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Global Fallout in Wake of Brexit Vote

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Dr. Gene Frankland, Professor
Ball State University

Turnout for the “Brexit” vote (Britain exiting the European Union) on June 23, 2016, was 72.2 percent, the highest nationally since 1992. The result came as a shock to many: 52 percent of UK voters favored “Brexit” while 48 percent did not. The UK was anything but united when one considers the geography of the results. England and Wales voted 53.4 percent and 52.5 percent respectively for Brexit while Scotland and Northern Ireland voted 62.0 percent and 55.8 percent respectively against Brexit. There was an urban/rural divide within England. London along with Manchester and Liverpool voted against Brexit while more “ordinary” cities and counties favored it. Exit polls indicated that the youngest cohort of UK voters (18-24) strongly opposed Brexit while the oldest cohort (65+) strongly supported it. However, the turnout of younger voters was significantly less than that of older voters. Education correlated with voting with the highly educated in favor of remaining in the EU, and the least educated in favor of leaving it. Brexit was favored by supporters of UKIP (93 percent) and the Conservatives (57 percent), and opposed by supporters of Labour (59 percent) and the Liberal Democrats (73 percent). When asked which issues counted in their decision making, pro-Brexit voters mostly cited immigration and sovereignty concerns while anti-Brexit voters cited economic risks.

In calling for the referendum back in 2013, former Prime Minister David Cameron had gambled that he would unite the Conservatives for the 2015 General Election, undercut UKIP (the UK Independence Party), and put the Labour Party in the uncomfortable position of opposing a vote by the people on an historic issue. While the promise of a vote helped re-elect Cameron in 2015, the results of that vote ended in Cameron’s resignation, market instability, uncertainty about the continued viability of the United Kingdom, and disarray within all political parties. The new PM, Theresa May, who had been a lukewarm supporter of the Remain campaign, is now faced with the task of leading the exit negotiations with the EU, which under Article 50 of the Lisbon Treaty would last two years once initiated by the British. Many observers saw the “gargantuan” task of economically disentangling the UK from the EU as taking many years. Markets responded to uncertainty by nose diving, the pound’s value plunged to 1980s levels, and the UK’s credit rating was revised downward. Longer term concerns include the erosion of foreign direct investment and major job losses in financial services. On top of all this, the leader of the Scottish Nationalist Party indicated that rather than exit the EU with the UK, Scottish options included another referendum on independence, which polls indicated 59 percent of the Scottish citizens would now favor.

May’s new cabinet includes Conservatives from both sides of the Brexit battle. May has indicated that there will be no early parliamentary election to revisit the issue, and no second referendum. The intra-party struggle between proponents of “hard” and “soft” Brexit is likely to be protracted. In a nutshell, the difference is between those who favor quick reassertion of national controls especially over immigration, even at the cost of access to the European single market, and those who prioritize market access and are willing to compromise on the question of freedom of movement of EU citizens. There is discussion of the pros and cons of the “Norway model,” under which the Nordic country–though a non-EU member state–has access to the single market, contributes to the EU budget, but has no vote in rule-making.

Ironically, the Labour party now finds itself in a leadership crisis. Jeremy Corbyn, the Labour leader, who stems from the far left, is being roundly criticized for the lack of leadership during the Remain campaign. He was hardly enthusiastic about supporting the EU, which far leftists dismiss as a corporate capitalist project. Not only did he fail to connect with ordinary voters, but also he declined to work with other parties in the Remain campaign. Polls indicated that 20 percent of Labour supporters did not know where their party stood on Brexit! In the days following the referendum dozens of members of Corbyn’s shadow government either resigned or got fired for disagreeing with him.

New circumstances may provide the opportunity for the Liberal Democrats, who were devastated in the 2015 election, to claw their way back into political relevance. UKIP was victorious in the Brexit vote, but faces a succession crisis itself now that its superstar Nigel Farage has decided to retire as leader. The future of UKIP appears uncertain if Brexit is ultimately accomplished by the Conservatives without too much controversy.

German Chancellor Angela Merkel expressed “regret” over the outcome of the EU referendum. The EU is set to lose its second largest economy, its strongest military, and its third largest population. Merkel and other EU leaders made it clear that “exit is exit,” there would be no renegotiations. Many EU officials called for speedy British initiation of the Article 50 process to reduce the uncertainty about when and how exit would occur. EU leaders’ challenge will be to show flexibility in exit negotiations without providing incentives for others to follow the UK out of the EU. The most likely outcome is some kind of associative relationship between the EU and the UK, but it will definitely not be a better deal than what was offered by EU leaders to Cameron in early 2016.

The outcome of the Brexit vote has energized the opposition to the EU in several member states. There were calls for referendums in France, the Netherlands, and Sweden, but their advocates have significant political and legal obstacles to overcome. A referendum is more likely in Hungary, where Prime Minister Orbán seeks a popular mandate to ignore specific EU rules, not to exit from the EU. Hungary and most EU member states are more economically dependent on the EU than the UK has ever been. The Brexit vote can be seen as a “wake-up call.” EU leaders know that they must reform the EU to better respond to the needs of the losers as well as the winners of globalization. The resilience of the EU as a transnational organization may even be enhanced through the departure of UK.

The Obama administration publicly supported the Remain campaign. The US economy would not escape the ripple effects of economic turmoil in the UK. On a great number of international issues the US and UK governments have closely shared perspectives. In effect, the UK has long provided the US with a bridge into the EU. Although close ties between the US and UK will continue within the NATO framework, Germany will become the US’s most important ally in Europe. But there will likely be less consensus, for example, on sanctions against Russia and on new trade agreements. In regards to consequences for US electoral politics, Republican presidential candidate Donald Trump found validation for his populist-nationalist campaign in the outcome of the referendum in the UK. However, American presidential elections and British national referendums are dissimilar phenomena. Nonetheless, one trans-Atlantic lesson from the June 23th vote is that the historic decision was more emotive than rational. According to Richard Wolffe, writing in The Guardian, the Brits are going to learn that “… protest votes are not, in fact, a token gesture. They have a very real impact in the real world.”