The Political Economy of Brexit: Why Making It Easier to
Leave the Club Could Improve the EU
The UK exit
from the EU represents a qualitative change in the nature of EU membership. On
the one hand, it conveyed the lesson that for the Union to be sustainable, membership
needs to entail constant caretaking as far as individual members' contributions
to the common good are concerned, with both rights and obligations. Countries
with preferences that are too divergent for the Union to function properly
should then not be discouraged to invoke Article 50 and to opt instead for
membership in the EEA or for a free trade agreement. The Union has to deliver
to be sustainable, but it cannot do so if there is a constant hold up of
decisions that are in the common interest. On the other hand, with the eurozone
having established itself as the de facto core of European (political)
integration, the UK's preference for a stand-alone (and incomplete) economic
union became untenable, because the need to make the monetary union work calls
for further integration and institution-building in the economic union sphere.
Annette
Bongardt, European
Institute, London School of Economics and Political Science, UK; and National
Institute for Public Administration, Lisbon, Portugal.
Francisco
Torres, European
Institute, London School of Economics and Political Science, UK; and St.
Antony's College, Oxford University, UK.
As the UK
referendum on EU membership approached, it seemed increasingly likely that a
majority would vote for a British exit from the EU (i.e. Brexit), and yet this
outcome appears to have taken almost everyone by surprise. The Leave camp won
and did so with voter turnout above 70%, which is significantly higher than the
turnout for the United Kingdom's European Community referendum in 1975 or the
British Parliamentary elections in 2015.
Hardly a surprise
Looking back at
the discussions during the campaign, it is probably fair to say that reasoned
arguments seemed to carry little weight. As far as the unsuccessful
"Remain" side is concerned, the failure was probably less due to
attempts by some members of the "Leave" campaign to discredit it as
"Project Fear" than it was to the fact that, on the whole, the Remain
camp was campaigning on a negative message. It defended the option to stay in
the EU on the alleged merits of a diluted, non-functioning EU/EMU project,
conditional upon many exceptions. Even some academics did the same in public
debates. It was, of course, also unhelpful that the (now former) prime minister
and many members of his conservative party – after having raged against EU
membership for years, sometimes very much along the lines of the UK
Independence Party, and threatening the rest of the EU club with exit –
suddenly changed their tune and began pointing to the perils and costs
associated with a Brexit, which did not exactly enhance the credibility of
Remain. It should then have come hardly as a surprise that the Remain camp's
Eurosceptic-led campaign did not work: people tend to prefer going for the
original instead of the copy – in this case, for Leave rather than for
"Remain with reservations in a very watered-down EU".
No panic, just different preferences in the UK
We do not see
the magnitude of shock to the EU from a UK exit that others seem to perceive. Markets
did not panic (but are obviously adjusting to new realities, as illustrated by
movements in the external value of the British pound or UK asset prices), nor
did the EU population and polity. After all, the UK was already not
participating in many EU policy areas and common goods.
On the other
hand, the scope of exemptions granted to the UK and the country's strong
opposition to EU integration have been undermining the functioning of the EU.
Those exemptions – cherry-picking the club's benefits – were set to increase
further; had Remain won, the pre-referendum settlement with the UK, an
intergovernmental agreement which enshrined additional exemptions, would have
been enacted. At the same time, opposition to EU integration would have
probably also risen. For instance, the eurozone would have risked seeing its
legitimate efforts to strengthen the Economic and Monetary Union (EMU) – for
example, by deepening the single market where necessary – vetoed by the UK. Quite
possibly, the EU project was not sustainable with the UK inside.
In the future,
Anglo-Saxon and more continental European perspectives will probably tend to
diverge ever more on issues such as financial regulation, international trade
agreements like CETA and TTIP, and many others. Most EU countries favour a more
social model of society, while the UK's manifested preferences in regard to
product and labour market regulation tend to be closer to those of the US or
Canada. The issues mentioned above will be another test of whether the UK's preferences
are more in line with those of the US and Canada than they are with the rest of
Europe. If so, it would constitute another argument in favour of the UK's
decision to leave the EU: the divide that already seemed insurmountable would
be bound to increase even further given that those issues will soon have to be
tackled. The EU's capacity to shape globalisation in line with citizens'
concerns (i.e. not merely growth-oriented but in a more inclusive and greener
manner) will be critical to the support of the project.
