How will Brexit actually shape up? Weeks after vote, Brits still don't know.
London — The ‘Brexit’ referendum that Britain held seven weeks ago was meant to resolve the vexed question of the nation’s European Union membership once and for all.
It has done nothing of the sort.
“Some ‘remainers’ are trying to scupper the [referendum] vote,” complains Matthew Elliott, chief executive of the victorious “Vote Leave” campaign. “People on the ‘leave’ side of the debate won the war; now they have to win the peace.”
As the complexity of the ‘Brexit’ process becomes clear, along with the fact that the government has not decided what kind of Brexit it wants, the fight over whether and how to leave the EU is gearing up for round two.
The new battle will mostly be over the exact nature of ‘Brexit’: how amicable the divorce will be and how close the future relationship between the two sides, though some disappointed by the referendum results are seeking to reverse them.
“We are already seeing the campaigns tool up again over what Brexit means,” says John Springworth, an analyst at the Centre for European Reform (CER), a London-based think tank.
The process of leaving
New Prime Minister Theresa May has declared repeatedly that “Brexit means Brexit,” but what that itself means is far from clear.
“Neither the old government nor the ‘Brexiteers’ had a plan for what to do,” says Hugo Dixon, author of a book about the debate over Europe. “The new government is trying to figure it out.”
That involves daunting challenges. Firstly it has to decide how closely it wants to link Britain to the EU – and there is a wide range of argumentative opinion on that issue within the ruling Conservative Party, within the cabinet, and within the “Vote Leave” movement.
Then it has to negotiate Britain’s legal separation from the Union in a two-year process that begins when London formally invokes Article 50 of the Lisbon treaty by declaring its intention to leave. It also has to negotiate new trade and political relationships with the EU that will be critical to the country’s economic health and role in the world.
And then, as a newly independent player, it will have to negotiate new trade relations with every country in the World Trade Organization (WTO), especially those with whom the EU has Free Trade Agreements from which Britain will no longer benefit once it leaves the EU.
Mr. Elliott is optimistic that “the divorce will be very, very easy,” and says he is “confident we will get a good trade deal which will allow tariff-free trade with the EU, because we are the fifth biggest economy in the world.”
Little give from Europe
Few experts are so sanguine about the prospects for a quick and smooth departure. After 43 years of tight economic and regulatory integration, unraveling the entanglement will require “multiple interlocking negotiations that will take years to unfold,” predicts Mark Leonard, head of the European Council on Foreign Relations. And the end results seem likely to cost the British economy dearly according to most economic forecasts, such as one issued last week by the Bank of England.
Ms. May told the Polish prime minister last month that she would seek “the best possible deal on trade in goods and services” that she could get while restoring the British government’s control over immigration. At the heart of the single European market is the principle that goods, services, capital, and people can move freely across borders. The referendum showed how unpopular uncontrolled immigration from EU member states is in Britain.
EU leaders seem unlikely to offer particularly generous terms to London, even to ensure a smooth transition that would be in everybody’s economic interests. Soon after the referendum, German Chancellor Angela Merkel warned that “it must and will make a noticeable difference whether a country wants to be a member of the family of the European Union. Whoever wants to leave this family can’t expect to do away with all its responsibilities while keeping the privileges.”
The EU “will want to ensure that the UK does not have its cake and eat it,” suggests Mr. Springford, the CER analyst, “otherwise all sorts of other members will demand concessions.”
He foresees a trade deal such as the one Canada has just signed with the EU. That took seven years to negotiate and must now be ratified by each EU member. Similarly drawn out talks would prolong uncertainty and cast doubts over the British economy.
But pro-European politicians are hoping for a protracted process. As the trade difficulties become clear, and if Scotland – which voted to stay in the EU – makes another bid for independence, they say, public opinion might shift.
It has shown no sign of doing so in the past few weeks, but “for those of us who believe that the referendum was not the last word, the longer and slower the process the better,” says Denis MacShane, a former minister for Europe.
When to trigger Article 50?
In the meantime, the High Court is hearing a case demanding that Parliament must endorse the referendum, which was only advisory, to make its results constitutionally valid.
Parliament seems unlikely to reverse the vote, even if it is given a chance. Though most members of Parliament personally favored Remain, the large majority of them represent constituencies that voted to leave the EU.
The government has promised to wait for a final ruling in the court case, expected in December, before triggering Article 50, and ministers have intimated that they may wait until the spring of next year.
That would give the government a chance to agree on a negotiating position, and to sound out European leaders informally on the outline of a possible deal, before the negotiating clock starts ticking.
Under the terms of Article 50, if no agreement has been reached within two years, Britain would be ejected with no special trade arrangements unless the 27 EU members unanimously extend the talks. Most economists warn that would be a major blow to the economy, knocking between two and four percentage points off GDP prospects.
Once London has decided on a negotiating strategy and invoked Article 50, its EU partners will take time to decide – unanimously – on their response. Substantive negotiations may not start until October next year after Dutch, French, and German elections.
During the referendum campaign “people were told it would be easy to exit, easy to get a good deal, that the economy wouldn’t be hurt at all,” says Mr. Dixon. “Over the next year or so it will become apparent that none of this was true, and there is a chance there will be quite a lot of regrets.” If so, he believes, the government might be persuaded to hold a second referendum on the results of negotiations, once they are completed.
Elliott says that in the wake of his campaign’s shock victory he is not sure what he will do next. But his organization is not giving up its office space overlooking the River Thames and the Houses of Parliament.
“It would be a huge let down if we just rested on our laurels and left the government to get on with negotiations,” he says. “There is clearly a lot of work to be done.”