JOHN MENADUE. Brexit means Brexit – or does it?

 

After the surprise referendum vote 52-48 for the UK to leave the EU, the new Prime Minister, Teresa May, rejected any suggestion of a new referendum or parliamentary intervention to reverse the ‘advisory’ referendum result. She said “Brexit means Brexit”.

I am sure that she was genuine . To repudiate the referendum result so early after a heated public debate would have been out of the question.

But if a messy exit process goes on and on, and it could, the political, economic and social dynamics in the UK in two or three years’ time could be quite different.

The Brexit vote was the easy part. The hard part lies ahead.

I was in London a few weeks after the Brexit vote. Our local greengrocer put it tersely “It was a stupid question, put by a stupid government and we got a stupid answer”. My local contacts were very limited and my impressions were mainly derived from reading and listening to the British media. In it all, the question that really hung in the air was “What have we done?”

Many factors contributed to the Brexit vote and not just or mainly a rejection of Europe.

David Cameron, the British Prime Minister, failed to provide leadership. Probably 70% to 80% of UK MPs favoured staying in Europe, but to placate the UK Independence Party. Cameron chose a referendum. He should have told his xenophobic fringe to “Go jump in the Thames” or get another leader. He failed the test of good leadership in a parliamentary system. The referendum gave voice to people with a whole range of different agendas going well beyond Europe. There is a lesson in that for Tony Abbott and Malcolm Turnbull on the same sex marriage plebiscite/referendum.

The referendum result was as much about class as about Europe. With a half-hearted leader of the British Labour Party like Jeremy Corbyn, many working people in decaying towns and cities of the Midlands with growing inequality and alienation, seized the opportunity to thumb their noses at the elites in London and elsewhere. They felt cheated, angry and disappointed, and took the opportunity so seldom given, to tell elites what they really thought.

This alienation and inequality was fertile ground for people like Farage and Johnson. Further afield, we are finding it also fertile ground for people like Trump and Hanson to point the finger at foreigners and outsiders.

The European project was driven by the Europeans and not the UK. After centuries of war, the EU project has been a remarkable success, despite its problems. That historical achievement was lost sight of in secondary issues and particularly, immigration. The Conservative and Labour leadership failed dismally to make the case for Europe.

The domestic political situation in the UK is now becoming quite fluid. Jeremy Corbyn thinks that he is the leader of a social movement rather than a political party. About 80% of the British Parliamentary Labour Party have no confidence in him, but he will likely be easily elected by rank and file members with their ‘warm inner glow’. The British Labour Party could split and new political alliances open up.

Teresa May says that the decision to start the exit process set out in Section 50 of the EU Agreement, will be made by the government and not the parliament. Some constitutional layers dispute that. But if the overwhelming majority of MPs in both the House of Commons and House of Lords believe that the decision should be made by the Parliament, will they be prepared to sit on their hands?

And then there is Scotland. If Brexit does proceed, it is likely that Scotland will secede from the UK and stay with Europe. Does any UK Prime Minister really want to break up the UK?

It is clear that the UK government had made no preparations in the event of the Brexit vote succeeding. Teresa May’s government will be in catch-up for a long time in trying to get its exit case and plans in order. Those preparations will not be helped by continuing doubts, at least in the short term, on the effects of Brexit on the UK economy. The British pound has depreciated substantially and the new government has told us that Brexit will require ‘a fiscal reset’.

Teresa May has appointed Boris Johnson, and Liam Fox as her main negotiators with Europe. Given their dubious record in opposing Europe, they are not likely to be seen as credible by the Europeans.

The UK will have to renegotiate trade agreements with each of the 27 other EU members. For the last 30 years, the UK has relied on EU officials and ministers to negotiate trade agreements. That leaves a very considerable experience-gap on the UK side for the large number of new agreements that will have to be negotiated. It could be a slow process.

In negotiating these new trade agreements, President Obama has made it clear, both before and after the Brexit vote, that the US will not be coming to the rescue and putting the UK at the top of the renegotiation queue.

At the recent G20 meeting in China, the Japanese Prime Minister flagged to Teresa May that many Japanese companies that are based in the UK in order to gain preferred access to Europe might reconsider and make future investment directly in Europe rather than in the UK. Companies such as Nissan, Honda, Mitsubishi, Hitachi, Toyota and others employ about 140,000 people in the UK.

The Indian steel giant Tata, has said that Brexit will mean the closing of the last British steel works.

China is now the country with the biggest bag of money for investment around the world and may not be all that subtle in the way it exercises its new power, It will be watching closely before deciding whether future investment should be in UK or directly in the EU. It was not a good start by Teresa May to abandon the Chinese designed nuclear plant Hinckley Point.

In his meeting with Teresa May last week in China, Malcolm Turnbull again extolled once again the dubious benefits of Free Trade Agreements. He offered to be helpful to Teresa May. In this nostalgic look backwards, he seemed unaware that the UK has slipped to eighth ranking as our trading partner.

If the British have problems, it is unlikely that the Europeans will be very helpful. They were offended by the behaviour of British Ministers like Boris Johnston and the referendum result.

More importantly they are also unlikely to facilitate an easy exit by the UK as it could encourage some EU members to try and join the UK exodus.

Individual European countries will also have their own agendas with the UK- Denmark on fishing, Spain on Gibraltar, France on finance sector employment, and Northern Ireland over its land border and convenient travel into the UK.

The EU like the UK has little experience for the negotiation task ahead. The last time member countries withdrew from the EU was Algeria in 1962 and Greenland in 1985.

Furthermore, the key European countries that will be at the forefront of the Brexit negotiations, Germany, France and the Netherlands, all have general elections next year. They won’t be focusing on UK’s problems. They have enough of their own.

UK exports go mainly to Europe, but no European country sends as much as 10% of its exports to the UK. Again, with the EU having far less at stake than the UK, it wont have the same sense of urgency.

The French President has been very clear that the UK cannot pick and choose about Europe. He has told Teresa May that ‘the UK has access to a foreign market because it reflects the four freedoms. If it wishes to remain within the single market, it will have to abide by the four freedoms. … There cannot be freedom of goods, free movement of capital and free movement of services if there isn’t free movement of people.’ That looks to fly in the face of what Boris Johnson and others told the British people in the recent referendum that they favoured access to a single market whilst imposing limits on migration.

Perhaps after years of confusion and stagnation, it may all get too hard and a state of limbo ensue! The situation the UK faces today may be quite different to the unfolding political, economic and social position two or three years down the track. In that time, more and more British people may keep asking the question “What have we done?”

Younger people clearly favoured remaining in the EU. They may yet reassert themselves rather than cling to a nostalgic view of the UK without Scotland.

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2 Responses to JOHN MENADUE. Brexit means Brexit – or does it?

  1. Mael Colium says:

    The PIIGS wouldn’t agree that the European project has been an outstanding success, particularly if you were a Greek. There is every indication that French popular sentiment is drifting back towards sovereign independence and the unfettered migration made possible by open borders is dulling the sense of benefit states have under a united Europe. Add to this the stagnant economic activities and the unwillingness of the ECB to loosen the fiscal limits of the states and I’m struggling to see the downside for the UK in the scheme of things. In fact it seems that we may well be witnessing the beginnings of European disunity despite the pro European press touting otherwise.
    Nonetheless, London was a financial giant before the EU and there will clearly be adjustments but it seems they will continue to be the key financial centre in the foreseeable future despite the rumblings from those corporate elites who see their grand plans being challenged. I doubt that anything Obama has said with respect to trade will matter a jot if corporate interests see benefit in advancing trade negotiations with the UK.
    If I had read this article pre Brexit I would have been swayed. However post Brexit vote the feared financial collapse has failed to materialise so it seems most unlikely that the UK government will be able to sell the doom message to the public again. If anything I think the longer Brexit takes to materialise the more likely it will hold together.

  2. Michael Keating says:

    The above comment looks at Brexit mainly from Britain’s point of view. The other party, the EU is likely to force Britain’s hand. If Brexit is a certainty, then the EU wants it completed asap.

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