Sunday, February 21, 2016

To Brexit or not to Brexit

At the risk of getting irretrievably bogged down in British internal politics and disappearing down the proverbial rabbit hole, I want to look at the pros and cons of a British exit from the European Union (Brexit), given that there is now to be a referendum on June 23rd of this year. I am not eligible to vote, having been out of the country for more than 15 years now, but this is still an important event in world politics. Also, I do still have most of my family living there, family that will feel the effects at first-hand, whichever way the vote goes.
Britain has been a member of the European Union (or the European Economic Community as it then was) since 1973, although the marriage has never been a particularly happy one. The first stay-or-go referendum came just a couple of years later. The UK opted out of the Maastricht Treaty in 1992, and so has never adopted the common currency, and it has never been as wholeheartedly sold on the idea of a united Europe as core members like France and Germany. But here we are in 2016 with another existential referendum on Britain's continued membership of the EU.
Polls suggest that the Brits are almost equally split on the matter, with 51% content to stay in Europe and 49% ready to leave. Generally speaking, younger people are more likely to want to stay and older people to leave, and Guardian readers and university-educated Britons are much more likely to vote to stay than Express readers and poorly-educated people. There is little or no difference in voting preferences between the sexes, and even the geographical spread is unpredictable, with Scotland being the keenest to stay, followed by London (even if London's mayor Boris Johnson in favour of leaving). Even political parties are surprisingly split on the issue, with Conservative voters narrowly in favour of leaving (despite Conservative leader David Cameron's support for the status quo, at least after the recent hastily-negotiated "special status" that will be granted to the UK within Europe), and Labour, SNP and the Lib Dem voters slightly more strongly opposed to an exit. Even a surprising 28% of supporters of the right-wing nationalist UK Independence Party would vote to stay. It really is the kind of issue that pits father against son, brother against sister.
So, what are the issues? What are the pros and cons of Brexit? How is the poor voter to know what to do?
The first thing to be aware of is that, if Britain does decide to leave the EU, thus freeing itself from EU rules on agriculture, fisheries, justice and home affairs, there are a few different options they could pursue:
  • join the European Economic Area, like Norway, which may still involve abiding by many EU rules although without having any influence over how those rules are arrived at;
  • negotiate trade treaties on a sector-by-sector basis, like Switzerland;
  • enter into a customs union with the EU, allowing access to the free market in manufactured goods but not financial services, like Turkey;
  • negotiate a comprehensive free trade agreement, which might or might not also include financial services, like Canada, for example; or
  • make a complete break with the EU, and just rely on World Trade Organization membership as a basis for trade, which would therefore be subject to tariffs, just like any other country.
Quite honestly, without knowing which of these would obtain, it is difficult to make an informed decision on an exit. Various studies have tried to evaluate the potential effect on the overall economy, and their conclusions are inconsistent to say the least. For example, one study suggests that the effect would be minimal, anywhere from a 0.8% reduction in GDP by 2030 to a 0.6% increase; another major study, though, suggests a much more substantial fall in GDP of anywhere from 2.2% to 9.5% (the worst-case scenario being substantially worse than the effects of the 2008-9 recession).
It is also difficult to gauge the effect on jobs of leaving the Union. Proponents of Brexit claim that it would result in a British jobs boom, as companies are freed from EU regulations and red tape. Others, though, suggest that millions of jobs could be lost if Britain were to pull out of the EU, particularly in the automotive and financial sectors, as manufacturers move to lower-cost EU countries.
Anti-EU campaigners like UKIP claim that by taking back control of immigration policies and instituting a work permit system for Europeans who want to work in the UK would result in lower immigration, reduced unemployment, higher wages for British workers, and less pressure on schools, hospitals and other public services. Less right-wing sources, though, maintain that migrant workers from Europe have been good for the UK, and that the country's future growth and the viability of its public services are predicated on continuing immigration from EU countries.
Britain's membership fees for access to the EU trade markets was £11.3 billion in 2013, almost four times as much as 5 years earlier. Brexit proponents see this as a kind of hidden tariff, which could be avoided by leaving the EU (or at least replaced by normal, transparent tariffs). Pro-EU advocates argue that this is money well spent for access to Europe's huge market.
That said, some believe that European trade is not as important to Britain as is often suggested, and that being outside the EU would just leave Britain in the same position as the US, India, China, etc, as well as leaving it free to negotiate its own independent free trade deals with China, Braz articlil, Russia, etc. Pro-EU champions, on the other hand, argue that Europe still represents 52% of Britain's trade, and jeopardizing that and inviting increased tariffs for European trade would amount to commercial madness.
Many people believe that exiting the EU would leave Britain isolated and weakened as a world power, especially given that the USA seems to prefer Britain to stay in Europe. But others point out that Britain would still remain an important part of Nato and the UN Security Council, and that having some limited influence in Brussels has never really conferred much real power.
Depending on the final deal struck, Britons may have to apply for visas to enter European countries if they are no longer a member of the EU, and those currently living and working in Europe may be subject to new rules and qualification requirements. It is also not certain what changes Europeans currently living and working in the UK might be subject to, although it seems unlikely that they would actually be ejected.
Taxation in Britain is not really under EU influence, apart from VAT, which is required to adhere to EU-mandated bands. Critics of the EU see the freedom to control VAT levels as an advantage of Brexit, although it does not seem that likely that any changes would actually be made in the short to medium term. Conversely, others have warned that leaving the EU might lead to an increase in rapacious foreign multinationals using Britain for tax avoidance purposes, creating havoc with the British tax base. This too does not seem like a very likely scenario, though.
Those who want out of Europe see Brexit as a boost to local democracy and a move away from the tinkering of faceless bureaucrats in Brussels, especially in areas like the European Arrest Warrant and other imposed law and order measures. Pro-Europe supporters, though, see the EU employment laws and social protections as important safeguards of democracy and fairness, safeguards that may be stripped away if Britain were to leave the EU.
A Brexit would be a huge blow to the European Union, and that in itself might be a good reason for some people to vote to stay. Britain is the EU's second-largest economy, after Germany, and the concept of a united Europe is already reeling from the huge influx of Middle Eastern refugees, large-scale and highly contentious bailouts of members like Greece, and continued worries over the future of the Eurozone. One large defector like Britain could lead to a cascade of others. The alternative argument is that the EU is a bold experiment that has failed, and continuing to prop it up artificially is just putting off the inevitable, and doing the countries of Europe a disservice.
So, as can be seen, there are pros and cons in almost every area, which is probably why polling is so evenly split. Quite frankly, I'm kind of glad I don't have a vote in this, as I'd be hard pressed to make a decision, although I would probably opt for the status quo as the least risky option. Whatever happens, though, it looks like almost half the country is going to be upset come June 24th.

Well, now they've really gone and done it!
On June 23rd 2016, the British electorate took the historic step of voting to leave the European Community by a margin of 52% to 48%, after 43 years of fractious but generally mutually-beneficial membership. Almost immediately, global stock markets took a large hit, and the value of the British pound sank like a stone. Other European and world leaders are putting a brave face on it, but far-right politicians like Marine Le Pen and Geert Wilders are rubbing their hands in glee and predicting the gradual and complete dissipation of the great European experiment.
British PM David Cameron has resigned, but European officials are insisting that Britain does not wait until a new Prime Minister is installed in October, and that the mechanisms of withdrawal begin immediately. Article 50 of the Lisbon treaty, never before evoked, allows for a maximum of 2 years to complete the extraction process. Britain has a whole lot of unnecessary work and expense ahead of it.

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