Could Brexit be the end of the world as we know? Or is it less dramatic?

Read few comments. On 23rd June 2016 the UK will vote either to remain in or leave the European Union.

Erik Jones, Professor of European Studies and International Political Economy, Director of European and Eurasian Studies, Paul H. Nitze School of Advanced International Studies (SAIS), Johns Hopkins University

Brexit will not be the end of the world as we know it, but it will be a major mistake.

The impact on the UK will be to constrain and weaken parliament. The constraint comes from the substitution of popular democracy for representative democracy. The ‘people’ will have spoken and although the referendum is only consultative, it will hard for parliament to ignore. Since UK membership rests on acts of parliament, it will require an act of parliament for the UK to leave as well. Currently, there is no majority in parliament for exit. So either the parliament will have to dissolve itself or it will have to find a workable majority that goes against the expressed wishes of a majority of its members. That is a powerful constraint.

Assuming that the parliament finally votes to leave (either after much soul-searching or after agreeing to hold new elections), then it will have to make policy without the benefit of the kind of close cooperation that the EU provides. Let me give you an illustration. The OECD is currently leading global efforts to combat cross-border tax avoidance by large multinational companies by curbing ‘base erosion and profit shifting’ (BEPS). This political effort is supported by the G20. The challenge is to implement this in law in a way that avoids creating new distortions. That is challenging if you jump straight from the global to the national level. It is easier if you coordinate how this is going to be implemented across Europe. That is what the European Parliament did on 8 June and the Ecofin Council did on 17 June (with final agreement today). Now the trick is to harmonize the texts from the EP and the Council and then to implement them in national law. The key to remember is that the standards are global and the EU helps to translate those standards into terms that can be implemented at the national level with minimal cross-country distortions. Without EU membership, the British parliament would still need to live up to the global standards. In other words, the bulk of the legislation will be ‘written’ abroad under any circumstance. But, after Brexit, the British parliament and the British government would have less say in how to do so without creating unnecessary cross-border distortions at the European level. This makes the British parliament weaker and not stronger. And, of course, how you tax multinational corporations is a very important political issue.

At the EU level, Brexit will create economic turbulence in the short term, political turbulence in the medium term, and institutional turbulence in the longer term. We will have to deal with sudden movements in currencies, bond, and equity prices; then we will have a host of copycat protest movements seeking to push referenda in other countries; and then we will have to figure out how to adapt EU institutions to make them more resilient or less binding. None of that will be easy; all of it will distract attention from issues like long-term unemployment, population aging, demographic change, migration, productivity growth, and the conflicts raging, simmering, or potentially emerging on Europe’s borders.

The timing could not be worse. We face a host of national elections in the United States and Europe that would be distracting under the best of circumstances and the circumstances are much less than ideal. Brexit will not be the end of the world as we know it. The world will survive. But it will not be the world that we might have wished for and we will have lost some of our ability to work together in order to make it better.

Kristian SteinnesProfessor, Department of Historical Studies, Norwegian University of Science and Technology

The end of the world as we know it? I do not think so, but a Brexit has the potential to change the path of history substantially.

European integration has deepened over the years, and European societies have developed common economic and political structures. Even cultural bonds have evolved over the years. Such institutionalised cooperation, which has taken place between member states over a long period of time, will not collapse over night. Indeed, it has been intentional. If serious challenges eventually should surface the institutional set-up has deliberately been created in order to withstand such challenges.

Yet, of course, this is not an antidote for systemic collapse. At a time when the EU is in the middle of the Euro and immigration crises, a possible Brexit takes place at a critical juncture. Seen in that perspective, it has the potential to strengthen nationalistic and patriotic forces which might have long-term consequences for the EU, and even European democracy.

As such, a Brexit will demonstrate if and to what extent European integration has developed structures capable of dealing with serious crises. My take on this is that such structures have developed and exists, and that they have the capacity to prevent a systemic meltdown in the short term, but also in the long run. Of course, it is hard to tell how strong these institutional, political, economic and cultural bonds are.

Besides, athough Britain is important to the EU, and is its strongest military power, it has substantial opt-outs – the Euro and Schengen be the most significant. And also opt-out from ‘ever closer union’, which might in some respect mitigate a Brexit?

Anna Visvizi, Head of Research, Institute of East-Central Europe (IESW), Assistant Professor, DEREE-The American College of Greece

I don’t think that Brexit is a viable option, even if the outcome of the referendum will be in favour of Brexit. Three factors weigh in on that point, i.e.

(i) the turnout, i.e. will it be high enough to ensure the validity of the referendum?
(ii) the outcome of negotiations (pursued in line with provisions of art. 50 TEU) between the UK and the EU, and most importantly the approval of the European Parliament, i.e. will the EP approve the outcome of the negotiations?
(iii) the temporal dimension of this process, i.e. how fast will the agreement be reached?

The temporal dimension of possible “yes” in favour of Brexit is very important for two reasons:

(1) Art. 50 TEU provides only for procedural requirements regarding possible withdrawal of a member-state; it stipulates that a withdrawal agreement needs to be negotiated, that the provisions of that agreement have to define the withdrawing country’s future relationship with the Union. What is important here is that “if no agreement is concluded within two years, that state’s membership ends automatically, unless the European Council and the Member State concerned decide jointly to extend this period”.
(2) Two years is a long period of time, long enough to produce arguments and convince the UK’s public that the role of the UK in the EU is “to lead and not to leave”, to use G.Brown’s words. Two years is also long enough to find an honourable and legitimate way of re-working the promise of a referendum and withdraw from it without a prohibitive political cost for the future.
A possible Brexit wouldn’t be the end of the world as we know it. Nevertheless, it would be a harsh wake-up call to a reality that existed and yet we didn’t want to admit that we were part of it.

The UK’s departure from the EU could follow the Norwegian, Swiss or the EFTA model. Economic losses both for the UK and EU business partners of the UK are difficult to estimate; many of them will be nevertheless offset in medium- to long-run. The really challenging period would be that right after the referendum, because markets would react hysterically to a possible ‘yes’ for Brexit and negative implications of market hysteria would spread well beyond the UK and the EU.
The problem of a potential Brexit lies elsewhere, i.e. in the realm of the political. A possible “Brexit”, perhaps more so than the hotly debated Grexit, would be a huge blow to the very idea of Europe and the spirit of liberty and fraternity that weaves in-between of what we tend to associate with the idea of Europe. The UK outside the EU would be a very sad and lasting reminder that we have failed to keep those ideas alive.

Frank HägeLecturer in Politics, Department of Politics and Public Administration, University of Limerick

I think for most of the rest of Europe, the economic consequences will not be terribly dramatic. The UK is a very big market, but the EU has grown in recent years, so losing the UK is not a disastrous blow to the single market. But of course, some countries and some industries within countries will be more negatively affected by a Brexit than others, depending on how important the UK is as a trading partner to them. In any event, the economic consequences will depend largely on the arrangements that will be put in place if the UK leaves the EU. If the UK manages to negotiate full access to the single market, they might actually be quite minor.

For the rest of Europe, the political consequences of Brexit might actually be much more troubling. In all likelihood, a popular vote for leaving the EU in the UK would embolden Eurosceptic parties in other countries to call for a similar referendum. And if such propositions gathered support – even if that was not sufficient in itself to actually call a referendum – it would put pressure on national governments to  pursue more nationalistic positions at the EU level. To make sure that a possible Brexit does not play into the hands of Eurosceptic parties in their own countries, governments have an incentive to make leaving the EU as painful as possible for the country that is leaving. Thus, domestic political imperatives will counter-act the desire to keep the economic consequences as limited as possible. The governments of most other countries will be keen to show that there is no free lunch – in the form of access to the single market – without signing up to the EU’s rule book on how to ensure a level playing field in that market (with which comes all the bureaucracy and encroachment of sovereignty that the leave campaign criticises).

The real losers will be the people of Britain, who either have to bear the economic costs of being excluded from the single market, or comply with the EU’s rules (including free movement of persons) without having any say in their adoption to ensure access to this market (as e.g. Norway currently does).

Hylke DijkstraAssistant Professor, Department of Political Science, Maastricht University

My bet is that things will remain largely as usual following a Brexit. If the UK wants to keep access to the EU internal market, it will have to adopt EU product standards (many Chinese firms do so as well; that’s the strength of the EU economy). Furthermore, if it wants to avoid EU tariffs under WTO rules, it would need to join a customs union with the EU. This implies automatically adopting EU regulations, paying into the EU budget, and accepting the freedoms of goods, services, finance and workers. In foreign policy, I wouldn’t be surprised if they find a pragmatic formula where the UK can easily align itself with EU positions. The UK might gain some additional opt-outs and budgetary reductions as past of a post-Brexit negotiation with the EU. Yet on the whole, this does not seem a good deal for Britain. And it will disillusion those who voted for Brexit.

While I see a lot of continuity, there are two problems. First, in the short-term, it is unclear how everyone is going to react. At worst, other EU member states will start to organise their own referendums. To avoid this, the EU might be tempted to take a harsh negotiation position on the UK, which further complicates its exit. The EU economy is also likely to take a hit. It is therefore important that our leaders indicate very clearly, already during their European Council on 28-29 June, what the course of action will be. They should reassure the markets that they know what they are doing. Second, the British exit will likely take at least 5-7 years. This will keep the EU occupied with the UK, while there are so many other challenges that need to be addressed. Given that I expect that few things will actually change in the case of a Brexit, this seems a colossal waste of time.

Vihar GeorgievAssociate Professor, European Studies Department, Sofia University St. Kliment Ohridski

In a way, it is the end of the world as we know it. UK has been an important counterbalance to the Franco-German motor of European integration. With the UK gone, the European Union will probably become more and more German-centric. Additionally, there may be a push for a two-speed Europe where a core of Eurozone countries will integrate further, while a periphery (including most of Eastern Europe) will remain more loosely integrated. The potential Brexit will further strengthen populist far-right and far-left Euroskeptic movements around the continent.

That being said, the world will go on. It will be a gloomier world, especially for the UK itself. But from my perspective the most important thing for the EU anyway will be to address the many concerns European citizens have – from the economy to migration. If that is done properly, the Brexit will have limited impact on the future of Europe.

Dimitrios Triantaphyllou, Associate Professor, Chair, Department of International Relations, Director, Center for International and European Studies (CIES), Kadir Has University

BREXIT is a threat because it has many existentialist components to it in particular with regard to the cohesion of the European Union as pressures may build for other countries that may have dissatisfied public opinion regarding the EU to take the same route. It is a threat because it would basically give rise to arguments that the EU contrary to what it professes, is unwilling to integrate all states on an equal footing – one need only go back to the repeated attempts it took the UK to finally be able to join the EU in 1973. It is a threat because it would further tear apart the fabric of the process of European Integration – the longest and most successful peace project in history – and could eventually lead to a frayed, embattled and further divided Europe that would not be able to meet its security challenges and most importantly protect the civil liberties of its citizens and the democracy of its member states. In other words, it is a threat because it would give rise to greater exceptionalism both for Britain and for the remaining EU member states that may undo the peace project it represents.

 

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