Will Britain leave the European Union? Some things to note about the referendum on a 'Brexit'

British voters head to the polls on June 23, this time for a referendum on whether or not to stay in the European Union (EU).

The unprecedented vote on a so-called “Brexit”, one that was inconceivable when the 28-member bloc was established in 1993, will resonate around the world.

Here are some things about the saga:

1. What is the referendum all about?

The referendum is a vote to choose between “Yes” and “No” in answer to a question. The winning side is the one that gets a simple majority of more than half of all votes cast. All who are of voting age can vote.

It will be held on June 23, and ballots will be open from 6am to 9pm British time.

2. What will the voting slip look like?

Voters will get a piece of paper with the question: “Should the United Kingdom remain a member of the European Union or leave the European Union?”

They will then be asked to put a cross beside either: “Remain a member of the European Union” or “Leave the European Union”.

3. How did the referendum come about?

Prime Minister David Cameron promised to hold the referendum three years ago if he won the 2015 General Election, in response to pressure from Conservative eurosceptics and the rise of the anti-EU UK Independence Party (UKIP). The UKIP had argued that Britons had not been given a choice on the matter since 1975, when British voters backed membership of the then European Economic Community by just over 67 per cent.

The eurosceptics say that much has changed since then, arguing that the EU has too much control over the daily lives of Britons. In holding the referendum, Mr Cameron had said that it would be the time for “the British people to have their say”.

4. Who are backing the opposing positions?

“In”: Prime Minister Cameron, 16 Cabinet ministers, the opposition Labour Party, Scottish National Party, Plaid Cymru, the Liberal Democrats and trade unions all want to stay in. Other EU nations also want Britain to be part of the EU.

They espouse the benefits of EU membership like trade deals and the flow of immigrants that boost economic growth. They also warn about the drawbacks of leaving the EU, including renegotiation of deals and damage to Britain’s global status.

“Leave”: The UKIP, which got nearly four million votes in the last general election, about half of the MPs in the ruling Conservative Party, including five Cabinet ministers and former London mayor Boris Johnson, several Labour MPs and Northern Ireland’s Democratic Unionist Party are all in favour of leaving.

They call for “freedom” from the EU, which they say imposes too many restrictions on business. They are also concerned that EU membership would mean too many immigrants coming into Britain, taking British jobs and possibly carrying out terror attacks, due to the EU principle of free movement across borders.

5. What are the world’s political and financial leaders saying?

Most world leaders are warning against a Brexit.

Singapore Trade Minister Lim Hng Kiang said a Brexit would have a significant impact on the United Kingdom and do nothing positive for the global economy. “If the British were to vote for Brexit, then I think the long-term consequences would be very significant for Britain specifically,” Mr Lim said. “Definitely not a positive development when you talk about global economic recovery.”

US President Barack Obama said that it would not be easy for Britain to strike a free trade deal with the US. “Maybe at some point down the line there might be a UK-US trade agreement,” Mr Obama said, but “it’s not going to happen any time soon” for Britain is “going to be in the back of the queue” should it choose to leave the EU.

German Chancellor Angela Merkel warned that a “Brexit” vote would leave the UK with less clout. Citing the example of international trade talks, she pointed to the benefits of being part of the EU bloc and the risks of isolation. “One nation by itself will never be able to achieve such good results” in trade negotiations, Dr Merkel said.

Canadian Finance Minister Bill Morneau said Britons who would prefer something similar to Canada’s more limited trade relationship with the bloc post-Brexit were mistaken. “The UK already has a better agreement with the European Union today,” he told Reuters. “We see … Great Britain staying in the European Union as the best outcome – the best outcome for Canada, the best outcome for the United Kingdom and the best outcome for the world economy.”

Japanese Prime Minister Shinzo Abe said a vote to leave the European Union would make Britain less attractive for Japanese investors. “A vote to leave would make the UK less attractive as a destination for Japanese investment,” he said.

IMF boss Christine Lagarde said that a Brexit could push the country into recession: “A technical recession is one of the probabilities in the downside scenario in case of a Leave vote.”

6. What do businesses say?

Big business are generally in favour of Britain remaining in the EU, according to surveys. Some 198 business leaders – representing more than a third of Britain’s top companies – wrote a joint letter published in The Times in February, urging voters to keep the country in the EU.

The chief executive of Britain’s Rolls-Royce has written to its UK staff to tell them the engineering company is better off in the EU, warning that Brexit could result in some decisions being put on hold. “We have taken the public position that as a company Rolls-Royce believes our customers, suppliers and employees benefit from the UK’s membership of the European Union and that it is in the company’s interests to remain a member,” chief executive Warren East said in the letter to the 23,000 staff employed in Britain.

Britain’s Trade Union Congress general secretary Frances O’Grady said: “To date, the debate about our membership of the EU has been dominated by business, but today I want to change the tone and set out why working people should vote to remain.”

It claimed in a recent report that an “average” British worker would suffer a wage cut of about £38 (S$75) per week because of the negative economic consequences of Brexit.

7. What happens if the “Leave” camp wins?

Britain would be first country to leave, it may destabilise the country, and may prompt other countries to consider leaving the EU too. “(A Brexit) would seem to lower the barrier of exit for other countries…. The (British) government is campaigning to stay. It’s like a vote of no confidence in the government if they vote to leave,” said Mr Marc Chandler, chief currency strategist at Brown Brothers Harriman.

On the one hand, the temptation to offer Britain generous terms of cooperation after leaving the EU – such as maintaining all the existing free trade agreements and extending other facilities to the British without asking for much in return – will be great; EU leaders accept that they should minimise disruptions. But if the EU grants Britain too many concessions, this could open the floodgates to demands from other member-states for either their own special status within the EU, or for departing from the EU altogether.

World Trade Organisation (WTO) director-general Roberto Azevêdo said a Brexit would lead to unprecedented negotiations between the UK and the Geneva-based institution’s 161 other members. If Britain voted to leave the EU it would not be allowed to simply “cut and paste” the terms agreed to when Britain joined the WTO under the auspices of the bloc, Mr Azevêdo said. Britain would have to strike a deal on everything from the thousands of tariff lines covering its entire trade portfolio to quotas on agricultural exports. “Pretty much all of the UK’s trade [with the world] would somehow have to be negotiated,” he said.

A Brexit could also trigger a second ballot on Scottish independence within two years, said senior Scottish separatist Alex Salmond, as he said Scotland may have a different opinion from England on leaving the EU.

An extreme scenario from European Council President Donald Tusk in an interview with German newspaper Bild:” As a historian, I fear that Brexit could be the beginning of the destruction of not only the EU but also of western political civilization in its entirety.”

8. How will the economy be affected?

Most economists believe that a Brexit, would wreak havoc with the pound, cut growth, damage the London’s financial centre and provoke a lengthy period of uncertainty, with no guarantee that Britain could quickly negotiate free trade agreements. The uncertainty has already hurt the pound, which just had its worst quarter since 2008 versus the euro.

Depending on the results from across the United Kingdom, the night of June 23 and early morning of June 24 could rank as one of the most volatile nights in the history of the London market. “This is by far and away the biggest risk event that has presented itself to the UK,” said Mr Chris Huddleston, head of money markets at specialist bank Investec.

In the short run, the government says leaving the EU would tip the economy into recession, cause more than half a million people to lose their jobs and trigger a fall of more than 10 per cent in house prices and the value of sterling.

However, campaign group Economists for Brexit says Britain’s gross domestic product would be boosted by 2 per cent over the medium term, as consumers would benefit from lower tariffs on imports from outside the EU and British companies could export successfully under the more limited rights available under World Trade Organization rules.


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