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The Causes and Consequences of Brexit

Author(s): Ana Palacio

It seems increasingly likely that the upcoming European Council meeting will produce a deal on the conditions of the UK’s EU membership – a deal that will be put before British voters in a referendum, possibly this summer. The referendum is the main threat, because voters rarely focus on the issue at hand when making such decisions.

From Project Syndicate:

The prospect of a British exit from the European Union is well and truly upon us. It seems increasingly likely that the upcoming European Council meeting will result in a deal on the conditions of the United Kingdom’s EU membership – a deal that will be put before British voters in a referendum, possibly as early as this summer.

But, just as everything rushes forward, Britain and the EU need to take a moment to think carefully. After all, despite assurances from both sides, no one knows how the referendum will unfold, much less how to navigate the aftermath if British voters chose to leave.

The referendum is the most immediate unknown. Past experience shows that, when voters make such decisions, they rarely focus on the issue at hand. In referenda on the EU’s draft constitution in 2005, for example, the Dutch focused on the euro, while the French worried that Polish plumbers would take their jobs.

So far, the signs indicate that the upcoming British referendum will follow the same pattern, with voters focusing more on simplistic ideas, prejudices, and emotions than pragmatic considerations. And the anti-EU camp has been by far the more passionate – and the more inflammatory in its rhetoric – side.

From a European perspective, this is deeply worrying. It is well known that a British departure would deal a devastating blow to European integration, possibly causing an already-fragile process to unravel. But the British should also be worried about the consequences of withdrawal, if only because of how little is known about what it would entail.

The problem is that most Britons have little awareness of the turbulence that “Brexit” would generate. Beyond the impact on Scotland’s independence movement, Ireland’s Good Friday Agreement, and the UK’s “special relationship” with the United States, there are important questions regarding the future of UK-EU relations. Many advocates of withdrawal cherry-pick policies and regulations, such as provisions of the EU’s free-trade agreements with Canada and Singapore, to cobble together a vision of what life would like be for the UK outside of Europe. They want Britons to believe not only that the City of London would remain Europe’s top financial center, but also that the UK would retain access to the EU’s single market, even without free movement of labor.

This is pure fantasy. Although the UK would retain its strong international standing in terms of defense and foreign policy, its clout in negotiating trade and investment agreements – including with the EU itself, which accounts for half of British trade – would be severely diminished. That has been the experience of non-EU countries like Switzerland and Norway. In fact, EU leaders are already unhappy with Switzerland’s access to the single market; the idea that they would give the UK such access, especially after being slapped in the face, is not convincing.

Some claim that a Brexit could resemble Greenland’s easily negotiated 1985 withdrawal from the European Economic Community (EEC), the only such withdrawal that has ever taken place. But the circumstances could not be more different. The limited EEC of 30 years ago does not compare to the robust EU of today, just as Greenland pales in comparison with the UK in economic size or political significance.

Furthermore, Greenland’s withdrawal was eased considerably by its constitutional ties with EEC member Denmark, which continued to represent its interests in European bodies. With no equivalent patron to smooth the way for the UK, negotiations following a vote for withdrawal would be complicated and acrimonious, dragging out over a number of years.

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