From “British exit” to Brexit
In the previous years, a futuristic British exit scenario turned into a real issue of the contemporary society. The origins of “Brexit” lie in the “Britain, a referendum and an ever-closer reckoning” article by Peter Wilding, published on 15 May 2012, used in reference to a possible UK exit from EU and probably on the pattern of Grexit (a portmanteau coined earlier in the same year). Prime Minister David Cameron initially rejected a potential In or Out referendum on EU, but then accepted the need to ensure the UK’ s position within the EU had the full support of the British citizens and announced in January 2013 that a future conservative government would organize a referendum before the end of 2017.
In late 2015, opinion polls showed a clear pro-EU majority, but also that the support would fall if Cameron did not succeed to negotiate limits on benefits for EU citizens. In February 2016, it was however announced that only some restrictions were agreed, with further permissions to be received until implementing them. On 22 February, Cameron announced the referendum date of 23 June 2016. In the same day, London’s mayor, Boris Johnson, decided to support the campaign to leave EU. Consequently, against the dollar, the pound hit the lowest point since March 2009 and has suffered its biggest one day drop since 6 may 2010 (when Cameron came to power). In the following months, two official political groups were consolidated, called “Vote Leave” and “Britain Stronger in Europe”. Before the referendum day, experts had some certain predictions: London, Scotland and Northern Ireland will be heavily In and the northwest will be Out, but the UK polls margins were very tight and nobody could give a predictable outcome.
On 24 June 2016, the highly expected result was announced: 51.89 percent voted in favor of leaving the EU. At that moment, some imminent questions came to the European community: How are financial markets affected? How will the UK’s political scene be influenced by Brexit? How will the EU respond and what does this mean for populist rebels? The pound dropped to the 30 years low on that Friday, tumbling as much as 13 percent. The investors had doubts whether the eurozone leaders possessed the political power to strengthen the architecture of the European monetary union. Apart from the immediate economic impact on the financial markets, David Cameron announced his resignation as prime minister and leader of the Conservative party and was succeeded by Theresa May. In the same year, Trump’s victory, another shock election result produced a political earthquake. Some analysts drew parallels between the two major revolutions through their populism approach and winners’ underestimation in the polls. According to Eric Kaufmann, Professor at the University of London, age, education, national identity, and ethnicity were found to be much more important than the income or occupation. Thomas Sampson, an economist at the LSE, declared that "Older and less-educated voters were more likely to vote 'leave'”. After Article 50 of the Treaty on European Union was invoked, an agreement between the European Union and the United Kingdom set a withdrawal date: at the latest 30 March 2019.
Since then, a long process of negotiations concerning UK’s exit from EU takes place, admitting very diverse hypothesis. The process is hardly coming to an end and an important step was made on 14 November 2018, when the European Union published a 585-page draft Brexit agreement, which currently is the most significant part of the UK’s withdrawal package. It points out some important issues like Irish borders “backstop”, level playing field, future trade agreements and financial markets. They will create a temporary EU-UK customs union with closer alignment for Northern Ireland, avoiding to have a hard border in Ireland. In order to ensure that UK businesses are not able to undercut EU industry, Britain will have to respect the EU standards in areas such as social, environmental and taxation policies. Moreover, the agreement gives London’s financial centre only a limited level of access to the EU’s market, similar to that enjoyed by US and Japanese firms.
Having a glimpse in the future, we can infer that the next months will be critical for the destiny of Brexit. In this period, the Mrs May’s deal, or something similar to it, should squeeze through the House of Commons, since the EU official insists that the 585-page withdrawal treatment will not be reopened. Following a defeat for the government, Members of Parliament could decide whether to call for another referendum, to ask the EU for an extension of the withdrawal process, to continue with a no-deal Brexit or to suggest Norway style membership of the EU’s market. It is nevertheless unclear what would happen in this case. If the Commons contrastingly approves the agreement, in February the major issues should be ratified and put the whole Withdrawal Agreement into law. Until 29 March 2019, it must also be approved by the European Parliament in a plenary vote. 29th March could finally turn into a historic day for both European Union and the United Kingdom. However, the potential changeover and the radical shifts in the European community mainly depend on the negotiations of the prior months. If everything goes as planned, 31 December 2020 should be the last day of the transition period. EU’s chief negotiator, Michel Barnier suggests that it can be extended until the end of 2022, in order to give more time for Britain to sign a full trade deal with the European Union.
The future of Brexit is very uncertain, but it is clear that the next period will be crucial for a shift in the European scenario and the upcoming transition in people’s daily lives.
WRITTEN BY @DANIEL PARASCHIV FOR BESA
PLEASE DIRECT ANY INQUIRY TO AS.BESA@UNIBOCCONI.IT