Act 1 Part 2: What if? Post BREXIT and EU wildcards

The BREXIT campaign was marked on both sides by a complete and utter absence of a future vision. The opportunities to discuss the UK’s true place in the world were never fully explored. The ‘what if’ question or ‘what happens next,’ scenarios are basic tenets of corporate and indeed government planning. They also seem to have been singularly excluded from anybody’s thinking in the British body politic in the run up to the referendum vote. The protagonists on both sides rightly shoulder significant blame and whilst this shouldn’t be mitigated, extricating the UK or some variant thereof from an already complex and far from homogenous 27 nation institution is the stuff of planning nightmares. In many ways, BREXIT was the wildcard, but what happens next will have far more significance than the vote itself.

Perhaps the most obvious short term impact from the vote is for a protracted period of political instability and infighting in the UK, of volatile markets, and regardless of the way in which they voted, a disappointed and angry public. The current situation of no negotiations without triggering Article 50 look like an invitation for years of stasis, but it needn’t be this way.

Here we look at some of the wildcard possibilities emerging in the post BREXIT world.

EEA membership (the Norway model): Although this option minimises the mid-to longer term economic fallout and is likely the preferred option for many pragmatic politicians, it is unlikely to satisfy the public given the notion that the vote was effectively decided on a question different to the one that was asked. Immigration controls would not in this event be any stricter, potentially leading to a further schism between the public and its politicians. There are signs that the genie is out of the bottle with regards to legitimised racism and xenophobia – this option would not help assuage this is any way. No matter how people voted, nobody voted for a combination of a) an imposition of slightly higher costs of single market access, b) the surrender of any say in rules that you have to submit to and c) continued immigration levels.

The end of the Union: With Scotland voting ‘remain’ logic has it that a break-up of the 300-year-old plus union is more likely since independence would allow for Scotland’s people to stay in the EU. Complicating matters are political circumstances in some EU countries regarding restive regional secession – such as Catalonia from Spain that would block any attempt for a trailblazing Scotland to secede and (re)join the EU. Since any one member can veto a new country joining the EU, this path would appear non-viable. In such an event, Scottish attempts to block BREXIT would strengthen – perhaps by forcing a Parliamentary vote (since the public vote was not legally binding) that would ostensibly indicate a preference to remain. Protracted legal wrangling would almost certainly ensue – and if a skilful politician of unity does not emerge, maybe there would be impetus for English nationalists to seek divorce from Scotland in a new referendum on the state of the UK.

Referendum 2.0: The EU certainly as a history of re-running referenda in which the ‘correct’ result was not attained. Such a decision here would almost certainly render a complete redrawing of the UK political scene. The semantics of openly defying a public referendum and promise of a Prime Minister to act upon it, no matter how badly constructed the original referendum and debate was, would possibly cement a very real divide in UK society. The possibility of newly formed political parties impacting the scene would be significant in this scenario. Future referenda that are cognizant of both the UKs democratic system (as a Parliamentary democracy) and the concerns of its public cannot be dismissed but a like-for-like replay is as close to inconceivable as is possible.

A vengeful EU: Given the urgent need to prevent further disintegration by setting an example, the EU could become hostile to any form of negotiations – effectively forcing a somewhat reluctant UK to enact Article 50. This could erode any remaining good will and render it more difficult to salvage mutually beneficial economic ties. The UK economy, whilst slowly orientating towards increased ties in the emerging world or Commonwealth, would suffer a sharp and perhaps lasting recession as the source of over half of its foreign investment is effectively shut off. It is also possible that Article 50 will be postponed indefinitely by the UK government – perhaps encouraging the EU to explore measures that legally exclude the UK from aspects of the European framework, including services. The disorderly divorce that this scenario represents would almost certainly handicap the British legal system and consume its political system for years, as little time would be given in preparation for sorting out the swathes of British vs. European law issues. This would in turn maximise instability and represent a worst case scenario for global business.

A reformist EU: None of the above scenarios would achieve two goals that Britain must currently try to satisfy – unify a divided society and preserve access to the single market, which even leading Brexit advocates wish to retain. In hindsight, had Mr. Cameron been given an emergency brake on immigration of some sort at the EU summit a few months back, the whole scenario of Brexit could have been avoided. This opportunity was plainly missed and the EU is unlikely to radically one of the four pillars on which it stands – namely the freedom of movement. Whilst the EU has the ability to act with considerable speed and assertiveness, as any Greek may attest to, the possibility of populist risings in France and the Netherlands that would surely seal the fate of the EU, demands a new agility. If the EU can demonstrate flexibility and a renewed sense of democratic accountability in the face of this crisis, then perhaps the groundwork is laid for a Parliamentary vote to end the current impasse and reign in the worst of the economic and social fallout.

The end result: Current indications seem to suggest EU pressure for a quick BREXIT yet a number of drivers explored above are set to complicate this. If nothing else, compromise would seem a very European political skill although this calculus may change in the face of an EU that is fighting for its very existence. Even so in this scenario, BREXIT does not happen since the possibility of others following the UK’s lead is deemed too high a risk. This does of course, require a public figure with requisite skill and widespread public support on the UK side to navigate a tightrope style deal and an EU realisation that reform is needed urgently. Both of which are far from guaranteed. However, the wildcard has already happened – nothing that follows should be considered much of a surprise. The UK public seemingly voted on a different question to the one that they were asked; perhaps they will receive a different outcome to the one borne out in the results

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