Prof. Carol Wise brexit.png What is Brexit? (short for “Britain Exit”) is the June 23, 2016 referendum where British citizens voted whether or not to exit the European Union The Roots of Brexit (Jensen & Snaith) •Contrary to standing theories, it was political party realignments, NOT elite bargaining between vests interests and the government that gave rise to Brexit •It started with “back benchers” in the Conservative party, scapegoating the EU for UK’s problems, that were challenging David Cameron’s leadership •To appease these Eurosceptic agitators, Cameron offered to hold referendum on Brexit by 2017 •Conservatives also trying to beat back the xenophobic UKIP dissidents •“…referendum decision principally driven by the internal politics of the Conservative Party, not elite intergovernmental bargaining • Racial argument (Virdee & McGeever) •Nostalgia over the “English Empire” & imperial longing •Drew on post 9/11 anti-Muslim sentiment •Retreat from globalization (good luck with that!) •Cross-class coalition of middle aged and old white men and women favored Brexit most •Racism implicitly endorsed by mainstream parties across the spectrum •Eruption of considerable racial strife following the June 2016 vote • • Conservative Party Complaints about EU •Not enough focus on economic competitiveness. Regulatory burdens, etc. •Eurozone states unilaterally deciding on policies that influence the European Single Market (ESM) •UK Brexiters wanted to broker a different arrangement (Norway, Iceland, and Liechtenstein belong to ESM, but not EU or Eurozone; Turkey belongs to EU Customs Union; Switzerland highly integrated with the EU market but belongs to nothing). However, none of these small countries occupy the huge economic space that the UK occupies in the EU •Wanted a reduction in migrant workers’ rights to social benefits • Results (Quantitative) Making Sense of ‘Brexit’ in 4 Charts The New York Times.png Taub, Amanda. 2016. "Making Sense Of ‘Brexit’ In 4 Charts". Nytimes.com. http://www.nytimes.com/2016/06/24/world/europe/making-sense-of-brexit-in-4-charts.html. Results (Geographic) https://upload.wikimedia.org/wikipedia/commons/thumb/d/d5/United_Kingdom_EU_referendum_2016_area_re sults.svg/871px-United_Kingdom_EU_referendum_2016_area_results.svg.png Leave won by 51.9% to 48.1%. The referendum turnout was 71.8%, with more than 30 million people voting” (BBC) Referendum results also driven by…. Demographics: largely British Anglo voters Level of education: less schooling Age: older voters who felt left behind Poor economic conditions: relative deprivation---looking at all the prosperity around them but not included Immigration pressures (even by those not exposed to immigration): notion the “others” coming in and taking their jobs World markets respond drastically Financial Markets across the world decline sharply DJIA loses 610 points British Pound declines 10% against the US Dollar Many other currencies lose significant value Stock prices of European banks such as Credit Suisse and Barclays tank 062416-Brexit-Market-Reax.V2.jpg DOW.jpg 57ebd08ac361888d0f8b45f7.jpg Introduction Soft Brexit Hard Brexit Potential Outcomes The British pound crashes… Other Economic implications UK inflation up 1.7% since vote Economic costs have been realized at 2.1% of GDP as of June 2018 Reduced income by 1.3% (350 million pounds/week) Short term Uncertainty in financial markets, although banks remain optimistic Reduction in consumer confidence Long term Uncertainty among economists without definite separation agreement New barriers to trade are imminent Article 50 of Lisbon Treaty (2007) Lays forth process of seceding Consists of 5 parts Article 50(1) - Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements. On 29 March, 2017 Theresa May officially wrote a letter to Donald Tusk initiating Article 50(2) and, subsequently, the two year grace-period to iron out the exit details Arguments FOR Brexit Reduces Britain’s fiscal pressures Controls immigration More jobs available Diversifies trade Lower prices Arguments AGAINST Brexit Bad for the economy Less secure nation Lower household income Higher uncertainty Introduction Soft Brexit Hard Brexit Potential Outcomes Leave vs Remain: 5 Main Conflicts Moving forward: Options ’Hard’ vs ‘Soft’ separation / exit strategy •Hard – leaving without a deal, nullifying any existing agreements •Soft – Deal to retain some trade and market access privileges some; free movement for EU members No Middle Ground Post-BREXIT UK? Alternative Models (BBC) Introduction Soft Brexit Hard Brexit Potential Outcomes Potential outcomes •European Council president Donald Tusk: “good deal, no deal, or no Brexit” •Implications of recent election •The Dream Scenario •Most realistic outcomes •No deal •Divorce-only agreements •Limited-tariff free trade deal • Why it happened 1.Economics 2.Sovereignty 3.Immigration UK and EU 1.Economics EU membership is expensive (according to UK) -In 2015, the UK paid £13 billion to the EU budget, and only received back about £4.5 billion -EU rules cost every part of the economy Mention graph 2. Trade negotiations back in UK hands -External relations, including trade, conducted partly or wholly by the EU -ie. tariffs -EU extremely slow at negotiating trade deals -It has failed so far to strike deals with the US, Japan, India, and ASEAN -UK would be faster at striking trade deals on its own -could create 284,000 new jobs 3. The Euro is flawed -the Eurozone (the EU members who have adopted the euro as their official currency) is a political project rather than an economic one -without shared economic institutions, European economies are too big and diverse to thrive under a single currency -deeper fiscal and political integration is needed for the euro to work, but Britain is unlikely to approve of this -the argument: it would greatly reduce transaction costs to be on the Euro, but Britain does not want to give up its own monetary policy Sovereignty: EU laws > UK’s laws -European Communities Act of 1972 -National laws are overridden by EU rules Sovereignty: lack of EC accountability -European Commission (EU’s executive branch) is not accountable to British voters (or voters in any member state) -The 28 commissioners (one from each member state) are appointed every 5 years -EC members are bound by oath to represent general EU interests and not their home states’ interests Immigration 356F8E4500000578-0-image-a-34_1466328712120.jpg nb2uF.png qP3W1.png Evans, Geoffrey and Jonathan Mellon. 2015. "Immigration And Euroscepticism: The Rising Storm". The Guardian. https://www.theguardian.com/news/datablog/2015/dec/18/immigration-euroscepticism-rising-storm-eu-re ferendum. Recent rises in concern about immigration appear to be linked closely with trends in EU immigration and not with immigration from other sources: concern increases along with increasing EU immigration rates whereas levels of immigration from other sources are falling or flat. In itself, however, this aggregate relationship isn’t compelling evidence that individuals are linking their attitudes to immigration with those to the EU. 306 2016_becker_fetzer.pdf.png Becker, Sascha O. and Thiemo Fetzer. 2016. “Does Migration Cause Exteme Voting?”. CAGE Working Paper 306. http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/306-2016_beck er_fetzer.pdf 306 2016_becker_fetzer.pdf1.png 1.Employment Wage Housing Healthcare Ukip-Nigel-Farage-quit-MP-general-election-265214.jpg Microsoft Word BREXIT_Analysis_Migration 18_JVR_final_10may_HGDformatted.docx.png Microsoft Word BREXIT_Analysis_Migration 18_JVR_final_10may_HGDformatted.docx1.png Microsoft Word BREXIT_Analysis_Migration 18_JVR_final_10may_HGDformatted.docx2.png bulletin_105_st_article1.pdf.png bulletin_105_st_article1.pdf1.png bulletin_105_st_article1.pdf2.png Tilford, Simon. 2015. “Britain, immigration and Brexit”. CER Bulletin. https://www.cer.org.uk/sites/default/files/bulletin_105_st_article1.pdf Dhingra, Swati et al. 2015. “Brexit and the impact of immigration on the UK”. The Center for Economic Performance. http://cep.lse.ac.uk/pubs/download/brexit05.pdf It’s all about framing! Did voters know what they were really in for? farage-trump.jpg “The problem … was not ignorance; it was preconceived ideas.” Fear of immigration Cleverly utilized public preconceived ideas on immigrants and turned immigrants into scapegoat Not immigration but fear of immigration that drives the whole brexit thing Reversing Brexit? Article 50 (5) - If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49. Article 49 - Any European State which respects the values referred to in Article 2 and is committed to promoting them may apply to become a member of the Union. Petition calling for second referendum garnered 4 million votes but was rejected by the government A Theresa May BREXIT deal needs MP approval Parliament has rejected all deals thus far……. Laid forth nearly impossible criteria http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-european-union-and-comments/title-6-fi nal-provisions/137-article-50.html Politics UK Prime Minister David Cameron follows through with his promise to resign if the Leave campaign won Home Secretary Theresa May is elected by the Conservative Party and replaces Cameron Weakened status of Labour Party US President Elect Donald Trump praises the vote File:David Cameron at the 37th ... 483208412-real-estate-tycoon-donald-trump-flashes-the-thumbs-up.jpg.CROP_.promo-xlarge2.jpg Prime Minister of the United ... Current Climate Currently, 69% of Britons think BREXIT is going badly so far (YouGov) UK Appearing to be heading for a “hard exit” ... the-future-next-exit | by ... Introduction Soft Brexit Hard Brexit Potential Outcomes Hard Brexit at hand: What this means What Hard Brexit would look like: •Leaving without a deal in place •Focus is on giving UK full control of its border and ability to negotiate new trade deals •UK gives up full access to EU single market and customs union, no compromise on issues like free movement of people •Likely that the UK would initially fall back on WTO rules while negotiations occur Politics Japan and US rejecting trade deals wirh UK Scotland threatening to leave the UK Northern Ireland could vote to also leave the UK and join the Republic of Ireland UKMap.png gWA Business and Economics Major challenges for EU business - especially manufacturing Finance and services fleeing Lodon and going to EU Increased likelihood of recession in both EU and UK Forecasts from the Bank of England already project slower growth Growth will depend on future trade agreements, but no takers UploadsNewsArticle4844445main.jpg 2014-land-rover-rangerover-hse-suv-angular-front.png Useful links http://www.vox.com/2016/6/22/11992106/brexit-arguments http://blogs.ft.com/ftdata/category/brexit-2/ http://www.strongerin.co.uk/#ugK4pwYoqhy0ag00.97 http://www.voteleavetakecontrol.org/why_vote_leave.html#collapseOne http://www.cnn.com/2016/05/18/europe/eu-referendum-timeline/