Monday, 27 June 2016

Understanding the Brexit outcomes

Article published in Cafebabel

 The final verdict has left the UK and its non-British residents in state of panic. Google

After years of caveats and months of campaigning the British people voted to leave the European Union. This represents an unprecedented move in the history of the UK, even though the relationship between the two has always been difficult. 

The expectations were high on both sides – Remain or Leave - and during the vote's counting Nigel Farage's UKIP leader has even said the Remain camp had edged it. After all the votes were assembled, the Leave counted approximately 52% of the electorate's vote against 48% for the Remain side. 

The outcome of the EU referendum came as a shock for many British – even the ones who voted Brexit. While this may be ridiculously confusing, we have come to understanding how uninformed the British people were about the significance of the referendum itself, let alone the consequences of what a leave vote could bring about. According to Google Trends, one day after the EU Referendum, the top questions registered in the UK were “What does it mean to leave the EU?” “What is the EU?” and “Which countries are in the EU?” This displays an enormous lack of sensitivity to such an important political decision. 

Who voted to Leave?

However, when dissecting the electorate of this plebiscite, we come to the conclusion that the vote to leave was mainly supported by the elderly sector of the population. The faction that is not paying taxes any longer and living off on guaranteed pensions. The majority of the youth voted to Remain and are now in shock and apprehension towards the future. Many leave voters have admitted had never believed the UK would actually leave the EU, others regretted their vote. In the meantime, an online petition in the UK – with over 3 million signatures - is calling on a new referendum but constitutional experts consider it very unlikely. Life might become a bit more bureaucratic for all the EU citizens living in the UK as well as for British living in the EU.

In any case, both campaigns were not informative rather a propaganda machine to support the credos of each side. Even if that implied lying, this was the case of the Leave side, supported by Nigel Farage. Apparently, one day after the referendum, the £350 million which used to be sent to the EU and were intended to go to the NHS, was a "misunderstanding". Probably one of the most captivating arguments of the Leave campaign was a big and despising lie.

                                                         June 23rd was a decisive day for the UK. Google

European Reactions

Overall, it was a sad day for the European Union. British citizens living in Brussels and elsewhere are devastated by this outcome. European Commission's and Parliament's presidents Juncker and Schulz are incredibly irritated with the aftermath of the referendum, blaming David Cameron of all the troubles he has given them. On the other hand, Council's president Donald Tusk has been more complacent. Juncker and Schulz are trying to hastening the divorce between the Union and London "as soon as possible". Following the press conference in Berlaymont, Juncker was asked whether this situation means the end of the EU, to what he promptly replied "No" and was followed by an enormous applause in the audience. 

EU leaders are now pressing for the UK to call on the article 50 of the Lisbon treaty, founding the legal principles how a Member State leaves the Union. However, the UK is delaying the official call on article 50 and Europe is getting anxious and afraid of the enthusiasm of extremist parties in the EU with the same convictions as UKIP and Front National.

Indeed, the fear of contagion is alive. Many discontent countries see this as an opportunity to launch their own referendums and take some control. Nicola Sturgeon, SNP's leader announced a very likely referendum over Scotland's independence. French Front National has already announced that its people have the right to choose their future, just like the Dutch anti-immigration Party for Freedom or Italy's Northern League. Recently, Portuguese's Left Bloc also announced the desire of a referendum should the EU decide to sanction the southern country. 

An EU Summit on June 28th and 29th will gather EU leaders in an effort to smoothly and swiftly address this huge issue hanging in Brussels. 

                                EU and UK are about to start the divorce process... Google

Media on Brexit

Due to the enormous impact and consequences of this political decision, Brexit made the front cover of each newspaper or magazine and every opening of breaking news across the globe. What has the media been saying?

The Financial Times expectedly focused on the economic and financial impact of Brexit asking, "What will Brexit mean for the city of London?" Indeed, the capital of capitalism all of a sudden saw its currency – the pound – plunging dramatically to a 31 year low as markets reacted with anxiety and lack of confidence following this unpredictable outcome. Bloomberg delivered a swift analysis on the immediate winners and losers of Brexit with the title "Brexit's Winners and Losers: Johnson Triumphs as Pound Plunges". The business media reported good news on the way to Russia and Front National’s leader Marine Le Pen, and bad news for the banks and London real estate. 

POLITICO accused British voters of “unleashing an economic and political tsunami” and added that it’s going towards the US, where GOP candidate to the White House Donald Trump, praised the Brexit’s aftermath. Both Hillary Clinton – Democrat candidate to the presidency- and incumbent Barack Obama have sent their pleas overseas calling on the importance of the UK inside of the European Union. Now, the fear of a massive populist vote on controversial Donald Trump on the upcoming elections of November is becoming a serious concern.

The Canadian based Global Research focused on the social triggers of this political decision taken by the British people writing that "The UK’s ‘Brexit’ Vote Is Actually a Referendum on Xenophobia". As a matter of fact, one of the biggest "trumps" used by the Leave campaign was precisely immigration, terrorism and security – which irrationally Leave advocates were relating to each other thereby putting them on the same bag. After Brexit became a reality, it is alarming to witness the xenophobic behaviour of UK citizens happy with the final verdict. Verbal attacks towards Polish and Muslim residents in the UK have sprung up and people are getting scared and uneasy with the repercussions of this referendum.

Foreign Affairs magazine published a few days before the EU Referendum an article entitled “Please Leave”. On this piece, the author Camille Pecastaing points out the EU’s shifting role over time turning political ideals and principles into an economic mission. In the meantime, the arrival of Margaret Thatcher in the political scene brought neoliberal policies, such as market deregulation and privatisations, turning London’s approach to the Europe as an “ever-enlarging free market”. Furthermore, Pecastaing accuses the UK of never being committed to a project of commonwealth within the EU. “It is that redistributive logic that makes a commonwealth and that, in Europe, the Greeks have abused and the British have denied. And this is why Europe would be better off without them,” wrote the author. 

Nevertheless, in each analysis circulating on the web, the shock felt by the markets as an immediate reaction of the Brexit effect is always emphasised. Considering the behaviour of the markets is by nature of extreme unpredictability, it was predictable that further uncertainty would retract potential investors therefore creating apprehension in the financial markets. However, analysts defend that the economic shock felt by Brexit will be moderate in comparison to the 2008 crash since so far no widespread market freeze or investor panic has occurred. Indeed, Bloomberg reported that the world's 400 richest people lost €1.27 billion after Brexit. 



Given the Brexit outcome, the UK must now reorganise its grounds. David Cameron has already announced its resignation, though by October, and the most likely future PM will be Boris Johnson. A series of resignations were presented to Labour leader Jeremy Corbyn, who is struggling to keep the party alive and united. The political turmoil must be replaced by an orderly restructuration of both Conservative and Labour parties. After stability is settled, focus should be put on the NHS and on the British social security system. Moreover, the UK must fortify its ties with future strategic international players and reinforce trade agreements with its counterparts. When debating a Brexit case scenario, many analysts were considering several approaches such as the Swiss or the Norwegian model, both wealthy non-EU countries with trade agreements with the EU and the rest of the world. Nevertheless, each case is a single case and even if the UK tries a transition – which might well be successful – the first stages of experiment and implementation will be harsh.

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