Haste is never a good move in politics or life, so before we start lining up for the ‘I hate Brussels’ tattoo, we better make sure we really want one

 

Debate as to whether the United Kingdom should remain a member of the European Union or leave has dominated the national-political agenda for quite some time and will continue to do so until the planned referendum at the very least. Europhiles tell us that a Brexit (British exit) would be a complete catastrophe. Businesses would exit the country in droves, leaving a trail of unemployment and poverty in their wake. Consequently, the United Kingdom’s already questionable influence in global affairs would be further diminished. The convictions of Eurosceptics couldn’t be more opposite however. The likes of Nigel Farage and Daniel Hannan would have us believe that once the great European millstone is removed from around Old Blighty’s neck, the United Kingdom would confidently step forth into a new Golden Age.

Of late, plenty of writing and debate has focussed on whether the United Kingdom should relinquish its continental ties. Today I hope to step away from this conversation and focus on the potential consequences of a Brexit. Internationally and domestically Britain’s withdrawal from the European Union would have profound consequences which would invariably impact the country’s economic prosperity, global standing and domestic unity. However the buck wouldn’t stop there. The departure of such a major member state would invariably have profound consequences for the European Union itself.

The Union

In September 2014, Scotland voted to remain part of the United Kingdom by a 10.6 per cent margin. The outcome was much closer than pundits had initially expected and yes, Scotland’s defeat failed to quash the independence debate. In the weeks after the referendum membership to the SNP surged, subsequently delivering the party a landslide victory in May’s General Election.

The SNP is very concerned at the prospect of Britain withdrawing from the EU. Shortly after September’s referendum, party leader Nicola Sturgeon argued that a Brexit should require the consent of the United Kingdom’s four nations. Meanwhile, polling has shown that support for Scottish independence would rise irrevocably if Britain were to break away from the continent and to this end, SNP pundits have threatened that a second referendum could follow suit. In short, if the long-term viability of the United Kingdom is already uncertain, a vote to leave the European Union could make it even more so.

The rationale behind this position is understandable. It is estimated that some 330,000 Scottish jobs directly rely on the UK’s membership to the European Union whilst 46 per cent of the country’s exports (worth €2,415 billion) make their way to the continent. Polling consistently shows that the Scottish people will reject the opportunity to leave the EU. In the event that England and the other nations of the United Kingdom vote to leave, constitutional debates regarding Scotland’s future will be blown wide open. The argument expounded by the likes of Sturgeon and Salmond will be simple. Why should Scotland endure the decisions of a right-wing and Eurosceptic English electorate, when the will of the Scottish people favoured the opposite so decisively?

The British Government has reiterated that there will not be a second referendum. However, in the midst of the turmoil that a Brexit would trigger, it might be difficult for Westminster to prohibit a Scottish secession. Senior members of the SNP have suggested that Scotland could achieve independence via a unilateral declaration of independence. If this were to be included in the 2020 election manifesto and voted in decisively by the Scottish electorate, the dissolution of the United Kingdom might become difficult to prevent.

Economy

There has been a lot of speculation as to what a Brexit would mean for the British economy. It is widely acknowledged that the ensuing political and diplomatic turbulence would be experienced negatively by the markets. From thereon in, opinion is divided. Eurosceptics argue that freedom from the stringent rules and regulations imposed by the European Union would make the United Kingdom more prosperous. However, data published by think tanks points to the contrary. The National Institute of Economic and Social Research estimated in 2004 that the UK’s GDP would fall by 2.24 per cent. A more recent study by the London School for Economics postulates that the UK could loose between 6.3 – 9.5 per cent of its income.

What would this loss of capital mean for British jobs? Again, this area of the debate is fraught with disagreement and controversy. Ex-Liberal Democrat leader Nick Clegg previously argued that some three million jobs depended on the United Kingdom’s membership to the European Union. This is because membership gives UK firms easy access to a market of 500 million consumers. For these reasons, foreign firms are also likely to base their European operations in the United Kingdom, attracted by the comparatively low corporate tax rate demanded by the British Government. Already, a substantial number of firms including Nestle, Ford and Hyundai have threatened to scale back their operations in the United Kingdom in the event that Britain votes to leave the European Union.

However, economic Armageddon as predicted by the likes of Clegg could well be misleading. A Brexit would not necessarily alter business relations between the United Kingdom and the continent. Outside the EU, Britain will remain a large consumer market which continental exporters would compete to enter. Likewise, a Brexit wouldn’t necessarily reduce continental demand for British exports. Thus, claims that withdrawal would lead to massive job loss could be interpreted as being inherently misleading.

Leading figures in the financial services industry have also expressed concern at the prospect of a Brexit. Research conducted in 2014 by the City UK argues that the alternatives to EU membership would be extremely costly for the financial sector and pose a series of significant risks. Not only would the United Kingdom’s access to the EU’s internal financial services market be limited, if the country were to become a member of the European Free Trade Area it would have to adhere to EU regulation without the influence that it currently enjoys as a member state. Indeed, more often than not, the United Kingdom is successful in getting what it wants from the EU’s regulatory policy.

It is clear that Britain’s relationship with the continent has inherent economic value. A Brexit would likely cause complications that would impact on the strength and vitality of the British economy. The true extent to which this would affect employment and the day-to-day lives of citizens could only be measured in the event of a withdrawal.

Foreign affairs

To determine whether or not a Brexit would damage the United Kingdom’s international standing, we must ascertain whether or not the EU increases its global clout. There is substantial evidence that suggests the EU enables the United Kingdom to ‘punch above its weight’ on the world stage. Although the public largely assume the contrary, the British Government is regularly successful in persuading its partners on the continent to follow its foreign policy objectives. Consequently the voice of 64.1 million individuals becomes that of 503 million. In essence, the EU acts as a ‘power maximiser’ for Westminster.

The results of this can be seen in regions such as the Middle East. Cooperation with other EU member states gives the United Kingdom access to a far larger aid budget. In turn, this buys greater influence. Moreover, the United Kingdom has a chequered history in the region, epitomised by backhanded diplomacy as seen in the Sykes-Picot Agreement which brought troubled nations such as Iraq and Syria into existence, simultaneously denying the Kurds nationhood. Meanwhile the 1953 Anglo-American intervention in Iran which brought down the democratically elected Mosaddegh Government remains ingrained in the popular political conscience. Many in Iran and elsewhere continue to view the United Kingdom as a marauding ‘little Satan’.

By acting through the European Union, the British Government is able to overcome some of its historical baggage and forge modern relationships with Middle Eastern nations. A Brexit would undoubtedly make the United Kingdom’s dealings with Middle Eastern governments more fraught. European foreign policies would be impacted negatively too. The loss of the United Kingdom’s foreign policy experience of the region would undoubtedly undermine European influence.

Although it is a shade melodramatic to suggest that the United Kingdom’s international standing would be decimated in the event of a Brexit (membership to organisations such as the UN and NATO enhance British power), certain realities cannot be denied or avoided. Comparatively, the United Kingdom is a small nation of 64.1 million people in a world increasingly dominated by large national and supranational entities. There is no denying the fact that it will become increasingly difficult to compete in such an international environment. The United Kingdom’s global influence will also be compounded by the impact of a Brexit on the Anglo-American special relationship.

The Special relationship

The long-term viability of the Anglo-American ‘special relationship’ in light of a Brexit deserves special attention. Despite disillusionment with its modern-day utility, the special relationship remains an important objective for American and British foreign policies. Intelligence sharing and defence cooperation between the two nations is crucial to the defence of the Western hemisphere. Meanwhile, British diplomatic and military support for American overseas operations grants the latter’s foreign policy greater legitimacy internationally. How does Europe factor into this equation? During last year’s G7 summit in Germany, President Obama stated that the United States was ‘very much … looking forward to the United Kingdom remaining in the European Union’. As the UK’s status as a global military power wanes, the European Union has assumed central importance in the Anglo-American relationship.

From Washington’s perspective, Britain’s membership in the EU creates opportunities for American-European cooperation that would otherwise be difficult, the Transatlantic Trade and Investment Partnership being a prime example of this. If negotiated and implemented successfully, it will shift the fulcrum of US-European diplomacy from NATO to the European Union. The successful implementation of the TTIP depends on the United Kingdom playing a leading role in negotiations on the European side. Despite recent talk of a pivot towards Asia, the United States remains committed to Europe, exemplified by Washington’s strong response to Russian actions in the Ukraine.

For these reasons, if the United Kingdom were to withdraw from the European Union it’s geopolitical significance to the USA would be much reduced. Cooperation in areas such as defence and intelligence sharing, nuclear security as well as foreign policy would continue, underwritten by the close economic and socio-cultural ties the nations share. However the UK’s utility could well stop there. Westminster would no longer be able to play a bridging role between Washington and Brussels. American diplomats have expressed frustration that the European Union is not a coherent and assertive international actor. With the loss of a lukewarm member, it could develop a cohesive intentional identity.

The United States views the EU with equal importance to the UK in the formula of transatlantic relations; however, a Brexit would prompt a pragmatic reassessment. Policymakers could be forced to choose between a close, bilateral bond with the United Kingdom and a cooler but larger relationship with the European Union. In a world where American power is increasingly challenged by emergent giants and old adversaries alike, it would be naive to assume that Washington would prioritise alignment with the United Kingdom over the European Union.

Europe

So far, this article has been rather one-dimensional in its analysis, focussing on how a Brexit might affect the United Kingdom. Whilst it is impossible to know how Europe would react to a Brexit, or how such an eventuality would influence the future makeup of the European Union, it is a fair comment that the impact(s) would be profound. A recent study by Tom Wright, author of ‘Europe’s lost decade’, outlined three likely scenarios which could befall the continent. These will be given below.

A wit once described the European Union as an ‘economic giant, political dwarf and military worm’. The consolidation of such tendencies has been made increasingly unlikely in recent years as European nations have made tentative steps to greater foreign, political and military integration. These moves have, in large part, been driven by France and a somewhat cautious United Kingdom. A Brexit could stall all progress and crystallise the continent as described above. In this rather bleak situation Eurosceptics in the Netherlands, Poland, France and elsewhere could be inspired to press their demands leading to the political and then (potential) territorial fragmentation of the European Union. Even after this unravelling has been completed, the outset would be difficult for those that remained. With no clear leadership, the internal political coherence of the European Union could further deteriorate reducing it to a core based around the Eurozone, in perpetual competition with rival organisations created by ex member states. This would also jeopardise continental security. The deterioration of the basis for foreign political and military cooperation would leave the continent vulnerable to the divide and rule politics of external powers.

The fire and brimstone scenario outlined above is less than likely, however. Governments across Europe would be keen to minimise the destabilising and damaging effects of a Brexit, a situation favourable for the status quo. With the loss of a reluctant and half-committed member, Europe’s emergent political institutions could become even stronger and the status of the Eurozone as heart of the EU would be confirmed. Simultaneously, German preeminence within the EU would be guaranteed. The continent would have to remain outward-looking due to political pressure from actors such as the United States and China; however the drive towards foreign political and defence integration could be pursued less enthusiastically. Consequently, a somewhat rudderless continent would emerge. Presuming that NATO remained coherent and unified, these deficiencies would be adequately compensated for. Although various rivalries and tensions could complicate Anglo-European relations, it is likely that close political and economic relations would endure due to a high level of mutual dependence.

After the humiliating disaster which befell the United Kingdom as a result of the Suez Crisis, Prime Minister Harold Macmillan engaged in a pragmatic and unemotional reassessment of British Foreign and Imperial Policies. Arguably, his six years initiated the United Kingdom’s alignment away from the Empire-Commonwealth and towards the continent. Central to these considerations was an underlying fear that the process of European integration would culminate in the emergence of a Federalised Republic. The limits which then-European Community membership placed on national sovereignty were considered a worthwhile sacrifice for influence over the eventual direction of the integrative process.

The loss of Europe’s most reluctant members could remove the breaks which have thus far inhibited full unification. Consequently, the European Union could emerge as the dominant power in Europe. German economic power would increase the clout of newly coherent political institutions. In turn, this would give way to a unified military and foreign policy. British influence and power across the world would invariably be challenged by a new, powerful actor. Meanwhile, global powers would be keen to develop close political relations with Brussels, potentially to the United Kingdom’s detriment.

There is substantial evidence which shows that a Brexit would leave the United Kingdom poorer, weaker and less influential. In the coming referendum pro-Europeans have to hope that the public will realise that substantial risks and uncertainties would be involved in a break from the EU. James Ind has summarised the choice at stake aptly, drawing parallels with the Scottish Independence Referendum:

‘The arguments, when you look at them objectively, for staying in Europe may not be as emotionally appealing, but they do appeal to self-interest and I think if you look at the Scottish referendum as a playbook for that, you can get a lot of headlines about why people should leave the union, but when it really comes down to the cold hard choices, people vote with their wallets’.

 

Sources:

http://www.telegraph.co.uk/finance/economics/11666560/Brexit-referendum-will-trigger-another-Scotland-independence-vote-warns-JP-Morgan.html

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-33150080

http://www.heraldscotland.com/politics/referendum-news/salmond-independence-can-happen-without-referendum.25385478

http://www.gov.scot/Resource/0043/00439166.pdf

http://www.theguardian.com/politics/2015/may/14/brexit-what-would-happen-if-britain-left-eu-european-union-referendum-uk

http://www.thecityuk.com/media/latest-news-from-thecityuk/leaving-eu-poses-very-significant-risks-to-uk-s-future-thecityuk-reports-provide-critical-analysis-of-the-economic-case-for-uk-s-eu-membership-and-legal-implications-of-alternatives/

https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&ved=0CD0QFjAE&url=http%3A%2F%2Fwww.parliament.uk%2Fbriefing-papers%2Frp13-42.pdf&ei=LV-SVeu5K-ae7gbUxYGgCA&usg=AFQjCNGvch3c4x50wXH9hqK-M-XJj0cWgA&sig2=Pydn2DKjfkqlLKeuyhX0WA]

http://www.e-ir.info/2014/08/10/what-would-a-brexit-mean-for-the-eu/