Brexit: Unintended and Unanticipated Consequences

One would usually expect a piece such as this to refer to a clear set of intended and expected effects of Brexit, but of course the inability to identify such effects is part of the challenge. The difficulties in assessing unintended effects are in part rooted in the very heterogeneity of issues and concerns that agglomerated in the pro-Brexit coalition. Add to this the questionable assumptions about the likely behaviour of our partners in the European Union and in the Commonwealth; claims about reversion of access to fisheries resources to the UK fishing industry; the distributional impact of Brexit; the limited likelihood that previously intractable problems of migration and economic competitiveness will be solvable, as well as the administrative and financial costs of Brexit, and ‘buyer’s remorse’, is predictable.

Brexit has also shed some light on the unreliability of the referendum as a political instrument and the shaky legitimacy of deep-reaching constitutional reform based on a simple majority vote. This is particularly the case when the vote related most closely not to party political position, but to the newspapers voters read, to differences in salience of the vote, the fact that individuals are differently invested in the EU and in ‘Europe’, as well as generational differences to the extent that one might speak of the tearing up of the intergenerational contract whereby state pensions are funded by those currently in work. Add to this the list of those affected who had no vote – expats, the under-18s, citizens of Commonwealth countries and of UK Overseas Territories – and we see a mismatch of voice and impact.

Exit from the EU is a complex challenge. Add to that the multiplicity of reasons for voting ‘leave’ in a referendum initiated by an unpopular and complacent prime minister, and it is difficult for those preparing to leave to claim to know what people voted for, or even whether aspects of the vote are achievable. Can immigration be reduced significantly even if the UK leaves the EU? What will exit cost in terms of repayments to Brussels, negotiating infrastructure and legal drafting? Will there be any savings at all to go to the National Health Service (NHS)? And what of the impact on the Commonwealth and UK Overseas Territories, frequently promoted as an ‘alternative’ set of trading partners to the EU? Or, how about the implied benefits to the UK fishing industry of a return of ‘control’ to Westminster? The NHS, the Commonwealth and fisheries all played a talismanic, and deeply misleading, role in trying to persuade people to vote for Brexit.

A world view of Britain

A further question given little attention domestically is ‘How will the world see Britain post-Brexit?’ This includes our erstwhile partners in the EU as well those we expect to rely on in the Commonwealth. While one unanticipated consequence was giving encouragement to the Trump campaign and to nationalist populist parties across Europe, another may be a deepening international dislike of the ‘whinging pom’, with the implications for British ‘soft power’, exercised in part through support for the Commonwealth. Similarly, withdrawal from the EU may be seen as undermining the peace agenda that has underpinned the European project from the start; and breaking of university links across Europe coupled with perceived hostility of the UK to granting student visas to international students will push future leaders in Commonwealth and other countries to study elsewhere, and not be automatic allies of the UK in international diplomacy. Nor will the post-Brexit rise in incidence of race hate crimes help our reputation.

The largely mythical construction of the ‘Brussels bureaucracy’ by both wings of the Conservative Party over decades may largely be equated with ideological opposition to European directives and regulations to protect citizens’ health, safety and environment. The voluntary pooling of sovereignty in pursuit of common goals is efficient in terms of one body negotiating for 28 national governments, especially when these have agreed to the shared decisions.

Domestically, Brexit does, though, raise questions of: the rule of law, and the democratic legitimacy of decision-making; the role and control of the press and the interpretation of ‘equal treatment’ by the BBC of competing arguments without consideration of their basis in evidence/fact; and of what the nation state can in fact control in a globalised world, as opposed to what populists hope they are voting for.

It also raises distributional questions. Many protest voters have made it clear that they are protesting about the failure of the ‘establishment’ to address the problems of workers and communities left behind by a shift out of primary and secondary industries and by automation—in effect by globalisation. It is not clear how decoupling from the EU will make that better, though, especially as the hole in the UK budget is unlikely to allow the UK government to replace the funding allocated to struggling regions through EU structural and regional funds. Brexit will also seriously reduce the value of remittances to developing countries, and put at risk both EU development assistance to Commonwealth countries and UK Overseas Territories, as well as their access to the EU market.

Regarding legitimacy, it has already become clear that the referendum is like taking a sledgehammer to crack a nut, missing the nut, and coming down heavily on the family porcelain. This decision is one of constitutional import, but also one of intergenerational and geographical distribution. ‘Generation Empire’ has voted for future curtailment of employment, mobility and, when the deficit grows, of welfare, for the young and the poor.

The Leave campaign said, or carefully if disingenuously implied, that: huge resources would flow to the NHS; that the UK would regain control of ‘its’ fishing resources; that the UK would ‘get back control’, a vacuous statement akin to ‘Make America Great Again’, in denial of the agreed pooling of sovereignty in pursuit of economic integration, human health and safety, and planetary survival. The UK supported the reformed EU Common Fisheries Policy, and will have to continue negotiating agreements with those who share its waters, and will not be able to set its own quotas unilaterally.

Financial consequences

Further impacts have been the loss of AAA rating for Sterling, the impact of Brexit on exchange rates and hence inflation, as well as the unpredicted scale of the cost of decoupling from the EU.

The NHS ‘promise’ also disregarded the choices that will face UK pensioners living in southern Europe, many of them enjoying the health benefits of a warmer climate as well as the quality of Spanish health-care provision. If a bilateral deal is not done, and there are no guarantees, then these pensioners will return to the UK when seriously ill, for treatment and for housing. They will therefore cost the NHS millions, block beds and present a further drain on social services and housing resources.

Courageous assumptions have been made: that the 27 EU nations will continue to allow access to the single market because we have a trade deficit with them.

The referendum also fails to recognise that people are differentially invested in Europe, in their working history, what they have studied, and their aspirations to work in Europe. Also, recent experience of polling shows that these mislead, as people lie about their intentions, or do not bother to vote if they think their side will win. Hence, the outcome may not reflect the popular will at the time, let alone a few months after the event.

The heterogeneity of what people voted for was masked by a failure to spell out clear policy implications. The loss of access to the single market, now a clear policy of the hard Brexit lobby, was not introduced, or explained. The costs and benefits of leaving remain unspecified.

While it is hard to imagine a silver lining, the referendum cloud has, in passing, underlined that the losers in globalisation and European integration are not to be ignored. The only way out short of a reversal of the Brexit decision, if the UK is to restore the economy to a growth path, and governance to something closer to an orderly democratic style in tune with Commonwealth values, is to make a radical shift to a blue-green economy, learning from China, Germany, Denmark and others that the future lies in clean technologies and a carbon neutral, or carbon negative, and equitable development path. This, of course, would be anathema to the regulation-shy proponents of Brexit, though not to all the Brexiteers.

The author is a Senior Research Fellow, Institute of Commonwealth Studies.