisory and so vulnerable to rejection by Parliament.

antimule said...

James, could you give us your rationale for leave vote? I ask because most intellectuals are vehemently certain that leave is fueled by nothing more than racism and nativism. What would be a rational case?

James said...

Hi antimule,

I am a bit confused by your message. Over half the UK population voted to leave the EU and if most intellectuals think that was nothing more than racism and nativism, I fear that tells us more about intellectuals than about the case for leave.

Anyway, here is a long read from an outstanding scholar (Robert Tombs who voted Leave) writing for a left wing magazine that might help you to understand what has happened and why:


antimule said...

Sorry for any confusion, English is not my fist language. I am simply saying that many prominent people (not me) think that "leave" option is not respectable position. You seem to be a respectable person. You seem to be advocating "leave". So I was asking what would therefore a respectable reason for "leave" be. Your link is satisfactory as an explanation.


Anonymous said...

Half the population did not vote to leave the EU!! 52 per cent of those who voted voted to leave. Remember that two groups who will be disproportionately affected by the vote did not even have a vote: EU communities living here whose EU privileges have not been guaranteed and UK citizens who have been abroad for more than fifteen years. Both may lose heavily. EU citizens who do have a right of residency as they have been here for five years( from what date will this five years run?) will still, according to Migration Watch, have to provide proof of five years residency and this will clog the system when it will already be overstretched.
Also important to note that in the hysteria, speculations and misrepresentations about what Voting Leave meant, the long term consequences could not be foreseen by either side. By December or January , Parliament can take a long hard look at the evidence and the many years that it will take before we have new trading relationships and may well, as the sovereign constitutional institution in this nation, decide that it will be irresponsible to rely on the advisory vote of a hysterical referendum campaign to consign the UK to economic isolation. I ,for one, would prefer to accept the normal constitutional way of doing things, honed over many centuries, over the referendum route. No one planning a new referendum would ever follow the EU referendum precedent!

James said...

I'm sure that an amicable agreement on the status of EU citizens here and Brits in the EU will be reached without too much trouble. I'm not sure why the Government is playing hard ball with this one, except that they clearly don't underestimate the capacity of the EU to play silly buggers.

Also, never fear. There will be a vote in the House of Commons before Article 50 is invoked. Like the votes on Syria, its constitutional status will be unclear, but it will be binding nonetheless. It will also be won by the Government which has a majority and can count on the DUP and Labour rebels. I suspect Labour (under Corbyn) will officially abstain, which might set off that week's leadership crisis.

Finally, I am quite happy to concede that if Brexit turns into the disaster Remain insist it will, then there will be a rethink. Obviously, I don't think that will happen, although we will see every bit of bad news for the next 20 years being blamed by Remainers on Brexit (c.f. the misinformation on Lloyd's Bank restructuring last week). What your side should be doing is quietly preparing your contingency plans and, in the mean time, not appearing to try to sabotage the referendum result. Constant whinging is likely to mean you have less chance of being listened to if your moment comes (although, to be clear, I don't think it will come).

Anonymous said...

'Constant whinging' . No, a realisation that the process of Brexiting will tie this country up in knots for years to come with no obvious gains at the end. This continues to be the case despite the result of the referendum. Better not to start but let's see what people feel by December when the way ahead will be clearer for all to see. Which will win out, Theresa May's stubborn-ness or her pragmatism?