The UK votes to leave the EU: An earthquake – but we have to keep calm!

24 Jun 2016, keywords :

Yesterday, by a margin of 48 to 52%, the UK voted in a referendum to leave the EU. While the UK government still has to hand in a formal notice of intention to leave the EU, exit negotiations between the two sides will span over at least two years. The UK’s exit from the EU, the Brexit, will certainly bring a high degree of uncertainty both in the UK and the EU, but panic about an imploding EU are probably not appropriate. A commentary by CESI Secretary General Klaus Heeger.

The UK votes to leave the EU: An earthquake – but we have to keep calm!

Troubled times ahead for the UK

Especially the UK will likely face troubled times: In British politics, the party landscape will change, with UKIP basically having lost its raison d’être (the departure from the EU) and Prime Minister Cameron having announced his resignation. Plus, in order to stay a member of the EU, pro-EU Scotland may strive anew for independence. Northern Ireland may join these efforts. As regards the economy, the future is just as unclear. The UK will have to negotiate new trade agreements with third countries. However, as a small entity (compared to the EU), the UK will have difficulties to strike favourable deals. And what will be the future economic relationship with the EU, which currently receives almost half of all British export goods and services? EU leaders have so far made clear that a new accession to the EU in the foreseeable future is not an option, and that negotiating cherry-picking such as a British access to the EU’s Single Market with exemptions where its suits the UK best is not acceptable. The EU will likely be tough on the UK. Great Britain could become Little England.

No panic in the EU

For the EU, the Brexit is certainly unfortunate. Especially in its foreign and security policy, the EU will lose weight. However, negotiations on challenges like migration management will remain difficult – with or without the UK. These were neither caused by the British nor will they be solved by the Brexit. What is true, however, is that the EU may struggle to carry on on these subjects for some time, given that Brexit negotations will absorb a lot of resources of the EU during the next years. At the same time, though, in fields in which UK governments have been difficult partners, such as in employment and social affairs, prospects for progress on files and initiatives like the labour mobility package or the Pillar of social rights may even increase.

The EU can also pre-empt a domino effect of exits by other Member States if it makes sure in the exit negotiations that ‘out’ really means ‘out’ and that no benefits can be expected from leaving the EU. In the future, citizens in other Member States may think twice before voting ‘Leave’ in theoretical future referenda.

Picture: Brexit © executivefinance.nl 2016