Friday 24 June 2016

Britain has voted to leave the EU – what happens next?

The UK’s historic decision to end its 43-year love-hate relationship with the European Union represents a turning point in British history to rank alongside the two world wars of the 20th century.

On the assumption there is no turning back, or collective buyer’s remorse, Britain will live with the political, constitutional, diplomatic and economic consequences for a decade or more.

The pin on the atlas marking the UK’s place in the world has shifted, just as the centres of power in the UK polity. All the familiar points of authority in London society – Downing Street, big business, economic expertise, the foreign policy establishment – have been spurned by the equivalent of a popular cluster bomb. 

So what happens next?

The politics
The scale of the destruction wrought by independence day is such that one of the last redoubts of the establishment left standing – the civil service led by the cabinet secretary Sir Jeremy Heywood – will take centre stage. 

It will be his task, in conjunction with the governor of the Bank of England, Mark Carney, and David Cameron to bring a semblance of shape to the chaos that is likely to ensue.

The prime minister has insisted he will accept the instructions of the British people and be in his study in Downing Street ready to carry out those orders. 
But it will be for him to decide whether he will try to stay as planned until 2019, or instead announce that he will remain until a Conservative party leadership election in the autumn.

Neither option is attractive. The former smacks of a tone-deaf arrogance; the latter may create further instability at a time when the markets crave certainty. 

The cabinet manual is clear: the prime minister cannot leave until he can advise the Queen on the identity of his successor. Either way, the Labour leader Jeremy Corbyn is likely to mount a confidence vote that will not pass.

However long the political machinations last, Cameron and the chancellor, George Osborne, face a dilemma. The vast majority of MPs and peers are pro-Europeans who have been shown to be out of step with public opinion. 

The sceptics may number no more than 200 in the Commons, but that minority has been shown to speak for the people. It leaves the locus of political authority in the UK in dispute.
David Cameron and George Osborne have been seriously undermined by the Brexit vote. 

The negotiations
Cameron has vowed if there is a Brexit vote he will trigger article 50, the part of the Lisbon treaty that sets in train a two-year process whereby a member state can notify the EU council of its decision to leave. 

Constitutionally, the triggering of article 50 is a decision for him alone, not parliament, since it is a matter of the royal prerogative. At the same time, nothing can stop parliament passing a motion that seeks to instruct him not to trigger article 50.

Cameron’s statement that he would trigger article 50 was in part made to dramatise the irreversibility of Brexit. This starts a two-year negotiation with the EU that must end with the UK’s ejection, unless the union unanimously agrees to extend the negotiations at the two years’ end. 

The UK then formally leaves once a deal – which requires the support of the UK and a “qualified majority” of the remaining 27 member states (specifically, 20 of them, comprising at least 65% of their population) is struck.

If at the two years’ end neither a deal nor an extension has been agreed, the UK automatically reverts to World Trade Organisation rules, meaning the UK faces tariffs on all the goods it sells to the EU. So if the UK triggers article 50, Britain will have wilfully leapt on to a conveyor belt that ends with the EU holding all the bargaining chips. 

Even in spite or out of despair, it is doubtful Cameron would wish to step immediately on to such a conveyor belt.The prime minister will be operating largely at the sufferance of the Brexit wing of his party. That wing is disunited to the point of dysfunction and will need time to absorb their unexpected victory. 

Some Brexiters have for months quietly pointed out the referendum is advisory and asks voters’ views only on whether to leave the EU. It is silent on the form of the departure. 

An Irish referendum, by contrast, posed very specific legal questions, giving clear instructions to the politicians. 

So Brexiters will face a choice between maintaining their pledge to withdraw from the single market and so ending the free movement of people, or whether instead to seek what has been described as purgatory – the kind of half-in, half-out arrangement enjoyed by Norway.

Eurosceptic MEP Daniel Hannan has argued Brexit should be viewed as a process, not a single moment of departure, and a Norway arrangement for the UK might be a stepping off point before the final rupture in years to come. 

If the Brexiters are too leisurely, the electorate may become impatient, the pro-EU Commons majority start to mobilise, and the vista of a new election, providing new political mandates, becomes more imminent. 
Hard Brexiters will be impatient.

The EU
In all these calculations, the UK parliament will not be the only actor. The EU, faced by centrifugal forces, will wish to act decisively, something it rarely does. One group may urge the EU to demand that the UK triggers article 50; a second group, possibly led by the Poles, may explore whether the terms of the negotiation between the EU and the UK could be reopened. 

Many diplomats privately believe the German chancellor, Angela Merkel, should have conceded more to Cameron on free movement. 
But the majority EU view is likely to be that UK negotiations were finished in February, and that ship has sailed. 

The commission president, Jean-Claude Juncker, said before the vote: “Cameron got the maximum he could receive and we gave the maximum we could give. So there will be no renegotiation, not on the agreement we found in February, nor as far as any kind of treaty negotiations are concerned.”

The priority instead would be to prevent what has been described as the psychology of a bank run gripping the EU, as calls for parallel referenda proliferate in the Netherlands, France, Poland or Hungary. That, after all, has been the explicit goal of some leave campaigners. 

Michael Gove, for instance, called for the “liberation of Europe”. Once those demands grow, the whole EU project will slip from paralysis to disintegration. 

Any divorce settlement would focus on mundane budgetary issues – pension liabilities, properties and other assets, and deal with budgetary questions. It would also cover the rights of EU nationals based in the UK and vice versa. 

A key interim will be whether UK-based financial firms lose their EU “passport”, whereby firms registered in one member state are allowed to do business across the bloc without needing further authorisation. Separately, the higher-stake trade talks will look at whether the UK rejoins the existing European free trade agreement or instead strikes outside on a free trade treaty of its own. 

Beyond that, talks with the Irish government, the Commonwealth, Nato and innumerable other bodies await. The success of these complex negotiations will depend on the chemistry of the relationship between the UK and Europe post-Brexit, and whether the triumphalists or the pragmatists in the Brexit camp hold sway.

That in turn will depend on whether Cameron can restore relations with the two old friends that have laid him so low – Gove and Boris Johnson. After the events of the past two months, everyone knows they travel without maps. 

Credit: theguardian.

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