The Pearson Centre for Progressive Policy

Progressive Dialogue and Policy for a Better Canada

BREXIT: What next? (Analyses and views)

By

June 27, 2016

BREXIT: What next? (Analyses and views)

By Various writers

The Pearson Centre is asking various experts about their thoughts on the aftermath of the Brexit vote.. This will be updated periodically.

Q&A with
1. David Slin, former British Diplomat and Ambassador
2. Roy Sengupta, Student, Carleton Univeristy

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1. Q&A with DAVID SLIN, Former British foreign service official and ambassador now living in Ottawa
(Submitted on June 27, 2016)

Q: Why is everyone so surprised about this outcome? Why wasn’t there more serious discussion about this before the vote?

DAVID SLIN: The initial reaction was surprise because as the polling stations closed, several polls were predicting a Remain victory. But as the result became clear and the markets dropped, that initial surprise turned into many different emotions. Shocked, stunned, angry and sad were typical of the reactions that figured in my social media feeds from people who had clearly expected Remain to emerge victorious.
The campaign was long and increasingly bitter. But as the polemics got sharper, the space for serious discussion shrank. But in any case, large parts of the population were not listening. Many voters had been persuaded by the populist message of the Leave campaign eagerly carried by sections of the media, and were not interested in rational arguments from the Remain side. That said, the Remain campaign’s communications strategy seems to have been poor with little effort to tailor the message to the target audience.

Q: Will David Cameron have the support and authority to carry on in the next few months?
DS: Almost certainly, yes. The BREXIT team will welcome Cameron’s decision to stay on into the fall since he will be able to provide stability and continuity in efforts to quell the early market panic. From a political perspective, the BREXIT team have no plan and need time to consider their next moves.

Q: Is Boris Johnson the next PM?
DS: Johnson will undoubtedly attract a lot of support in the leadership contest from the Leave side of the Conservative Party who insist that the next Prime Minister be a Brexiteer. He is probably the current favourite to get the job.
But his Leave stance angered many in the Conservative Party. Having previously been seen as a supporter of the UK staying in the EU, his abrupt conversion to the Leave cause was widely seen by many as opportunistic and in pursuit of his own political career rather than the national interest.
The emergence of a credible Stop Boris candidate is inevitable. The name of Theresa May, currently the Home Secretary, is being touted as a more reconciliatory option to help bring the Party back together.
Johnson would have a tough job as Prime Minister. Cameron’s resignation announcement that he would leave it to his successor to trigger Article 50, the mechanism for withdrawing from the EU, was politically astute. It puts the responsibility for the whole withdrawal process and the likely tough negotiations with the EU on whoever succeeds him: and leaves that successor to take the blame if, as seems likely, the BREXIT campaign promises prove undeliverable. Many are not sure that this is the role that Johnson foresaw for himself, suspecting that he would have preferred to come to Downing Street as the new Leader following Cameron’s resignation in the aftermath of a narrow Remain victory.

Q: What is ahead for the Labour Party?
DS: The battle for the Labour Party’s continues: the pragmatists who point to Blair’s electoral success to justify the case for a move back towards the centre against the ideological left wingers who insist that the Party has to move further left to make it electable.
For as long as Jeremy Corbyn is leader, that internal conflict will continue. Most of the Party’s MPs see Corbyn as ineffectual and divisive and want him to go. The more left-wing rank and file membership who elected him as Leader insist that he has a mandate to stay. It is a divide within the Party caused by its own internal structures and resolution is probably not imminent. The centrists’ hope that a heavyweight like David Miliband will emerge seem likely to remain unfulfilled, at least in the near future.
Meanwhile, as the 2015 General Election and the EU referendum results show, Labour continues to haemorrhage support to UKIP in England and to the SNP in Scotland. The longer the internal conflict persists, the more the support base is likely to shrink.

Q: Will Mark Carney be able to continue at the Bank of England over the long term?
DS: Almost certainly, yes. The new Government will be well aware that the current Governor has been involved in all the post-BREXIT contingency planning. Getting rid of a key figure whose departure would cause nervousness and uncertainty on the markets would be a rash move.

Q: What do you see happening two years from now?
DS: Predicting what might be happening in two months is well nigh impossible, let alone two years. It will depend on what happens within the UK (will it hold together or break up?) but also within the EU (will BREXIT trigger a crisis amongst the EU Member States or between EU institutions on the future role of the EU? Or will it hang together and impose a tough settlement on the UK?).
But whatever happens, a period of prolonged uncertainty in Europe seems inevitable, with both the UK and the EU emerging weaker. In retrospect, last Thursday’s referendum result will almost certainly be seen as a turning point in modern European history.
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2. Q&A with Roy Sengupta
Student, Carleton University

July 1: updated comment
RS: Boris is out. He was outmaneuvered by Gove, who initially pledged his support to him but then surprised almost everyone by announcing that he would run himself. Andrea Leadsom, another prominent Euroskeptic who I mentioned in passing in the interview answers, has also thrown her hat in the ring. With the euroskeptic vote in the party increasingly split, and the negative reaction which Boris Johnson received from most of the MPs in the party, his position was increasingly untenable. His campaign has been in freefall, and may well have ended in disaster for him had he decided to stay in the race (as in, an embarrassingly poor final result).

Original comment posted June 29:
Q. Why is everyone so surprised with the outcome? With the polls so close why was there not more attention given to a leave vote?
RS: I think there are a few reasons as to why people are surprised by the outcome of the EU Referendum. The most immediate cause of this surprise was the fact that Remain appeared to be regaining the polling lead in the days preceding the referendum vote. Although Leave had taken the polling lead in the first half of June, thanks in large part to strong debate performances by Leave representatives, it appeared that the murder of Jo Cox by a right wing extremist, who was pro-Brexit, had reversed this momentum and pushed moderates back into the Remain camp. This meant that the final week of polling before the June 23rd referendum generally showed increasingly strong Remain leads. By polling day, the markets and betting agencies were generally confident in a Remain vote, meaning that the Leave vote came as a rude surprise to many investors. It appears that much of this apparent Remain lead in the week leading up to the vote came as a result of a large number of telephone polls, which may have underestimated the amount of undecideds still left in the race, and the potential of the undecideds to break for the Leave option. Many pollsters also underestimated the potential for a high Leave turnout on referendum day, as Leave was appealing to many voters who felt alienated from the political process, and wanted to cast a protest vote. Because these voters tended not to vote in general elections, the turnout models of a number of pollsters underestimated their likelihood of voting in the EU referendum, thereby underestimating the potential of the Leave camp to get out its vote, and wrongly skewing the polling results. It appears that there may also have been a phenomenon of the shy Leave voter, in the sense that many Leave voters may have been wary of expressing their Leave preference to pollsters because of a general public perception that Leave supporters were xenophobic and racist. Not wanting to be seen as close minded and bigoted, many Leave voters declined to indicate their Leave preference to pollsters, but nonetheless quietly voted for the Leave option on polling day.

You are quite right to suggest that the planning for a Leave vote has been minimal, leading to a great degree of chaos in the aftermath of the referendum. The reason for this is that almost all individuals involved in the referendum campaign, including Leave supporters, expected Remain to ultimately win. Remain was the establishment, it was backed by almost all major businesses, banks, and senior politicians, as well as almost two thirds of MPs. It was also the safe option, meaning that most observers believed that undecided and unsure voters would, in the end, break for Remain because of the safety and stability of such an option. This was based off of an understanding of the Scottish Independence Referendum, where the polls were very close, but, in the end, undecided voters broke for the no to independence side, meaning that Scotland stayed in the UK. However, it seems that, because almost all voters believed Remain would ultimately win, many undecided voters decided to cast a Leave vote as a protest against government policies, including policies related to unemployment, budget cuts, and immigration. Most of these voters did not think through the consequences of Britain actually leaving the EU, rather, they wanted to send a message of protest to the government. Most of the leaders of the Leave camp were also taken by surprise, and believed that Remain would ultimately come out on top. This was their belief throughout the referendum process, and this belief was evidenced by Nigel Farage’s comment soon after the polls closed where he predicted that “Remain will edge it”. Because everyone thought the odds were so stacked against Leave, very little serious planning was done for a Brexit situation. But now, the protest has become a reality, and figures such as Boris Johnson and Nigel Farage are scrambling to actually implement Brexit. These figures are also having to admit that many of the promises which the Leave camp made during the referendum were false, and many of the Leave voters now regret casting a vote for Leave as a result of the instability which it has brought about, as well as because of the broken promises of the Leave camp.

Q. Under the heading of “What next”, what needs to happen with the EU agreement?

RS: The immediate question now centres on when Britain should invoke Article 50 of the Lisbon Treaty. This article of the treaty sets out the formal process for a nation to leave the European Union. Once it is triggered, a nation has two years to negotiate a new treaty with the European Union before being automatically removed. As soon as this article is invoked by the UK government, the clock starts ticking on negotiations. If the negotiations are not concluded within two years, unless there is universal consent among all parties to extend the deadline, the UK is automatically thrown out of the EU, and is thereby subject to EU tariffs on its exports to European nations. Needless to say, this would a very bad outcome economically for Britain, and one that almost all parties are seeking to avoid.

David Cameron has announced that he will not invoke Article 50 himself, but rather leave this decision up to the new Prime Minister. Boris Johnson has stated that there should be no rush to begin the formal exit process laid out in Article 50. Of course, there are other figures who want Article 50 to be invoked as soon as possible, namely Nigel Farage, and the leaders of the European governments. Nigel Farage is taking his typical hardline Euroskeptic stance by attempting to rush the leaders of the Conservative Party to begin the exit procedure. In the case of the European leaders, many are unhappy about the continued uncertainty caused by Britain’s failure to trigger Article 50, and want the UK exit process to be over as soon as possible to prevent broader destabilisation of the EU. Of course, it is also worth noting that the EU referendum results were not legally binding, meaning that the UK government could technically refuse to ever invoke Article 50, thereby never formally starting the EU exit process and maintaining Britain as part of the EU. This is, however, an unlikely scenario because of the potential political consequences of refusing to adhere to a democratic referendum result.

With regards to the UK’s future relationship with the EU, there are three major options. The first is for Britain to join the European Economic Area, a small group of countries associated with the EU that are permitted full access to the single market in exchange for making financial contributions to the EU, agreeing to abide by EU single market rules, and allowing freedom of movement between their country and other EU countries. This is likely to be an unsatisfactory outcome for pro-Leave politicians, most of whom campaigned against EU freedom of movement and in favour of restrictions on EU immigration to Britain. The more likely outcome that is that the UK signs a free trade agreement with the EU, similar to the Canada-EU free trade agreement. This would eliminate explicit tariff barriers on most trade between the UK and the EU. However, it will not eliminate various non-tariff barriers to trade, and could prove complicated to negotiate. One of the major complicating factors is the fact that different EU countries have different economic interests, such that some members of the EU may economically benefit from tariffs being placed on British goods, whereas others may be harmed. The different interests of the EU countries will have to be reconciled in any free trade deal, as any free trade treaty requires the unanimous agreement of all EU nations.

If all else fails, trade between the UK and EU will return to being subject to standard World Trade Organisation rules, meaning tariffs will be imposed on UK goods being imported into the EU. Needless to say, this could prove to be very damaging to the UK economy, and is an outcome which almost all figures, both Remainers and Brexiteers, want to avoid.

Q. Who are the contenders for the Conservative Party leadership? Is Boris Johnson a shoe-in?
RS: The Conservative Party at the moment is very divided between those who supported a Remain vote in the referendum, and those who supported a Leave vote. Obviously, with Leave having won the referendum, the smart money will now be on a Brexiteer leading the Conservative Party. The two main Conservative politicians in favour of Leave were the eccentric and charismatic Boris Johnson, and the more intellectual and mainstream Michael Gove. It appears that Gove will throw his support behind Johnson, meaning that Johnson pretty much has the Brexit forces in the party united behind him, barring any surprise dark horse candidate like Andrea Leadsom.

There are, however, many MPs, particularly those who supported Remain, who are opposed to Boris Johnson and feel that he does not have the temperament to be Prime Minister. One of the main accusations is that he is too erratic and eccentric, and that, at an unstable time like this, there is a need for a more steady hand at the tiller. Other Remain MPs do not want the party to be completely controlled by pro-Brexit politicians, and want to instead place a more moderate politician as leader. Two names in particular have been floated as challengers to Boris Johnson, Theresa May, the Home Secretary, and Stephen Crabb, the Work and Pensions Secretary. Theresa May is a very senior member of the cabinet, and has won significant praise for her performance as Home Secretary. Although she was pro-Remain, she is widely seen as a relative centrist on the EU issue, expressing significant Euroskeptic viewpoints, particularly in regards to freedom of movement.. She also kept a low profile during the referendum, meaning that she has some potential to act a unity candidate in the party.

The other option is a more junior member of the cabinet, Welsh minister Stephen Crabb. Crabb comes from a working class background, and was a support of the Remain side in the referendum. He is widely considered to be one of the left-leaning members of the Conservative Party, and has cloaked himself as a moderniser who can connect with the concerns of working class voters. A relatively young minister, he could have significant appeal to the more liberal “Red Tory” (or, as Red Tories are known in England, One Nation Conservative) wing of the party.

A new candidate has also recently been touted, Jeremy Hunt, the Health Secretary. He is probably the most pro-Remain candidate in contention for the Conservative leadership, and therefore the UK Prime Ministership. He has suggested that the terms of any deal which the UK comes to with the EU should be put to a second referendum, and that the UK must maintain full access to the single European market, with only limited restrictions on freedom of movement. By this, he likely means that he believes that the United Kingdom should attempt to join the European Economic Area, with certain caveats regarding freedom of movement. He has also suggested delaying the invocation of Article 50 of the Lisbon Treaty until as late as 2020, when a general election is scheduled to occur in the UK.

These are the main candidates. Chancellor George Osborne was once considered a strong candidate to succeed David Cameron as leader, but he has become increasingly unpopular of late in light of criticism regarding his recent budgets and his aggressive support of the Remain side in the referendum. Some accuse him of having attempted to fearmonger regarding a Leave vote, especially after he claimed that a Brexit vote would force him to implement a harsh “emergency budget”. He remains, however, an important powerbroker in the party, with many friends on the frontbench of the Conservative government.

There will likely a few other dark horse candidates, such as Nicky Morgan or Sajid Javid, but the candidates I have mentioned are currently the ones being looked at most seriously. Boris Johnson is definitely the favourite, if not quite a shoe-in. Although there is considerable opposition to him within the parliamentary party, he is popular with grassroots activists and has performed well as a leader for the Leave campaign in the EU referendum. I have to imagine the smart money being on him becoming the next UK Prime Minister.

Q. Is this the beginning of the end of a united United Kingdom?
RS: Nicola Sturgeon, the First Minister of Scotland, has certainly responded very aggressively in the days after the EU referendum. She has said that she will do everything in her power to ensure that Scotland remains in the EU, up to and including a second independence referendum. In her opinion, a second independence referendum is now “very likely”. She is also engaging in a major diplomatic campaign to attempt to persuade EU leaders and officials to allow Scotland to negotiate a special deal to remain within the EU, even as the rest of the United Kingdom may leave. The Scottish government is looking to cooperate with other jurisdictions in the United Kingdom which voted to Remain in the EU, including Gibraltar, London, and Northern Ireland, in order to jointly advocate with these jurisdictions that these parts of the UK be allowed to maintain some form of EU membership.

I imagine that this current situation can only boost the fortunes of the separatist SNP, not least because the SNP is one of the only stable political parties left in the United Kingdom at the moment. Both the Conservative and Labour parties have fallen into disarray in the aftermath of the referendum. Only the SNP seems to be developing a coherent political strategy which all of its party members are united behind. Nicola Sturgeon is showing leadership in a vacuum, which can only bode well for her reputation in Scotland. Moreover, one of the key arguments made by the anti-independence side during the first Scottish Independence Referendum in 2014 was that the best way for Scotland to remain in the EU was to remain the UK, and that, if Scotland were to separate from the UK, the EU membership of Scotland would correspondingly be at risk. Obviously, now that Scotland’s membership in the EU is being jeopardised by her being part of the UK, many Scots who may voted against Scottish independence in order to preserve EU membership may be having second thoughts.

One complicating factor is that any second independence referendum for Scotland would have to be approved by the central government of the UK, led by the UK Prime Minister. Whilst Nicola Sturgeon likely has the votes in the Scottish Parliament to obtain the approval of that legislature for an independence referendum, it remains to be seen whether the next Conservative Prime Minister of the UK would be willing to sanction a second referendum for Scotland. I would wager that this approval may prove challenging for Sturgeon, largely because a UK Prime Minister preoccupied with the chaos and intense negotiations of Brexit likely would not want the further headache of a second Scottish independence referendum, and the potential breakup of the UK that may entail. Both the SNP and the Westminster government had promised in 2014 that the first Scottish Independence Referendum would a “once in a generation” event, and a Conservative Prime Minister could therefore, somewhat justifiably, still stick to that position, and claim that a second independence referendum so soon after the first one would be unreasonable. There also continue to be knotty questions regarding the potential currency of an independent Scotland that the SNP still needs to address. Unless the SNP was coming forward with a significantly different position on matters such as currency compared to its position in the first referendum, a UK Prime Minister could also justifiably say that many of the same concerns which worried voters in the first independence referendum have not been addressed, meaning that there is no reason for a second independence referendum.

There is also the question of Northern Ireland. Northern Ireland voted to Remain in the EU, with approximately 56% of Northern Irish voters supporting this option. Brexit raises unique questions for Northern Ireland, not the least of which is the matter of the border between Northern Ireland and the Republic of Ireland. The Republic of Ireland remains a committed member of the European Union, and is therefore subject to EU rules such as freedom of movement. Since the Good Friday Agreement of 1998, there has been free movement between the borders of the Republic of Ireland and Northern Ireland. This has been an important part of the Northern Ireland Peace Process, helping to placate Catholics in Northern Ireland by allowing them unrestricted and easy access to the entire island, and reducing feelings of partition between Northern Ireland and the Republic of Ireland. However, with the Republic of Ireland remaining in the EU, the Republic of Ireland-Northern Ireland border could emerge as a backdoor for EU migrants to continue to enter the United Kingdom. One of the main objections which Leave supporters in the UK had to the EU was that its freedom of movement provisions allowed too many EU migrants into the UK, taking jobs away from, and lowering wages for, British workers. There may be calls, then, for border controls to be reimposed at the Irish border. This could lead to significant disruptions of the Irish peace process, and would likely be received negatively by Northern Irish Catholics, many of whom desire to maintain close and unrestricted ties with the Republic of Ireland.

Another issue is the amount of money which the EU has invested into the Northern Irish peace process. Many social programs in Northern Ireland, and programs of inter-community dialogue, are underpinned by EU funding, funding which will likely vanish with Brexit. Both the border issue, and the EU funding issue, means that many analysts are concerned that the Northern Ireland peace process may be dangerously disrupted with a UK exit from the EU. In terms of separatist sentiment, Sinn Fein, a left-wing, pro-Irish party supported primarily by Catholics in Northern Ireland, has already called for a referendum regarding the unification of the Republic of Ireland with Northern Ireland. Other parties representing the Protestant community of Northern Ireland, such as the Democratic Unionist Party, and the Ulster Unionist Party, have rejected such calls for a referendum. Northern Ireland is not likely to merge with the Republic of Ireland in the near future, rather, the major fear regarding the situation in Northern Ireland is that sectarian violence could re-emerge as a problem in the region, as Catholics in Northern Ireland resist the re-imposition of border controls at the Irish border. This means there will be very high stakes negotiations between the Republic of Ireland and the UK along with the negotiations taking place between the UK and the rest of the EU, in order to ensure that reasonable openness is maintained at the Irish border, in a way that does not destabilise the Northern Ireland peace process.

Finally, there is the issue of Gibraltar, which voted 95% to Remain in the EU. Gibraltar is a British dependency at the southern tip of Spain. The Spanish government has long sought to annex Gibraltar into its own territory, and Spain has recently re-opened this issue in the wake of the Brexit vote. Although there is probably little sentiment in Gibraltar for a merger with Spain, this will be another territorial issue to watch.

RS. Additional Comments:
I suppose the only additional thing I would add is that the relationship between the UK and the EU has always been fraught. There was never a period in the history of this relationship in which the UK was regarded as a model or even a good member of the European Union. The UK has always resisted further integration into the EU, and many European leaders have, in the past, doubted Britain’s suitability for the EU. I would say, therefore, that although this vote comes as an immediate surprise, placed in the context of history, it is not an entirely surprising conclusion to what has often been an unhappy relationship.