It has been a week since the UK woke up to a Vote Leave victory. Yet it is now also waking up to a new reality of political instability, economic uncertainty and broken promises. As of 1st of July, FTSE 350 has lost a total value of £40bn and the Eurostoxx Banks index has suffered a loss of €158bn since the Vote leave victory was announced on June the 24th. Post-Brexit, world stockmarkets fell by over $3tn. The UK’s pension fund deficit jumped by £80bn, hitting a new record of £900bn amid increasing concerns about the long-term financial health of European and UK pension funds. The need for the ECB and the Bank of England to keep interest rates low will only mean further deficit increases for pension funds, with some warnings that many pension funds will implode in the next few years. While FTSE 100 has started to recover, the UK is on the cusp of a recession. From a healthy, recovering economy pre-referendum, the UK now has wiped all recent gains and faces an uncertain future, having been bumped down to a lower growth trajectory.
Both of the main UK parties are undergoing internal rifts and leadership contests, with neither offering a clear plan for the UK’s future outside or inside the European Union. EU leaders have announced that there will no formal or informal talks before article 50 is triggered. France and Germany have shown no wish to compromise on the free movement of people if the UK were to opt for the EEA membership. Many overlook the fact that any new agreement will have to be approved by all 27 EU Member States and the European Parliament. There is not doubt that the EU negotiators will make sure that the new relationship is in the EU’s interests. The UK will not get to eat its cake and eat it too. EU governments are keen to be as tough on the UK as possible in order to make sure their own anti-EU constituencies can learn a cautionary tale from the UK’s humbling experience.
Vote Leave leaders have now proved to be unreliable, unprofessional and without a plan for a Brexit. Not only have promises been broken and lies exposed, key Vote Leave claims and pledges have been removed from their website.
So what next?
The UK is now a deeply polarised country with divisions that are unlikely to go away anytime soon. Whether a Brexit happens or not, the likes of Nigel Farage have helped legitimise open outbursts of racism and prejudice. No matter how angry it makes Brexit voters, they need to acknowledge that some Vote Leave supporters’ motivations to vote for Brexit were informed by bigotry and the dislike of foreigners. The numbers speak for themselves: UK police chief Sara Thornton has reported a 500% increase in hate crime reports. This is not anecdotal evidence – this is statistics.
This indicates that free movement of people that comes with EEA membership will not be acceptable for Brexiters, leaving them between a rock and a hard place, as leaving the EU and not being part of the EEA would mean the end of the United Kingdom as we know it today.
Without the free movement of people, Scotland will definitely organise another independence referendum and it will succeed in leaving the UK this time. The arguments and threats that it cannot become a EU Member State will not deter it. So Brexiters face a stark choice: get rid of free movement and break up the UK, or accept free movement and thus gain very little from having won the referendum.
We agree with Prof Rogoff that the threshold set for Brexit, requiring a simple majority, was too low for a decision that would affect the lives of future generations and send shockwaves through the global economy. This was a mistake made by the UK government. Despite the fears of a “neverendum”, another referendum should be held. Arguments that disputing the results of the June 23 referendum is undemocratic are unfair, as Brexiters themselves were fully intent on disputing the outcome if Remain won by a narrow margin. A Brexiter even set up the petition to demand a second referendum, now decried as undemocratic by Brexiters themselves.
What legitimises the calls for a second referendum or a Parliamentary decision on whether to proceed with Brexit, are the lies told by the Vote Leave campaign. The Sun, backing the Leave campaign did not shy away from misleading the public about Her Majesty’s stance on Brexit, now ruled inaccurate and even directly contradicted by the Queen’s other statements about Europe. The lies of the Vote Leave campaign range from extra funding for the NHS to greater catches for UK fishermen. Once it dawns on the Brexiters that there will be no sudden stop to immigration while maintaining economic privileges, the question will arise: what is to be gained by leaving the EU? The answer will be – very little. It will only mean losing influence on the EU decision-making and being removed from most discussions on the future of the continent, while still being bound by most of its rules and regulations.
Those who indulge in schadenfreude about the elites and the privileged finally losing out on their cozy positions, are mistaken. A Brexit will affect the privileged and the mobile the least. People working in the City of London and for large multinational companies will be better equipped to adjust to the changes. It is the more disadvantaged who will suffer the brunt of the recession.
The UK parliament also faces a tough choice. The UK has no written constitution, thus the Parliament is the seat of UK democracy that needs to look after the best interests of its population and its future. It would be most patriotic to take the decision about UK’s future based on facts (which currently do favour the Remain side) or call for another referendum to allow everyone to cast their vote knowing the facts and what really is at stake. While many argue that “Bregret” is only supported by anecdotal evidence, there are too many instances of it to dismiss it, especially in light of all the admissions that even the Vote Leave campaigners’ pledges to “take back control” over immigration were misleading.
It would also allow the young to decide whether they wish to vote to determine what kind of a country they will live in, as their referendum turn out was poorer than that of older generations, but heavily more pro-EU. They will be the ones who will have to live with the UK’s decision to leave the EU the longest. Also, a second referendum would allow the UK to put the issue to bed – if Brexiters are so certain history and reason is on their side, they have nothing to fear. With no more “speculations” and “project fear”, this would offer an opportunity for people to make a more informed decision with less fear mongering and more sanity.
Linda Zeilina is Director & Special Advisor at Re-Define