Originally Published 2016-06-27 11:46:09 Published on Jun 27, 2016
Brexit: Britain’s big mistake, will take it back several years

June 23, 2016, is a sad day in British history. Nearly 52% of the population has decided to leave the European Union, reversing the decision taken in 1975 to join the common market. Discussions and political activity to have a Brexit government have already begun and the campaigners of “leave” are exulted; they have called the referendum a sort of reformation to save Britain from a dying EU.

There will be a major reshaping of the politics of Westminster, with David Cameron having already announced his resignation and is now essentially a caretaker Prime Minister. The person who gave a huge impetus to the “leave” campaign from the Conservative Party, Boris Johnson, is likely to take over in a few months’ time. It is unfortunate for Cameron, who has been one of Britain’s best leaders in recent times and strongly advocated for Britain to remain in the EU to help the country stay strong and safe, but it appears it is not meant to be.

The repercussions of Brexit are serious. It is also a referendum on Cameron. One wonders if the British voter even understood the consequences of exiting before voting. A country that believed in divide and rule has just had one stuck on its backside. Whether they like it or not, the fact is that it is a lot of East Europeans and Indians who roll up their sleeves and work hard to keep the British economy growing. The local guys, instead of upping their game and remain competitive, have decided to keep the EU guys away who actually work to make a living. Now it is time for action and moving forward.

A lot also depends on when the new Prime Minister will revoke Article 50 and renegotiations with the EU will begin on the exit. The EU itself is hugely disappointed with the decision, and it’s not going to make the exit easy. Leaders in Brussels are weary of being drawn into months and years of negotiations and haggling over Britain’s status. Jean-Claude Juncker, the President of the European Commission, said that the EU expects the Article 50 will be immediately activated and negotiations would need to begin at the earliest.

Triggering Article 50, formally notifying the intention to withdraw, starts a two-year clock running. After that, the treaties which govern membership would no longer apply to Britain. The terms of exit will be negotiated between Britain’s 27 counterparts, and each will have a veto over the conditions. It is expected that two vast negotiating teams will be created, far larger than those seen in British renegotiation. The EU side is likely to be headed by one of the current Commissioners. The negotiations would be tough and tedious, as it would be hard agreeing to a new trading partnership, establishing what tariffs and other barriers to entry would come into play, and agreeing to other important issues such as restrictions on free movement of persons between the EU and the UK.

According to the EU, the complete exit would take about five years or more, simply because the EU is particular about making the conditions for exit really difficult to discourage other states from following suit.

Another important issue this referendum has thrown up is that of migration or immigration to the UK. It is evident that a majority of Brits who voted to leave felt very strongly about this issue. In recent years, immigration to the UK has grown exponentially. After the global financial crisis in 2008 followed by the eurozone crisis, many EU countries — including Spain, Italy, Greece and Portugal — started to face huge employment issues and people from these countries started to look to other EU nations and the UK for employment opportunities, affecting employment prospects of local Brits.

For instance, Poland is now the second-largest source of immigrants to the UK, just behind India. By 2015, the total number of immigrants to the UK from within the EU reached nearly 3 million. It also resulted in the EU becoming inextricably linked with immigration in the minds of a lot of Brits. This mass immigration made the British population very unhappy about the state of affairs in Britain. They weren’t used to mass immigration, but since joining the EU, they’ve been getting a whole lot of it. This led to euro scepticism, and the Brits began to realise that there was no solution to this problem of immigration unless Britain exits from the EU, so they put pressure on the government, ultimately leading to a referendum. The UK was also worried about Turkey becoming a member of the EU, further adding to the problem.

From an Indian perspective, it would be difficult for Indians based in the UK to do business with the EU. They would lose all the advantages of free movement of goods and personnel, affecting their business. All the trade deals would need to be reworked, which will take years. In fact, this could also further delay the India-EU FTA, as India might look to sign a separate FTA with the UK. There are a lot of questions about the next steps as the treaty of Lisbon is fairly new and never implemented before.

In addition, the EU is upset with the British leadership led by Cameron for agreeing to a referendum when it was not a constitutional requirement. The EU is of the opinion that after creating the mess, Prime Minister Cameron, by stepping down, expects others to clean up the mess. Moreover, Scotland voted to remain in the EU, and will begin to prepare for a new referendum to exit from the UK and then go on to become a part of the EU. So, it is a double loss for the UK. It is clear that the UK is now trying to buy time, but the EU is firm and does not see any reason why the activation of Article 50 should be delayed.

In sum, both the EU and the UK have a long and arduous road ahead. The future of the UK is certainly bleak at the moment, with financial markets in turmoil and stocks plummeting, but the nation is confident it is only a matter of time before it regains its lost glory.

Only time will tell whether the decision of the UK voter was worth it. The referendum has exposed deep divisions within the UK, which has to be put together somehow. It is a self-inflicted wound and takes the nation back several years and a lot of paperwork and negotiations in the next few years at the cost of growth. Moreover, it certainly is not good to see one of the largest free trade zones in the world crumbling with the exit of one of its largest members.

This commentary originally appeared in The Financial Express.

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Kangkanika Neog

Kangkanika Neog

Kangkanika Neog Programme Associate Council on Energy Environment and Water (CEEW)

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