In a first reaction the result of the referendum WAS Brexit for me. But the fight only started on that day. Strange enough, nobody had defined before what kind of Brexit was voted. It was a vote where NOT to be, but no vote about where to go. The campaign had been nasty, full of lies, demagogic, and unfair. However nobody questioned the legitimacy of the result of the referendum. The majority was small, but it was a majority that must prevail.
The direction of the negotiations that must follow the referendum was still open. It could from the start have been different, like some people believed then, going towards a status like Norway or Switzerland with a close relationship to the EU. The "hard Brexit" was not the most likely option at that time.
As far as economic consequences are concerned: it has always been wrong to look at indicators that reflect short term oscillations like the exchange rate of the Pound Sterling. Waht really counts are the effects on investment and growth. These effect have already been damaging. But this effect is always multi-causal and therefore can be used either way: either you say that Brexit, Covid, the Ukraine war and other developments are responsible for some economic difficulties, or you say it is mainly Brexit and all the rest is less relevant. There is no proof, and more important, such arguments do not convince anybody, because they are too complex.
In most of my lectures and speeches of the time I insisted not to make prophecies on the economic effects of Brexit just because of the multifaceted relations between caus and effect in economics. I think this was good.
It was foreseeable at that time that British politics would run into a phase of major turmoil - and that the image of David Cameron as the man who gambled with Britain to save his party would deteriorate. Today Cameron is nearly forgotten while Boris Johnson may stay in memory a bit longer as an example of bad government.
BREXIT – the game is over
Published June 24, 2016
© Georg Boomgaarden
Rub your eyes – the world has changed. BREXIT happened – the game around it is over. I attended the speech of Prime Minister David Cameron at Bloomberg in London when he announced on January 23, 2013 that he would call for an in-out-referendum if he wins the next election; some journalists found my sharp reaction odd: I said: this is a catastrophy for Britain, and damaging Europe. The debate who is more and who is less hurt by this has always been childish – both will suffer the consequences.
An interesting analysis why Brexit won is here (in Sept.2023 both articles were still available)
http://www.cer.org.uk/insights/how-leave-outgunned-remain-battle-five-ms
and a sharp analysis of the whole campaign and what we can learn from the result of the referendum (in German) is here:
http://www.zeit.de/politik/ausland/2016-06/brexit-grossbritannien-referendum-lehren
In 2008 I asked William Hague – then still in opposition – why he favoured a referendum on the Lisbon Treaty, since the Westminster democracy had always been admired throughout Europe, so why not entrust this decision to Parliament. He answered that for the people parliaments do no longer have enough legitimacy to decide on such a crucial question.
In the following years Britain had to learn about the expenses scandal in the House of Commons, damaging severily the standing of the MPs, about the scandal of the Murdoch Press spying on politicians and even not shying back from tapping phones of the Royal Family, about scandalous bankers who first ran their banks on the rocks and then cashed in obscene pensions while social benefits for the poorest were cut. The whole financial and economic crisis after 2008 was a real blow to the legitimacy of the political system not only in Britain, but all over the Western World. So it is understandable that some people thought that referenda could bring the people nearer to politics again.
But referenda are the fiesta of demagogues, they are much less democratic than a responsible parliamentary democracy, where the voters put their trust on politicians, who work in a formal decision-making-process with all safeguards against grave errors: several readings, expert hearings, two chambers looking closely into all possible consequences of a decision etc. This trust is given for a limited period and can be withdrawn on the next election day.
The responsibility is clear: if the ruling party or government makes capital mistakes they bear the responsibility. If you ask the people directly you renounce on expertise and safeguards. The responsibility stays with the majority, which cannot be changed by an election. In the masses of voters it is the citizen of the opposite vote who becomes the political enemy. This lets referenda become hotbeds of propaganda and hate. The minority has no protection at all and is just forced to accept even the most stupid decisions without remedy after four or five years.
BREXIT was an error of historic dimension.
It takes Britain out of a process of making Europe safer and better. The propaganda of some British media and the far right told the people they will be freed from the Brussels bureacracy – but who says that national bureaucracies are any better? I made my points on why Britain is better inside the EU – without holding back my criticism of the EU itself (see my comment on Boris Johnson's speech on May 9, 2016).
Britain is now deeply split between London and Scotland on one side and the rest of England and Wales on the other. Northern Ireland is a special case because there a new customs border has to be established which is not wanted by the citizens. So this problem has to be managed. To avoid a customs control on the border in Ireland the best solution may be to link Northern Ireland in a customs union to Eire and the EU (as long as a unification is not wanted by a majority) – this would imply custom controls between Northern Ireland and the other parts of the UK.
What will happen now ? The pound already plunged during Brexit-night- but I believe the currency will partly recover. The short term reactions of financial marktes reflect panic more than sober analysis. However the real damage will be on investment chances and jobs. The loss of growth may more than offset the sum that the Leave-campaign thinks should no longer be payed to Brussels.
I would be really astonished if a penny of that rather virtual sums will end up in the NHS. Real damage may also be inflicted on the psychological situation of the isles by making the Channel wider and the continent more isolated (as is said in case of fog in the English Channel). Isolationism may grow. The high seas are no longer waiting for courageous bucanneers, the world of colonialism is long gone – the members of the Commonwealth are equals now and more heterogeneous than the EU. They love the glamour of British monarchy (as Germans do), and they love the cash from British support for their development, but they fiercly defend their independence from the motherland.
The people were asked. The result expressed the view of a small majority, but still a majority. So this has to be respected. What makes me cry is not that Britain decided as it did, but that it decided on the wrong reasons after a debate which grew more and more unfair towards the EU and its real achievements and even hateful. Over years europhobes spoke loudly (especially in some tabloids) while those who knew how important the EU was for Britain, were mostly silent. The Remain-campaign was rather bloodless, not to speak of the 75%-campaign of Jeremy Corbyn.
Now the UK has to notify Brussels of the will to leave. The whole debate on a possible delay of that notification sounds a bit like a protracted bancrupcy – Brexit has been decided by the referendum and no British government could just ignore that. The remaining EU is now on the other side of the negotiation table – there Britain is no longer a partner from 24th of June 2016 onward even if formally still a member. So it is up to the EU to define when the period of negotiations begins. And this begins immediately even if a formal process has to wait for the letter from London, because on the level of civil servants as much as possible should be debated without any delay - the workload will still be immense.
And it may be necessary to suspend some activities linked to membership immediately. The British Commissioner, Lord Hill, already resigned. He could not continue to shape the future of European financial regulation. It would be indecent if (especially UKIP) British MEPs continue to stay and receive money for being in the European Parliament, which they disdain and are happy to leave. British Ambassadors should immediately stop to attend EU-meetings worldwide that have nothing to do with the exit process, because Britain will not share any more responsibility for the Common Foreign and Security policy. They should now concentrate on meeting in NATO setting where Britain continues to be an important contributor.
What is negotiated ? It is the terms of exit and a possible arrangement for trade relations between Britain and the EU. After two years Britain IS DEFINITELY OUT even without any arrangements. Nobody should bet on the possibility of prolonging that period. So time is pressing to decide what status Britain is striving for. The ambiguity of the half-in-half-out membership of the last years is over. Britain will be a „Third Country“ for the customs union until it signs any new arrangement.
This means that WTO rules with tarrifs and no rights and obligations beyond international regulations will be applied from the day of the definitive exit, unless no other agreement is concluded. On offer to be negotiated could be a Free Trade Agreement only covering a list of goods and some services. The best offer would however be a status similar to that of Norway or Switzerland.
As a member of the European Economic zone the UK may become part of the Schengen area, and may concede full free movement of labour and for that the UK will get full access to the single market – paying a considerable contribution (with no rebates) for the EU which bears the cost of the single market. If this sounds unacceptable after what was said during the referendum campaign, then the EU may ask, what else Britain could offer – I have no idea what this could be, and the Brexiteers avoided to think about that. Whatever way is chosen, both sides have to want it, both sides have to agree on it, and reciprocity is absolutely necessary.
Leaving a club has a cost. The Leave campaign pretended that they could get unilateral concessions from the EU because of the overwhelming interest in the British market. This is either an error or worse – in case somebody knows better it is a lie. It would be absolutely silly to talk of punishing a proud and great nation like the English (not to speak of the 48% who anyway wanted to stay in the EU, not to speak about the Scots and Nothern Irish who feel punished by the English dragging them out of the EU against their will) – but Brexit is a form of masochism: the self-inflicted damage is high and still seems to be enjoyed. This is the price of populism. It is the price of preferring sentiments to pragmatism.
David Cameron gambled on Brexit from the start: he became candidate on a Eurosceptic ticket, he made concessions to Europhobes when leaving the European Peoples Party in Brussels. In his speech at Bloombergs on Jan.23, 2013 he said that Britain could not remain in the EU in the form as it was at that time. This triggered the time bomb which exploded on B-day.
But then he did not at all concentrate on how to make the EU better by proposing reforms serving the whole union (where he could have found a number of allies) but just asking for more British cherry picking. He got some cherries and made big noise about this. But the climate at home was already too poisoned. His tactics was a good example that by giving in to the extremists in his party he only made them bolder instead of satisfying them. He gave a finger – they eat him up.
Here I want to remark, that I believe that the behaviour of some (now former) EU partners was absolutely unhelpful before the referendum happened. Observers agree that fear of immigration was a decisive factor for Brexit. The British debate never made a clear distinction between EU citizens and immigrants from third countries. The point was always „to keep control of the British borders“. When Chancellor Merkel declared that borders could not be protected, this had quite an impact in Britain and made people doubt of their security (it was not the humanitarian gesture that triggered that fear, but the message of loss of control!). In Germany itself this feeling of being unprotected let many people go to far right parties. Also in Britain this led to a feeling that the EU is increasing their insecurity.
The leavers said that „they want to take back control over UK borders“: This was pure nonsense. Not being under the Schengen agreement British borders were all the time protected nationally. It was a British national decision not to use the transition period for the new Eastern European members of the EU – Germany used the seven years period to be prepared. In the UK using the right to freely move in the EU was always mixed up with immigration from third countries (which overall was higher than from the EU). I travelled a lot throughout Britain including most of the „Little Englander’s“ counties – beautiful but often poor areas. The people really fear, that at some moment they could feel aliens in their own country. These feelings – and not thumb xenophoby made the Brexit-campain successful.
The EU made a great mistake when not making a clear difference between refugees directly coming from war zones (and not already protected areas) and other migrants who want to be in the land of milk and honey (very understandable, but with the potential to make the autochtonous people feel uneasy with people who do not adapt to their customs). This increased the feeling that nobody is in control.
Another problem was, that often integration was half-baked not least because of British influence. The UK always preferred enlargement to deepening the Union. So it is very ambiguous to criticize the consequence of fast enlargement always pressed for by Britain, praising itself for getting even Romania and Bulgaria (prematurely) into the Union and then blaming the EU for free movement of just the same people invited by the UK. The Brexit-campaign made a fear-campaign telling the people that the Turks would soon stand at the walls of London, if Britain remains in the EU. The truth is that Britain pressed for Turkish membership while Merkel expressed her doubts very early and only promised to continue „negotiations in good faith“.
The Euro could not be completed without all member countries joining it and rules of the game strictly observed. Germany was blamed of pressing Greece unduly: this is just unfair, because this understates the home-made problems in Greece. On the one hand I do not like the fact that banks are directly bailed out, while people who took housing credits are dislocated – this costs a lot of legitimacy to any political system. The money should be given to the lenders to stay in their home – and pay a rent to the state as a temporary owner (this is much less invasive than forming bad banks).
But on the other hand the Greek tactics of a beggar biting the hand of the giver was awkward. To ask for solidity is right – solidity is the condition for solidarity! British criticism on Germany’s position towards Greece was also unfair, because the London financial institutions participated in the Greek party making great profit but did nearly nothing to help Greece come out of the mess after the party (a banker once told me as early as 2004 speaking on all of Southern Europe: „we know that the whole thing is not stable, so our principle is: join the party but dance near the door!“)
The fact that Chancellor Merkel criticized Hungary or even Austria for closing their borders and pressing Eastern Europeans for obligatory quota of refugees was a massive mistake. In the EU one should never press others in topics which could lead to the suicide of a government – even not if you are formally right. I know that this is extremely difficult: but the priority must be to really find a common position and not impose it, to respect that others have different views and nobody should pretend to stand on a morally better position towards his or her partners. Even if this includes a possibly less welcoming policy for illegal migrants in Germany, if this is the EU mainstream it must be discussed and if this view prevails it must be implemented.
Just besides: in Germany many people are proud to be very pro-European asking for more integration for example in foreign and security policy. But in a concrete case of a majority decision over war or peace where Germany is outvoted, I have my doubts, if Germans would go to war based on that European majority against the German majority. This shows that there are topics still not mature for more integration – and the refugee question may be another one where integration still has not the necessary legitimacy for a European majority vote.
The next steps will now be the negotiations on the new terms of the relationship (which is NO RENEGOTIATION AT ALL) and no time should be lost on that. Westminster will have a tremendous workload to transfer the majority of EU law into national legislation (it may increase the national bureaucracy to implement and control it) and needs excellent negotiators. The UK (or in the end possibly only England and Wales) will not be better off than they were up to now – this is foreseeable. But the EU will also have to change to take the people for serious. Not by silly referenda without safeguards, but by taking for serious the will and the fears of the ordinary people.
Where should this end up ? In my lecture in Oxford on November 7, 2014 I spoke of a flexible Union as a possible answer, hoping that a maximum of the acquis could be saved. With Brexit this is no longer an option for Britain now (may be after a decade it will be) – but it could be a way to keep the rest together. The best way would be to use the existing models like the Norwegian membership of the European Economic Zone as a blueprint and then adapt it to get the best out of it on the basis of reciprocity and the interests of each side. But I give a warning: there is no more the overwhelming common interest based on the common membership in the EU, which made concessions much easier up to now. This will be haggling and a lot of tit-for-tat with Britain in a rather weak position.
However I still hope for a good solution especially for the movement of people. Britain rejected the best solution – I still hope we can negotiate the second best for all of us. I want a great and prosperous Britain as our best partner, may be in the end this will be better than having a reluctant partner.
© Georg Boomgaarden