Despite the UK’s referendum on 23 June, David Cameron has so far not decided to trigger Article 50 of the Lisbon Treaty, which outlines how a country can voluntarily leave the EU. Sebastian Koehler argues that this process should not be delayed any further given the uncertainty which is damaging the UK economy. He writes that while Britain remains an EU member state, the country is now effectively marginalised from EU decision-making and has little to gain from taking longer than need be to negotiate its exit.
The vote in favour of Brexit caused expected turmoil in the markets and in the political arena. With the dust settling, the focus needs to be on negotiations, not party politics. The political class owes at least that much for its collective failures. Postponing serious talks means losing precious time by prolonging the period of political uncertainty.
Political uncertainty damages investment both from foreign and domestic firms, which reduces economic growth. It will also cause job losses, as companies have already started to enact plans for parts of their operations to be moved to other EU countries. Quickly resolving uncertainty is therefore crucial for containing the damage to the economy. To make matters worse, rising unemployment and slower growth will put strains on public finances as tax revenue will go down while social spending will go up.
And this uncertainty also puts pressure on the exchange rate. The economy of the United Kingdom is highly dependent on imports of goods, which means inflation will increase as a consequence. The National Farmers Union have already warned that prices for food and clothing will rise as a sizeable share of such goods are imported. Buying British won’t help as in the short run it is impossible to increase agricultural production. Those who will be hurt the most are the most vulnerable. While some may argue they’ll just get what they asked for by voting for leave, this would have deeply problematic consequences. Internal divisions would be exacerbated further, potentially beyond repair. Quickly resolving uncertainty is therefore a necessity.
But there are political arguments, too. The political environment is dramatically changed. With the vote for Brexit, the UK has de facto lost all influence in the European Union. A first sign of this is the resignation of Jonathan Hill from his position as Commissioner for Financial Services. Mounting pressure to sideline him was apparently one of the reasons for his resignation. It is clear that while the UK is a full member state until the negotiations following the triggering of Article 50 are concluded (or the two year deadline for such negotiations expires), they will be unable to influence any decision in Brussels from now on.
British members of the European Parliament will not be nominated as Rapporteurs anymore and British Ministers will be ignored by their colleagues in the Council. Any objection raised by a British delegate in Brussels will be answered with the response that the country is leaving in any case, so should therefore be unconcerned with the outcome of decisions. The same is true for the right to vote against legislation – it would be seen as undue interference by the UK in European matters. Stripped of all bargaining power, the UK is now de facto no longer a full member of the European Union, even though de jure it still is.
The loss of influence is the price Britain has to pay for access to the common market. After leaving the European Union, political influence on EU policies will be reduced to zero. Postponing negotiations, however, will neither buy more influence nor improve the bargaining position. Pressures will mount on the economy as long as Article 50 is not triggered, thus forcing the country to make concessions in order to get a deal.
The EU, on the other hand, will not agree to informal negotiations before Article 50 is triggered. If they did so, a series of other European Union countries could immediately demand to start such negotiations, destabilising the European Union and diverting resources needed for its normal operation. It would also send the signal that states can ‘have their cake and eat it’, further damaging the stability of the EU. Didier Seeuws, the chief negotiator for the European Union, will therefore insist on the UK triggering Article 50 before agreeing to negotiations.
Triggering Article 50 and seeking a quick deal to secure access to the common market is therefore vital. This deal will include the acceptance of free movement and payments into the European Union budget. While this partly defeats the will of many who voted for Brexit, it is inevitable that this will form part of the final agreement.
First, the European Union will insist that acceptance of those two points is a precondition for starting serious negotiations. Switzerland should be a warning. The 2014 Swiss immigration referendum forced the Swiss government to renegotiate the bilateral treaties with the European Union in order to scrap free movement. The answer from Brussels was clear: “We are happy to renegotiate anything you want, once you have accepted free movement”.
Second, while still obeying the will of the voters to leave, it will improve the future prospects of the young who feel let down by the elderly. Getting to a deal quickly might therefore help reduce the internal conflict caused by the referendum. A clean and fast deal might also help to prevent a secession of Scotland. It will secure access to the internal market and many of the benefits currently enjoyed will be maintained. The political damage is still significant. Combined with other political measures, for example supermajority requirements for future referendums, which demand an overall majority and a majority in all constituent parts of the United Kingdom, could be a way out of the seemingly inevitable break-up of the country.
Lastly, in a globalised world, national decisions have international consequences. By voting to leave, voters in the United Kingdom have negatively affected the lives of 450 million people in the 27 European Union member states who will suffer economic and political consequences over the next months or even years. Brexit will also affect non-EU economies as well. Taking back control implies assuming responsibility for one’s action. Triggering Article 50 would be a start.
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Note: This article gives the views of the author, and not the position of EUROPP – European Politics and Policy, nor of the London School of Economics.
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Sebastian Koehler – LSE
Sebastian Koehler is a Post-Doctoral Fellow at the Department of Government of the London School of Economics and Political Science.
Tell you what, we turn off the cash fountain in exchange for being ignored.
Tell you what they can do Joe, Brussels to stop taking the money from the UK, that will sure trigger something don’t you think?
So the author is telling us that other EU member states are going to defy the Treaty rules and do as they like, despite the clear legal and political fact that the UK referendum was a non-binding domestic matter for the UK government. Moreover, even after Article 50 is triggered, it would be inappropriate for anything other than the policy-making of the EU to exclude UK nationals, state institutions and private companies from their participation in the European environment. Article 50 is a sort of constrained standstill provision, allowing for transitional measures to be negotiated over a period of at least 2 years — during which period the UK remains a part of the EU.
Perhaps, if the author reflected a little, he might grasp why so many EU citizens across the continent share the views of the English and Welsh working class. Moreover, even those of us who oppose Brexit are angry about the clear German disrespect for the rule of law and greater interest in political and economic power. Greece has suffered greatly from such abuse of power used against it, which is now being attempted against the UK. Sadly, legitimate criticism of the operation of the EU — namely, its promotion of neoliberal values and massive democratic deficit — has been diverted by the far right into xenophobia and fear of immigration.
No, Art. 50 should not be invoked until the political decision is made by the UK government, is confirmed by the Parliament, and there is a new government in place to negotiate Brexit. Cameron made his position crystal clear — that he will not negotiate Brexit. The fact that other northern European governments do not like this position calls for only one reply: tough shit. Indeed, the arrogance, lack of democratic accountability and manipulative behaviour undermining the rule of law is a primary cause of the EU’s likely incipient demise.
As a Greek I can assur e you that the Greek people suffered nothing because of the EU. It has been their fault all along.Blaming everything on the EU is the easy way. Waiting to see who the Brittons will put the blame on from now on. Then again it could still be the EU that will not give them what deal will ask for after triggering article 50. I could say very ironically ” good luck” but then again I live in the UK and whatever they do affects me
Panteli, I spend my time between Greece and the UK, and know the Greek situation far better than the Greek diaspora. The Greek people were never asked about joining the eurozone, the corrupt governments of Pasok and ND laid no plans for protecting Greece from structural damage that was likely with cheap credit and an overhigh exchange rate, and made no attempts to modernise the economy, improve the taxation system, pressure the banks to invest wisely, or provide training and imperatives for ministries to support the private sector. The economists advising Simitis were either incompetent or bought by the Germans, and had nothing to say about the momentous mistakes that were being made.
Believe me, the Greek people have suffered greatly owing to the corruption and manipulations of the EU — at least, with respect to the eurozone. Many working class people across the EU have a lot to complain about, and it is about time that academics grasped this fact. Already, the far right have done so.
David Cameron’s most used phrase today is “the next government” – there is absolutely no chance of article 50 being invoked immediately – none.
Your conclusions are entirely based on failed assumptions of past political dynamics. About the only ardent supporters of the EU across Europe are the bureaucracy itself and the few embattled state governments driving it to their benefit without even much support from their own electorate. France and the Netherlands face elections this spring. With an anti EU far right nationalist party in the lead in France, either a mainstream party will offer a referendum or fall to a right wing extremist government.things are not much better for the Dutch. This time next year will be a far different picture with as many as three of the top four net paying countries countries possibly heading towards the door. The longer Britain waits the more likely it will be negotiating as part of a bloc or partnership with devastating financial and political power either for a two speed Europe or sweeping reforms rolling back the federal ambitions of the current cabal.
If you want to understand why we are here, read this 1986 article by Professor John M Culbertson in the Harvard Business Review https://hbr.org/1986/09/the-folly-of-free-trade While written from an American perspective it describes both the global and internal strife that the unqualified love of free markets has bred. In the case of the EU, not only does it enforce the export of jobs as he describes but an import of unemployed and under employed by the more developed and stable nations. Unfortunately, the arguments he made here and more precisely in his books and academic papers on the limitations of Ricardo theory were ignored rather than debated or refuted. The race to the bottom is nearing the end and those who lead it must not be shocked at the impact felt by all when we hit the ground.
Joseph, EU support has always been just over 50% across EU nations. Far right parties have always been asking to leave the EU as this is required for their totalitarian regime establishment. Post BREXIT referendum EU support is soaring with recent polls in Scandinavian nations ( usually strong EU supporters ) to increase by 10% , reaching almost 70%. Denmark rumoured to have a referendum on EU has currently approval rates of over 60%. Few nations feel so much self destructive as the British.