Posted in: Europe

Breaking Down Brexit

By | October 11, 2016

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Protecting the British people’s right to consume oddly-shaped bananas seems like a ridiculous undertaking.  Yet in the build up to the United Kingdom’s departure from the European Union, many Brits were up in arms over a rumor that bendy bananas were to be banned by an overzealous E.U. governing body.   While bananas may seem a trivial subject of outrage—the E.U. does not, in fact, consider bendy bananas to be a contraband substance—this type of rumor highlights the sort of public distrust that led to Brexit.  Although the U.K. voted to join the European Union in 1975, the modern E.U. as we know it is a relatively new institution, created by the Maastricht Treaty of 1992.  This became a point of contention for British voters, who were never able to self-determine their country’s role in the Union.  As time went on, resentment of the European Union’s expanding influence on British life grew, spurred on by the European debt crisis and an uptick in anti-immigrant rhetoric.  At its core, Brexit is the culmination of the British people’s desire to keep Britain British. This involves aversion to any external influences, be they from immigrants or the European Union’s governing body.

Yet Brexit is also the result of strategic political maneuvering.  Then-Prime Minister David Cameron, head of the Conservative Party (commonly referred to as the Tories), found his party under threat by the minority  U.K. Independence Party (UKIP), led by Nigel Farage.  In Britain, like in the United States, a third party’s power comes not from its ability to win elections but to siphon away votes, and thus alter the final vote tally.  UKIP had managed to expand its support to 15% of the electorate, taking a large plurality of its new supporters from voters who would otherwise have supported the Tories.  This potential loss in support would have been enough to earn the Tories’ rival party, the Labour Party, a victory.  Cameron thus chose to promise a referendum vote on European Union membership in order to retain Tory control of Parliament in the 2015 general election.

In more simplistic terms, this indicates that the majority of Brits were not fixated on the idea of Brexit when the referendum was first introduced.  Instead, a promised referendum vote was a minority issue that became politically strategic for Cameron—necessary for him to keep his job, but not pivotal for the majority of British citizens.  A similar pattern may soon emerge across Europe. Minority anti-E.U. parties are typically incapable of winning elections: even Marine Le Pen’s famed National Front party typically fails to secure any major French political offices. However, because of their propensity to skew election results, Europe’s protest parties are generally able to further their agenda despite their relatively low membership numbers.

 

The Perks of Being British

It’s important to note that Britain’s circumstances are markedly different from those of other European nations. These circumstances allowed it to risk an exit from the E.U. where others would not.  Britain’s wealth allows it to depart the E.U. while facing comparatively minor consequences.  A parallel can be drawn with the rise of Trump across the pond; America’s status as a global superpower enables voters to operate without concern for the impact of their behavior on the world economy.  Regardless of whether Trump wins office, it is unlikely that America’s huge wealth and influence will soon dissipate.  Thus in both the U.K. and the U.S., voters can rebel against political norms and reject party leadership while suffering relatively few repercussions.

Indeed, the evidence shows that in purely economic terms, Brexit has not been the devastating bombshell pundits were anticipating.  Markets have held relatively steady, and the F.T.S.E. 100 & 250 both indicated a rebound after the initial shock of the vote.  The pound’s value has declined, but most experts agree that it was overvalued initially, and a lower exchange rate will  make British exports more competitive.  Interest rates have remained the same, and while the economy is contracting slightly, we have not seen the overwhelming chaos promised by the media.  While Brexit may very well have devastating long term consequences, it’s too soon to contextualize or fully understand its impacts, which may bolster the arguments of anti-E.U. parties across Europe.

 

An Anticlimax – For Now

Brexit’s impact has also been relatively minimal on the U.S. election, despite fears among the Democratic Party that American voters would feel inspired by the Brits’ show of anti-establishment sentiment.  Pundits, in their breathless following of every intricacy of Brexit, failed to understand that the average American does not base their decisions off of those made by another country’s citizens, even if that country is one of our closest allies.

Perhaps the greatest impact of Brexit has  simply been on how it has restructured domestic politics in Britain.  Cameron, who was strongly in favor of “Bremain”, resigned almost immediately afterwards, propelling fellow Tory Theresa May into the Prime Ministership—the first woman to hold the office since Margaret Thatcher.  Meanwhile, Scotland, which mainly desires to stay within the E.U., has heightened its demands for independence.

In other European nations, notably France and Austria, political leaders have doubled down on pushes to depart from the E.U.  Marine Le Pen has been a strong advocate for this approach, calling Brexitthe beginning of the end of the European Union”.  Yet her popularity does not extend far enough to allow her to take power and thus force a referendum within France. Britain’s circumstances were unusual and it would seem unlikely that any other country would follow the U.K.’s lead.  The majority— however slim—of most Eurozone countries’ populations and elected officials are in favor of the E.U.

Right now, the joint fates of the European Union and the United Kingdom hang in the balance, and much will depend on the results of upcoming negotiations between the two.  This leaves the British economy in a state of, if not crisis, at least uncertainty.  Questions over whether E.U. regulations will stay intact in a post-E.U. business market has frightened away many foreign investors for the time being, who are willing to watch and wait until an agreement is brokered.  Thus, we don’t know what “Brexit” will really look like yet; if anything, this vote has shown us just how truly unpredictable the future of the European Union is.

 

Image Source: David Kellam/Flikr

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