Britain Four Months Later: A Grumbling, Fumbling
and Stumbling Brexit

Just to remind ourselves: Britain voted in a referendum on 23rd June to leave the European Union (EU). The Leave (or Brexit) vote was 51.9% and the Remain vote was 48.1%. More than 30 million voted – 71.8% of those eligible to vote, the highest turnout in a UK-wide vote since the 1992 general election. The referendum result showed a divided nation with 17,410,000 voting to leave the EU and 16,140,000 voting to remain. Although the referendum result was not legally binding on the government, David Cameron made it clear from the start that the government would treat it as such, since he was then confident that there would be a majority vote to remain in the EU. This disastrous miscalculation led to his resignation. Theresa May, a strong candidate for the party leadership, had let it be known that she was a lukewarm EU remainer, but she clearly believed that her support across the party for the leadership would be reduced if she played an active part in the remain campaign. So it proved to be. By positioning herself as a Brexit-friendly remainer she was subsequently selected by the party to replace Cameron as Prime Minister and to lead the country into the Brexit future.

Readers of the Europhobic tabloid press might be forgiven for thinking that 90% or more of the British people had voted to leave the EU. Anxious to maintain an iron grip on the Brexit agenda and to sideline those of contrary views, the tabloids and their political allies have characterised those expressing legitimate concern about Britain’s future relations with Europe and its place in the world as moaners and whingers and members of ‘the elite’ who are ‘bad losers’ unwilling to accept the democratic process. The Daily Mail and Daily Express have gone further, calling them ‘unpatriotic’ and ‘traitors’ who must be silenced. Such reasoning is dangerously perverse. No one has argued that parties that lose a general election should jettison their convictions and take a vow of silence out of respect for the winners. Why should that be demanded of the 48% who voted for Britain to remain within the EU – particularly when divisions within the Leave campaign rendered them unable to spell out in any detail what Britain outside the EU would look like? All that united them was that they wanted to leave.

Some wanted Britain to sever relations with the EU entirely so as to “take back full control” of immigration (the so-called ‘hard Brexit’ option) whereas others wanted access to the single market with a compromise on free movement (‘soft Brexit’). Yet others oscillated between the two.

It may very well be that the Brexiteers own uncertainties prompt them to close down debate. This is the view of Conservative Ian Birrell, writing in the Guardian newspaper: “There can be just one reason those pushing Britain in this direction want to close down debate: a dawning realisation for them of the harsh reality of Brexit. Until now they have displayed breezy insouciance since their triumph, in some cases allied to foolish arrogance towards fellow Europeans with whom they must negotiate. Yet they have struggled to define a clear vision that stands up to analysis. Why else would they lack confidence to engage with their critics?” Quite so. In a situation as complex, uncertain and momentous for Britain and Europe – economically, politically and constitutionally - a full debate inside and outside Parliament is absolutely essential.

Theresa May’s first priority as the new Prime Minister was to establish herself as an enthusiastic Brexiteer to the Tory party faithful and the tabloid newspapers, that she is in control and that she appears to know what she is doing. Her appointment of the ‘Three Brexiteers’ (also known by opponents as the ‘Three Blind Mice’) – Boris Johnson as Foreign Secretary, Liam Fox as International Trade Secretary and David Davis as Secretary for Exiting the EU -show her in this light. Addressing the Conservative party’s annual conference in October she asserted that voters had given their verdict "with emphatic clarity", and that ministers had to "get on with the job". No doubt feeling the time had come to elaborate on her earlier meaningless ‘Brexit means Brexit’ declaration, she revealed that the UK will begin the formal Brexit negotiation process by the end of March 2017 by triggering Article 50 of the Lisbon treaty. This would mean that Britain would leave the EU by mid-2019. The government would strike a deal with the EU as an "independent, sovereign" UK and gave details of a Great Repeal Bill which she said would end the primacy of EU law in the UK. Anxious to differentiate herself from the Brexit remainers - which at present includes the majority of Tory MPs - who she said "have still not accepted the result of the referendum", she declared: "It is up to the government not to question, quibble or backslide on what we have been instructed to do, but to get on with the job."

Not everyone is convinced. Writing in the Times about what he calls “this Brexit thing,” Matthew Parris said: "We British are on our way to making the biggest screw-up since Suez. And somewhere deep down, the new governing class know it. How do you make this thing work? We ask because the suspicion grows that none of you has the foggiest." Despite Theresa May’s hard Brexit tone, her newly appointed foreign secretary, Boris Johnson, renowned for his unpredictable and flaky pronouncements on the EU, seems at present to want a ‘soft Brexit’ and is confident of a favourable trade deal with Brussels. “We are going to get a deal which is of huge value and possibly of greater value … We are going to get the best possible deal for trade in goods and services,” he told a committee of the House of Commons. The president of the European Council, Donald Tusk, disagreed: “The only real alternative to a hard Brexit is no Brexit, even if today hardly anyone believes in such a possibility.”

It is surely deluded to believe that a bespoke Brexit deal with the EU is a foregone conclusion. As the German Ambassador to the US said: “An exiting country cannot be better off outside the EU than it was as a member. Otherwise, the EU would be endangered to unravel.” Why would the EU wish to show that withdrawal from the EU is more advantageous than membership? As Euan McColm in The Scotsman put it: “Good old Bo-Jo muttered and spluttered about our bright new future, a future where countries to which we have just shown an extended middle finger respond by throwing themselves before us, obsequiously encouraging us to take from them whatever we wish”.

The process of withdrawal from the EU will be triggered by the UK government invoking Article 50 of the Lisbon Treaty “in accordance with its own constitutional requirements”. Britain has no written constitution and no established rules for such an unprecedented event. Consequently a High Court case has been initiated to get clarification on the legal implications of Article 50. Nevertheless, the government maintained it alone can decide when to trigger the process without any reference to Parliament or to the devolved legislatures in Scotland, Wales and Northern Ireland; that it has the executive power under the royal prerogative so to do and that it has the referendum as its mandate.

Despite paying lip service to openness and transparency, the British government typically went for secrecy and minimum scrutiny in a preliminary legal hearing on September 23rd. It not only opposed the argument that Parliament should decide when and how Britain withdraws from the EU but claimed the right to conceal its case for so doing until the full legal hearing on October 13th. The judge was not impressed by this arrogant and tawdry manoeuvre and ordered the government to disclose its arguments immediately in the interest of open justice.

The government’s claim to unaccountable and unfettered freedom on Article 50 has caused resentment among MPs on both sides of the Brexit debate. Parliamentarians, whatever their convictions, don’t like to be ignored or sidelined when issues of great national importance are discussed. Pro-Brexit Tory MP, Stephen Phillips stated in a Commons debate that it would be “fundamentally undemocratic” and “unconstitutional” for the government to negotiate the terms of Britain’s exit from the EU without consulting Parliament. Former Tory minister, Nick Herbert, part of a cross-party alliance opposed to Brexit, said the group was not seeking to “delay or frustrate the referendum decision” but wanted to prevent “hard Brexit ideologues” from damaging the country by pulling out of the single market without proper scrutiny.

Sensing that the government could be defeated in the House of Commons in a debate on Brexit earlier this month, Theresa May back-pedalled and accepted the need to have “full and transparent” parliamentary scrutiny before triggering Brexit. She also accepted a Labour motion calling for MPs to have more say over the strategy for leaving the EU before Article 50 is triggered. The concession did not give Parliament a formal vote on Article 50 or on any subsequent Brexit deal although the need for ratification appears to have been conceded. However, it does suggest that Parliament’s agreement will be needed on Britain’s negotiating position before Article 50 is invoked. May’s overall majority in the House of Commons is 16. It was reckoned that at the time of the referendum that 185 Conservative MPs favoured Britain remaining in the EU and 129 wanted Britain to leave. This means she has a precarious majority as she faces opposition from the ideological ‘impossibilists’ in her own party - for whom anything less than a hard Brexit will be seen as a betrayal - as well as from the other parties opposed to Brexit.

The Position of Scotland and N.Ireland
Even more concerning is the potential threat of Brexit to the survival of the United Kingdom itself. Scotland voted 62% to 38% to remain in the EU. Its First Minister, Nicola Sturgeon told the Scottish National Party (SNP) conference: “There are many 'no' voters now looking at the Brexit vote with real dismay and wondering if independence might be the best option for Scotland after all.” She believed that it was in Scotland’s interest to remain within the single market and announced that Scotland would increase its presence on the continent through trade missions, including a permanent representation in Berlin.

Northern Ireland voted 55.8% to 44.2% to remain within Europe. Brexit will have a “devastating” impact on Ireland, Northern Ireland’s Deputy First Minister Martin McGuiness has warned. He has called for special EU status for Northern Ireland, amid concerns over its relationship with the Republic of Ireland following withdrawal from the EU. In an interview with "The Guardian" newspaper, Mr McGuinness said: “As things stand at the moment we’re going to suffer, big time. Theresa May says ‘Brexit means Brexit’, but so far as we are concerned Brexit means a disaster for the people of Ireland.” He added: “We were all working on the basis that the maintenance of EU membership was a continuing part of the Good Friday Agreement. The fatal decision to hold the referendum was made without any consideration whatsoever on its impact on the island of Ireland.” The Irish government too is concerned about the future of its relationship with the UK, its chief export partner. If the UK insists on controlling immigration from the EU after Brexit, border controls would affect trade and the movement of people between Northern Ireland and the Republic. The Irish Minister for Foreign Affairs, Charlie Flanagan, has warned that the possible reintroduction of a border between Northern Ireland and the Republic was a “matter of grave concern” to his government. The destabilising effects – political, constitutional and economic - would be grave indeed.

Triggering Article Fifty
Meanwhile the full legal hearing on whether the government or Parliament has the power to trigger Article 50 was completed in the High Court in London on October 18th. A similar claim has been brought in the High Court in Belfast in which it was argued that the Good Friday peace agreement of 1998 precludes Brexit being imposed in Northern Ireland. The Welsh and Scottish governments have been watching these developments with interest and could initiate legal action themselves. Judgment is awaited in both cases, which are likely to be appealed to the Supreme Court in London for a hearing in early December. If the case against the government succeeds, responsibility for triggering Brexit will rest with MPs. How those who wanted Britain to remain in the EU might vote is anybody’s guess. Do they go along with the referendum result, the wishes of their constituents or their own convictions? The referendum has placed them in a difficult and unenviable position.

The mixed signals for the UK economy since the referendum result have fuelled the political debate. It is ironic that Britain joined the EU in 1973 because economically it was the ‘sick man of Europe’. Its improved economic performance since it became a member of the EU does not prove that its membership was the cause, but it would be difficult to prove that its progress was retarded by joining the EU. Warwick University economic historian Nick Crafts, in a study on whether Britain’s membership of the EU has made much difference to its economic growth, concluded: “Joining the EU had a positive on the level of GDP in the UK. A reasonable estimate is that the impact was in excess of 8% and that this was several times the annual membership fee which the UK has had to pay through budgetary transfers and the costs of unwanted regulation”.

It is worth reminding ourselves, amidst the turmoil, that Britain is turning its back on a single market which allows free movement of goods, capital, services and people between member states. It has population of more than 507 million and according to the International Monetary Fund, the economy generates a GDP of around €14.303 trillion. If it were a single state it would have the largest economy in the world. It is hardly surprising that withdrawal from such a trading bloc does not inspire confidence in the financial markets. Fearing a hard Brexit, the markets have seen the pound lose a fifth of its value since the Brexit vote and it is at its lowest level against the dollar since the mid-1980s. Hitherto, the economy has confounded analysts’ gloomy expectations, with consumer spending strong, unemployment low and the housing market holding steady. The Bank of England cushioned the blow after the referendum vote by reducing interest rates but the Paris-based Organisation for Economic Cooperation and Development (OECD) said it still believes the UK will suffer a sharp slowdown in growth next year amid continuing uncertainty.

The falling pound will push up prices for the consumer, according to the think tank the EY Item Club. It predicts inflation will climb by 2.6% next year but will ease back to 1.8% in 2018. The growth in consumer spending will slow from an expected 2.5% this year to 0.5% in 2017 and 0.9% in 2018. The uncertainty about Britain’s future relationship with the EU will affect business confidence and reduce business investment by 1.5% this year and more than 2% in 2017, according to the report. It states that the UK economy is expected to expand by 1.9 per cent this year, slowing to 0.8 per cent in 2017 before recovering slightly to 1.4 per cent in 2018. Higher prices in the shops will have an impact on living standards and if profit margins are squeezed by the falling pound, wages will be tightly controlled. As always, those on lowest incomes will be worst affected – especially when government ‘reforms’ of welfare benefits are also considered. It would be a tragic irony if the ‘left behind’ in the economy, who voted for leave to register their discontent, were left behind still further.

The downturn in the economy will also affect government revenues. Treasury coffers may take a £66bn annual hit if Britain goes for a hard Brexit, cabinet ministers have been warned. Leaked documents from the Treasury suggest that leaving the single market and switching to World Trade Organisation (WTO) rules would cause GDP to fall by up to 9.5% compared with staying in the EU. “The Treasury estimates that UK GDP would be between 5.4% and 9.5% of GDP lower after 15 years if we left the EU with no successor arrangement, with a central estimate of 7.5%”. The net impact on public sector receipts would be a loss of between £38bn and £66bn per year after 15 years because of the smaller size of the economy. This has outraged the Brexiteers but, whatever the precise accuracy of the figures, it highlights the dangers ahead. The former Conservative minister and remainer Anna Soubry MP said: “The horrific damage of a hard Brexit is clear. Less tax revenue means less to invest in schools and hospitals, lower trade and investment means businesses and jobs at risk”.

That isn’t all. Britain is facing a 'divorce' bill from the EU for €20bn, according to a Financial Times analysis that shows the bloc’s shared budget is emerging as one of the biggest political obstacles to a Brexit deal. The Financial Times states: “More than €300bn of shared payment liabilities will need to be settled in the divorce reckoning, according to EU accounts. It is a legacy of joint financial obligations stretching back decades — from pension pledges and multi-annual contracts to commitments to fund infrastructure projects — that Brussels will insist the UK must honour”. The amount of money involved, according to the FT, “could poison the politics of the break-up and derail a Brexit transition and trade deal, according to several senior European figures involved in the process”.

Immigration and “taking back control of our borders” became a central issue during the referendum campaign. Under EU law freedom of movement within member states is a fundamental principle. Britain cannot in general prevent anyone from another EU member state coming to live in the country. Britons have an equivalent right to live and work anywhere in the EU and 1,260,000 have done so. Britain has always had complete control over the admission of migrants from outside the EU.

Immigration is often blamed for falling wages, the housing shortage and rising rents, and for the strains put on the health service and education. It may create some problems in some areas e.g. by undercutting pay rates and putting pressure on housing. But immigrants also fill many skill gaps in the labour market and do menial jobs that the indigenous workforce cannot, or will not do. Although they are net contributors to UK public finances, it is easier to point the finger at immigrants themselves and the EU, rather than the policy failures of successive British governments. No one at present knows what Brexit will do to the 54,000 EU migrants now working as doctors, nurses and ancillaries in the NHS and nearly 80,000 working in social care. Who will replace skilled workers like builders and plumbers and the unskilled workers who do jobs that the local British won’t take? And what will happen to the Britons living in EU member states? No one knows. The NHS, public transport, shops, hotels and restaurants would all be badly affected. Business leaders have warned that restricting immigration from the EU would hurt British companies and could drive up prices.

The Confederation of British Industry, the British Chambers of Commerce and the Institute of Directors have told The Independent newspaper that proposals to prevent low-skilled migrants entering the UK could cause problems for companies who rely on their labour and raise prices for consumers. It could also result in more migrants from non-EU countries filling the gaps in the labour market. The uncertainty makes planning for the future very difficult for businesses.

In the light of such realities, are the public as inflexibly opposed to immigration as is often suggested? It seems not. A recent ComRes poll for The Independent newspaper indicates that a good trade deal with the EU is more important to voters than cutting immigration, when deciding the terms of Brexit. 49% of those questioned, said “the Government should prioritise getting favourable trade deals with EU countries when negotiating the UK’s exit from the EU”, whereas only 39% said the Government should “prioritise reducing immigration”.

There is evidence to suggest that fear of immigration from the EU – rather than immigration itself –led to the victory of the leave campaign in the referendum. An Ipsos Mori Poll conducted in early June show that we massively overestimate how many EU-born people now live in the UK. On average we think EU citizens make up 15% of the total UK population (around 10.5 million people). In fact it is 5% (around 3.5 million people). Those who intended to vote to leave the EU thought that 20% of the UK population are EU immigrants, compared with the average guess of 10% among those who intended to vote “remain”. In fact, we underestimate the proportion of all immigrants who were born in the EU. The average person guesses that 25% of all immigrants were born in another EU member state. In fact 37% of all immigrants are from the EU. This suggests that any concerns there are about immigration are general and are not specific to the number arriving from EU countries.

It is a curious fact that those who are most nervous about immigration live furthest from it. The EU referendum results show that highest levels of remain voters lived in areas of highest immigration, while some of the strongest leave areas have had the fewest recent new immigrants. According to Alan Travis, writing in the Guardian newspaper the day after the referendum: “London, which absorbed 133,000 of the 330,000 net arrivals in 2015, voted the most strongly for remain. Manchester also voted for remain – and at 13,554 had nearly doubled the level of net migration seen in Birmingham, which voted leave”. At the local authority level inside the large conurbations, this voting pattern becomes even clearer: “In Conservative Wandsworth in London, net migration was 6,295 and 75% of voters backed remain, while in Labour Hartlepool there was a net inflow of 113 and 69% of people voted to leave”.

Since the referendum, some have concluded that the rhetoric of Brexit gives them a licence for overt displays of racism. Racist or religious abuse incidents recorded by police in England and Wales jumped 41% in the month after the UK voted to quit the EU, figures show. According to the Home Office, there were 3,886 such crimes logged in July 2015, rising to 5,468 in July this year. The increase is doubtless due the public’s greater willingness to report these offences and to better police methods for recording hate crimes. Nevertheless there is strong anecdotal evidence that there was also a genuine rise in crimes targeted at ethnic minorities and foreign nationals.

The government is eager to show it will respond to the voters’ supposed concerns about immigration. If it proposes severe restrictions on immigration from the EU a post-Brexit deal will be virtually impossible because it strikes at the fundamental principle of free movement of goods, services, labour and capital. As Martin Schulz, president of the European Parliament put it: "I refuse to imagine a Europe where lorries and hedge funds are free to cross borders but citizens are not." It will also put at risk the status of UK citizens living and working in EU countries and inflict considerable economic damage on the UK economy itself.

In the eyes of those favouring a ‘hard’ Brexit, such short term economic hardship is a small price to pay for the bright, long term future of Britain, liberated from the debilitating shackles of the EU and free to sign exciting new trade deals with the rest of the world. The three Brexiteers have yet to inform the rest of us of the location of these new markets of whose existence we were hitherto unaware. But as the pound falls and economic forecasts for the UK become gloomier, ‘soft’ Brexiteers are joining the remainers in fearing that without a favourable trade agreement with the EU, Britain’s economic future looks bleak indeed.

Britain’s Prime Minister, Theresa May, has just been to her first EU summit with fellow European leaders. It was a gloomy occasion by all accounts. The EU has far bigger problems to contend with than Brexit – the migration crisis, the Syrian civil war and relations with Russia. Britain, with its uncertain economic future, is already diminished by its intended departure and, in the eyes of the world, looks set to be more so as it grumbles, fumbles and stumbles towards the EU exit.

Peter Crisell