BREXIT: Blunder of the Century By Paolo Tejano | July 2016
The United Kingdom of Great Britain and Northern Ireland has voted 52% to 48% in favor of leaving the European Union. This could be the biggest mistake their country has ever made. Here’s why.
A Brief Background
The issue actually dates back to even before the European Union was formally established through the Maastricht Treaty in 1992. In fact, the UK voted to participate in the European Communities (then only a customs union) in 1973. In 1975, a referendum on withdrawing from the said community was held, but quickly quashed by a 67% vote to remain. They no longer held a vote to affirm membership in the newly established European Union in 1992, and no referendum has been held until the one that took place last June 23rd to determine whether or not they should end their membership of the 28-nation bloc.
Many citizens have long questioned their country’s membership in the European Union. Many have claimed that being part of the community has led to a deterioration of the political, economic, and cultural conditions in their country. As with the rest of the world, these unfavorable conditions were exacerbated by the 2008 Global Financial Crisis, and more recently by the refugee crisis brought about by the turmoil in the Middle East. Britons pinned the blame on two things – Brussels and immigrants. To appease the growing number of Euro-skeptics, Prime Minister David Cameron agreed to hold a referendum should his Conservative Party get re-elected in the 2015 election. The Tories won by a landslide and a referendum was held. The very promise that kept Cameron at 10 Downing Street has now cost him his job.
What has Brussels Done to the UK?
Being the seat of the European Commission and the European Council, Brussels is the de-facto capital and thus, the physical representation of the EU. In other words, the rules and regulations that Britons claim to be destroying their economy and restricting their freedom come from the body based in the Belgian capital. It is important to ask, however, what exactly are these rules and regulations, and why are they “destroying” the UK?
The most important implication of being a member of the European Union is being part of the single market that it has created. There are no tariffs or quotas for companies importing and exporting goods and services within the EU. This massive stride in trade facilitation has allowed for cheaper goods and services, greater competitiveness, and a much faster diffusion of knowledge and technology. UK residents are free to work, study, and live in any of the other 27 member states, and vice versa.
Of course, this freedom would undoubtedly be accompanied by certain concessions which allow the EU to regulate its internal market. Measures such as an EU Competition Law, an Emissions Trading System to reduce carbon footprint, a Common Fisheries Policy, and various other rules on public health, transport, and the economy in general which are passed by the European Parliament must also be adopted by its member countries. The strong sentiment from those who want to leave the EU is centered on the lack of political, and economic freedom that the adoption of EU laws creates. Certainly, these EU measures and programs are not going to fund themselves, and that’s where members like the UK come in. They have to contribute a lot of money. This is what Euro-skeptics use as their primary argument. The United Kingdom is giving more to the European Union than it is getting.
One of the leaders of the Leave Campaign, former London Mayor Boris Johnson (who was recently appointed as Foreign Minister by new PM Theresa May), has pointed to greater control over the allocation of public funds as something that Britain will definitely benefit from. His colleague and co-Brexiter, Nigel Farage, leader of the UK Independence Party, claimed that the UK sends 350 million pounds to Brussels every week, and that this money ought to be given to the National Health Service (NHS) instead. That sounds noble and all, except there are a few problems with that claim. One, 350 million pounds was derived by dividing the UK’s total contributions made to the EU in the year 2015 by 52. A lot of that money was spent on non-recurring payments. Two, the UK’s contributions are exactly that – contributions. The British people do not donate 350 million pounds to the 27 other member states. They get something in return for it. Whether or not what they get in return is also worth 350 million pounds is a different issue. But the fact of the matter is that the UK does not send 350 million pounds to Brussels every week. They will not save 350 million pounds a week by leaving the EU, and more importantly, they cannot give this money to the NHS. Incredibly, Farage admitted that it was a “mistake” to claim that the money could be given to the NHS a mere hour after the Leave vote was confirmed.
Now that the British public has officially voted to leave the EU, a large cloud of uncertainty has risen over the future of the UK as a whole. Three areas voted overwhelmingly to remain – Scotland, Northern Ireland, and Greater London. London, being the financial center and business hub that it is, was largely expected to vote to remain due to the large number of foreigners and foreign corporations in the city. The Scots and Northern Irish however, realize that the European Union has greatly helped their economy through the vast amount of trade that it has enabled. In fact, in Scotland’s independence referendum of 2014, they voted to stay, primarily because of the UK’s existing membership in the EU. Now that the UK itself wants out, it is very likely that we will see another Scottish independence vote, with Northern Ireland following suit in the near future. The UK, as we know it might very well cease to exist.
Leave campaigners have also zeroed in on the idea that they can renegotiate a trade deal which will allow them to experience the same benefits from the free trade agreement without having to adopt EU rules and regulations. The problem with leaving the EU was that nobody knows what kind of deal the UK can cut with the rest of the bloc. German Chancellor Angela Merkel came out saying that she was very disappointed with the UK’s decision to leave. Her fellow European leaders have also voiced out dismay, as they surely worry about a chain reaction of withdrawals. That doesn’t sound like a bunch of people who are willing to welcome Britain back with open arms and zero tariffs, without getting a penny from them. Brexiters have previously pointed to Norway as a model that they can copy. Norway is not part of the EU but is able to access its single market. Perfect. Well, not so. The Norwegian government conducted a study which found out that, in fact, Norway has already adopted 75% of EU rules and regulations in order to back their free trade agreement with the bloc.
Nationalism or Racism?
Immigration was and is the primary fuel to the Euro-skepticism fire. Britons believe that the money they spend on EU membership is nullified by the immigrants who move to the UK and “steal” the jobs otherwise created for Brits. Unfortunately for the Brexiters (and now the entire UK), an LSE study has debunked the myth that immigrants come to the UK and to claim benefits, and steal jobs. In fact, immigrants help create jobs by increasing aggregate demand in the economy. Immigrants even contribute more in tax than they use in public services.
Another bullet used by people like Nigel Farage is that Britain is for the British and that they ought to preserve their culture. This is the most hypocritical statement any leader can make. Culture is ever changing. It has evolved through time because of the movement of people. British two thousand years ago is nowhere near what people consider British today. London is one of the most diverse places in the entire world. It being a melting pot of ideas and culture is exactly what makes it the great city of London that we know. Turning their back on the EU will do nothing but send the businesses and businessmen packing, and looking for new office buildings in Frankfurt, where the Germans don’t curse at immigrants on trams.
A Globalized World
It is simply naïve to believe that one person can only do one thing, and one country is meant for one race. Ten blokes from Crewe working for H.J. Mulliner & Co. no longer build coaches for Rolls-Royce. BMW now owns Rolls-Royce Motors and they pay Agnes from Slovakia to stitch the leather on the steering wheel because she’s probably darn good at doing so. Because of the EU, she got a job in the UK that can help pay to send her kids to college back home. In an increasingly globalized world, the challenge is how to make the most out of our relationships with one another.
Admittedly, no institution is perfect. The EU has faults and is in need of reform. But the UK cannot completely do away with the EU. In order for them to have a hope of one day recovering from this decision, they would still have to submit themselves to the same body and the same regulations. Only now, the Brits just gave up their voice. Talk about liberty.
The Free Market is a blog created by the SESC for both informative articles, as well as opinion pieces, for the consumption of the UPSE community and the public at large. Should you have any ideas that you would want to share on a larger platform, kindly contact SESC Education and Reserach at 0917 884 0220 or message the SESC Facebook Page. Image taken from Ashurst.