The Tribune

Peter Young assesses the immediate aftermath of the UK’s vote to leave the European Union

THE headlines in the British press following last week’s referendum on the nation’s relationship with the European Union (EU) said it all.

Each expressed different degrees of shock at the result, a win for those wanting to leave the EU by a margin of 52 to 48 per cent with some 33 million people casting their votes in a high turnout.

Variously described as an electoral earthquake, the most tumultuous event of modern times or, with less hyperbole, a momentous event in the history of Europe, such extreme reaction was puzzling to some in light of the polls’ prediction that the likely result had been too close to call.

It is hard, however, to exaggerate the significance of this historic decision by the British people, so clichés were perhaps justified given the serious fallout, not only in Britain and Europe but also worldwide in relation to stock markets and the value of the pound sterling in a globalised economy. The long-term consequences remain, at this early stage, hard to estimate.

In a closely-fought contest the results showed, in particular, a divide between, on the one side, London, Scotland and Northern Ireland – where the majority voted to remain – and, on the other, the old industrial heartlands of the Midlands and the North of England, which wanted to leave, while, generally overall, younger people favoured the status quo and older people voted out.

Analysts attribute the victory of Vote Leave to the importance of two main issues: unrestricted immigration from the EU and the re-assertion of British sovereignty by taking back control from Brussels, the institutional seat of the EU, over a full range of other issues as well.

There is evidence that many people were simply no longer prepared to be dictated to any more by unelected and unaccountable foreign bureaucrats. But it has also been suggested that this was a protest against the political elite in Britain itself and the gulf between the so-called establishment and the traditional working-class Labour Party supporters which had been widening for years and which has been described as a “deeply entrenched national geographic inequality”.

Linked to this was a broader dissatisfaction with globalisation, which has been seen primarily to benefit a small privileged elite rather than helping the masses. Not everyone has been happy to see the accelerated free movement of capital, goods and people across borders, together with greater emphasis on trans-national market forces, which has seen a diminished role for nation states.

There is no doubt that the immediate and most serious effect of the ‘Brexit’ vote will be on Britain’s own economy. As predicted by the Remain group, the stock market took an immediate hit and the pound dropped to a 30-year low against the US dollar, though both have rallied. Banking stocks are down because of fears about access to the Single Market and the Chancellor of the Exchequer has reiterated warnings about the threat of recession, higher taxes and spending cuts. But this was predicted by Vote Leave as inevitable in the short-term while Britain re-positioned itself both in relation to the EU and to the rest of the world.

Meanwhile, Prime Minister David Cameron has resigned – a matter of considerable regret in the eyes of many in Britain who regarded him as having been an effective and successful leader for the last six years. This has triggered a Conservative leadership contest which should be completed by early September and, in any case, before the party conference in October.

His resignation has been seen as a matter of honour and principle and he has said that, having campaigned for the country to stay in the EU and having felt strongly about the issue, it would not be right for him to take charge of Britain’s negotiations to leave the bloc. This would be a matter for a new prime minister and a new government.

In order to reassert authority and stability in the wake of last week’s seismic events, Mr Cameron set out the government’s position in a statement to Parliament on Monday. He confirmed that the decision of the people (in what he described as one of the biggest democratic exercises in the country’s history) had been accepted and that there would be no second referendum, as had already been proposed by those dissatisfied with the result. Such a move would seek to overturn the democratic will of the majority who voted to leave and would thus be unacceptable.

He stressed that now was the time to begin the process of implementing the decision to leave in the best way possible; and it was vital to bring the country together so he would include in the discussions the devolved administrations - Scotland, Wales and Northern Ireland. In particular, 62 per cent of Scots had voted to remain and wanted to protect their position in Europe.

Mr Cameron said that the UK possessed one of the strongest of the major advanced economies of the world, with low inflation and a low budget deficit, a high employment rate and a high capital requirement for its largest banks. Despite the volatility of the markets and a ratings downgrade, which would put up borrowing costs, it was therefore well placed to face any challenges.

He also announced that the Government would not trigger immediately Article 50 of the Lisbon Treaty, which is the legal basis for any member state to leave the EU within a two-year period for negotiations. It was important first to determine the kind of relationship the UK wanted with the EU, and, as a sovereign nation, this should be its own decision. He had set up a new EU unit of “the brightest and the best” in the civil service to explore objectively options for this future relationship with the EU, and with the rest of the world, from outside it.

He concluded by saying that Britain wanted to be respected abroad, tolerant at home, engaged in the world and working with its international partners to advance the prosperity and security of the nation for generations to come.

The reaction of EU leaders to all this has been a mixture of sadness at Britain’s departure, but acceptance that it was inevitable and concern about the likelihood of other member states following suit. Some in Brussels have demanded that the UK should act quickly to cut ties so as to avoid a lengthy period of uncertainty, though the EU Commission has made it clear that no negotiations can start before formal notification to withdraw has been made by Britain invoking Article 50.

Concern has also been expressed about growing anti-EU sentiment and calls for a referendum in, for example, France, the Netherlands and Scandinavia. In spite of this, the EU is now reportedly planning to deepen integration by forcing the eight remaining member states which do not use the euro to join the single currency. Furthermore, there has been media speculation about new moves to do away with the nation state and create a federal superstate with individual nations having to give up responsibility for their own armed forces, criminal law and taxation systems.

Following his statement to Parliament, Mr Cameron attended on Tuesday what is likely to be his last EU summit in Brussels. Described by the UK press as “an exercise in damage control”, he explained why Britain had voted to leave and argued that it was now in the UK’s and EU’s mutual interest to agree a deal on trade, security and other co-operation among neighbours, friends and allies in what he termed a constructive process of withdrawal.

The vote on June 23 sent a strong message about the importance to the general public of political and economic accountability and against remote authority. With the current upheaval involving both of Britain’s main political parties, the nation now needs calm and decisive authority and direction from its political class, not only to ensure a successful outcome of the negotiations about its future relationship with Europe but also to bring the people together after such a period of divisiveness.

It remains to be seen whether the volatility of the markets is a temporary phenomenon. Amid fast-moving developments, it will surely be a long while before judgments can be made about whether the short-term economic pain of ‘Brexit’ will be worth the long-term advantages of Britain going it alone.

To untie the UK successfully from a complex network of EU institutions will take some doing. Since immigration and trade were major issues in determining the outcome of the referendum, the most important immediate task will be to find a means of retaining access to the Single Market without being forced to accept the free movement of people which is an existing requirement. This will inevitably involve some form of give-and-take.

In such a fluid situation, only a fool would predict likely developments even in the short-term. But, whatever happens, the supreme irony for the future of the EU is that Britain’s referendum could easily have gone the other way if Brussels had given Mr Cameron some meaningful concessions in February during his much-hyped but ultimately insignificant re-negotiation of the country’s relationship with the EU.

That now seems to have been a costly miscalculation by EU leaders.

• Peter Young is a retired British diplomat living in Nassau. From 1996 to 2000 he was British High Commissioner to The Bahamas.