Saturday, June 25, 2016

The Damage Done: The UK faces the Sunset

As I feared, the polls weren't wrong, but the bookies were. On a very narrow margin, the referendum in the United Kingdom has voted to leave the European Union.

In the face of a great shock, there is a tendency to exaggerate the scale of the crisis. There is after all an awful lot of ruin in a nation. Unfortunately the UK has been pressing its luck for sometime now. I could write screeds about the narrow education system, the growing lack of social mobility and the economic imbalances, but that must wait for another time. The point is that the people of England and Wales have voted to Leave, but the people of Northern Ireland and Scotland have voted to Remain. 

As I predicted in May, the vote to Leave has triggered a thunderclap of a crisis. The Prime Minister has indeed resigned, Sterling did indeed fall through the floor, the FTSE went into meltdown and next week the UK will lose its AAA credit rating. Investment projects are being suspended, Millions of workers are facing an uncertain future and in the face of the divisive and ugly anti-immigrant theme in the campaign, many are making plans that no longer include staying in Britain long term. The crash is already causing damage that will lead to a permanent fall in the economic performance of the UK for many years into the future- the damage is already done.  

Yet, as we parse the result, it is not only that Scotland and Northern Ireland that have voted differently from the majority. The astonishing thing is the massive difference between older people, the less educated, the less well off and the rural populations, which largely voted Leave, and the young, the well educated, the better off and the urban populations, which largely voted Remain. A sociologist might suggest the vote was a rebellion by those with no stake in globalization, against those with a heavy stake in globalization. Personally, I am not convinced. The fact is that before the vote, only 30% of those who supported Leave believed that they would win. Even after the polls closed, Nigel Farage was forecasting a narrow Remain victory. Thus the shock of the actual result was pretty universal. It is clear that if people had believed that the situation was so close, that many people might have voted differently. "Buyers Remorse" amongst Leave voters has already been significant.

The question now, is is that "Buyers Remorse", and the growing understanding that "Project Fear" was nothing of the kind, but an accurate forecast of the impact of a Leave vote sufficient to change the country's political direction? There are examples of Referendum votes against the EU- in France, Denmark and the Netherlands- which have been either fudged or reversed. Can the UK change its mind, and would the EU accommodate this?

The early signs are mixed.

The decision of David Cameron to resign was accompanied by a further decision: not to activate article 50 of the Lisbon treaty until a new government can be formed. This will give a brief breathing space on the UK side. However, Martin Schulz, the German Socialist President of the European Parliament, believes that article 50 should be activated now. Meanwhile the German Chancellor, Angela Merkel, is silent- suggesting that it is up to the exiting party to declare its intentions first. The likely new Prime Minister, Boris Johnson, is now suggesting that the UK intends to seek associate membership- like Norway or Switzerland. However, the European Commission suggests that even to negotiate the framework agreement would be far beyond the two year negotiation window that Article 50 requires. The problem is that article 50 is simply too inflexible and too short a window for the necessary agreements to be made. Despite Mr. Schulz's insistence, pushing the UK out in too quick a timetable will lead to chaos, and not just in the UK.

Yet, as the practical negotiations are considered, it is now clear that the vote will indeed lead to an existential crisis for the UK. The reaction in Scotland has been the collapse of support for the common state. Nicola Sturgeon, in the disorganized and emotional way of the SNP has, immediately announced plans for a second referendum. Personally, I think it is a little premature, but the clear direction of travel for Scotland is clear now. Unless the UK stays in the EU, Scotland will leave the UK.

That, I suspect will trigger another thunderclap in the rUK. All the institutions that have been taken for granted, from the Monarchy downwards, will be challenged. I see the end of the UK leading to a much weaker, smaller, but perhaps eventually more open society in England and Wales. A country that is less Pomp and Circumstance and more the Levellers, and eventually, of course, the rUK will return to its European ideals- just too twenty years too late, and too diminished, as usual.

As for Scotland, the swing of the establishment behind Independence will hopefully result in a significant change in the ideology of the emerging Scottish State. The hurried chaos of immediate separation- snatched quickly, less it be reversed- needs to give way to a more confident, but longer timetable. In order to gain support amongst the other 27 member states of the EU, Scotland will need to be a genuine force for European federalism. This implies membership of the Euro, not the untenable idea that Sterling can be retained. This implies full opt-ins to the European acquis, with the possible exception of Schengen, where a three way rUK, Ireland, Scotland passport zone may need to be retained, Although that can only happen if rUK becomes an EEA or Schengen member, otherwise, there will indeed be borders at Berwick, and we must accept the damage that might cause. Scotland will need to spend a great deal on defence and to keep the nuclear bases open, especially to the Americans. Russia remains a serious threat, and Scotland, with a strong martial tradition, should commit to help the defence of the EU as much as possible. The halfway house of the Common Monarchy should, in my view, give way to a ceremonial Presidency, with the powers of the Crown devolving to the Parliament or President, as appropriate. Yet, again, the details of the future will have to await further events. 

The people have spoken, but Messrs. Johnson, Gove and Farage, the nominal victors, are most likely to be the gravediggers of the UK.

Unless there is a popular uprising which derails the result and significantly changes the political scene, which I can not altogether rule out, the end of the auld sang of the UK is in sight. I regret it. In a fit of pique, the voters have unleashed forces that will bring about the precise opposite to what they may have intended. Unless they recant, through protest or through early elections that bring about an explicitly pro-European government, committed to staying in the EU, the first pebbles of the landslide to come are already rolling.

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