Brexit_ Origins and Implications

: Causes & Consequences

BS15079

University of Sheffield, CITY College, An

International Faculty of the University

5/16/20162016

: Origins and Implications


Table of Contents

1. Introduction................................................................................1

1. Great Britain & the EU Membership.......................................1

1.1 Early Years.............................................................................1

1.2 1973 United Kingdom Referendum........................................2

1.2.1 Internal Political Situation....................................................2

1.3 Present Years..........................................................................3

1.4 Renegotiation of Membership Conditions..............................3

1.4.1 Internal Political Situation....................................................4

1.4.2 External Political Situation..................................................4

1.5 Eurozone.................................................................................5

2. Consequences..............................................................................5

2.1 Legalities.................................................................................6

2.2 Economic................................................................................6

2.3 Political...................................................................................7

3. Conclusions..................................................................................8

4. References....................................................................................9

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1. Introduction

The vision of a unified Europe is age-old with historical figures trying to realize the

idea of continental unanimity within the European region, sometimes leading to

horrific aftermaths, such as the World War II (Dinan, 2014, McCormick, 2014,

Marshall, 2013, Pilotto, 2012). Nevertheless, the aforementioned war and the Cold

War that ensued, instigated the creation of the European Union as is nowadays, with

British politicians such as Sir Winston Churchill being at the forefront (Dinan, 2014,

McCormick, 2014, Marshall, 2013, Pilotto, 2012). However, the stilted and detached

British standpoint toward European integration has created longstanding problems,

culminating in the 2016 in-out referendum (Oliver, 2015).

1. Great Britain & the EU Membership

1.1 Early Years

Great Britain’s first attempt in European Communities participation was in 1961

when the Conservative party under Harold Macmillan applied to be enrolled

(Marshall, 2013, Pilotto, 2012, Bulmer and Burch, 2005). Even though the English

were founders of the European Trade Association (EFTA), formed in 1960, it was

losing its influence, with English exports declining to 20% from 49% in previous

years (Baimbridge, 2015, McCormick, 2014, Marshall, 2013, Dinan, 2004). Thus,

they turned to the European Economic Community (EEC) to achieve their full

economic potential, while at the same time avoiding financial seclusion (McCormick,

2014, Marshall, 2013, Dinan, 2004).

Nevertheless, their first and second attempt were not fruitful, mainly due to French

president’s, Charles de Gaulle, beliefs that the British indifference towards adaptation

and integration would not make them adequate participants (McCormick, 2014,

Marshall, 2013, Dinan, 2004).

Consequently, it was not until 1973 that full membership was reached, that, being part

of the EEC first widening undertaking, while also because de Gaulle resigned from

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his presidential position (McCormick, 2014, Marshall, 2013, Pilotto, 2012, Bulmer

and Burch, 2005). Thus, albeit the history of the nation is inextricably linked to

Europe and therefore, the adaptation and integration effort were explanatory, the need

for independence along with the negative proclivity towards supranational

governments displayed by the British, were imperative causes behind the British

disengagement (Marshall, 2013, Pilotto, 2012). That led to the 1975 United Kingdom

referendum on continued EEC membership (Bulmer and Burch, 2005).

1.2 1973 United Kingdom Referendum

Roughly 44 referenda have occurred in the European region to date, incorporating the

votes of non- EU states, such as Switzerland (McCormick, 2014). The 1975

referendum was built upon the renegotiated stipulations of the 1974 Harold Wilson

Labour administration, and its outcome was pro-EEC (Baimbridge, 2015).

1.2.1 Internal Political Situation

The applicability of the referendum to the whole of UK was a first for the English

(Walsh, 2016). The main question raised was the furtherance of the UK participation

in the EEC, thus, agreeing with the new terms of its association (Baimbridge, 2015).

Nonetheless, this decision held political weight, as the English relationship with

Europe relied on it (Baimbridge, 2015).

Its roots lie firstly, at the insistence of the Wilson government for free trade and their

role globally, over economic and political integration (Mourlon-Druol, 2015).

Secondly, the culpability of the harsh internal economic situation, on the EEC

accession (Mourlon-Druol, 2015). Thirdly, the argument that their budget provision

was disparate, and lastly, the previous governments’ discussions, whose main strategy

was the launch of a “European regional fund”, (p.4) were denounced by the Wilson’s

Labour Party (Mourlon-Druol, 2015).

Consequently, Harold Wilson tried to renegotiate the conditions on the English’

behalf that led to the ballot (Mourlon-Druol, 2015).

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During this period, Margaret Thatcher, the forerunner of the opposition was a strong

advocate of remaining in the Communities, while, the Labour camp was divided

(Walsh, 2016). Eventually, the outcome was in favour of continuing their

membership, however, that was the first crack in this relationship and it did not solve

their disputes in the long run (Walsh, 2016, Mourlon-Druol, 2015).

1.3 Present Years

Nowadays, the threat, or promise, of the second UK referendum is set to happen on

June 23, 2016, since the desire to renegotiate the terms of accession never died for 40

years (Butler et al, 2016, Taberno and Ciardiello, 2016, Mourlon-Druol, 2015).

This referendum’s causes originate partly, from the frictions observed within the

Conservative Party, probably to improve their negotiating power within EU, but

mainly due to the aforementioned domestic need not to become fully assimilated in

the Union, feeling protective over their cultural beliefs, identity, sovereignty and

position in the world (Butler et al, 2016, Kroll and Leuffen, 2016, Oliver, 2015).

Table 1. The UK demands as set in the 1974 Labour Party

Manifesto (Moulron-Druol, 2015)

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1.4 Renegotiation of Membership Conditions

These reasons have urged the British to argue in favour of a “multispeed Europe”,

“Europe á la carte” or “variable geometry in Europe” resulting in the 2016 vote

(Butler et al, 2016, p.1).

1.4.1 Internal Political Situation

In 2013 the Conservative Party leader, David Cameron, prime minister at the time,

vowed that he would conduct a voting as concerns the UK’s future in the EU, should

his party be re-elected in 2015 (Butler et al, 2016). Consequently, after the favourable

outcome of the general elections, Cameron announced that he would renegotiate the

EU membership terms before conducting the referendum (Butler et al, 2016).

At that time, the three main parties in the UK had unanimously agreed over this topic,

with the unexpected power of the emergent faction of the Eurosceptic UK

Independence Party (UKIP) urging the Labour and the Liberal Democrats to approve

these steps (Oliver, 2015). Moreover, the inland turmoil of the Scottish vote of

independence along with the threat of the Eurozone crisis and the immigration, further

adhere to the eventual decision to go along with an in-out vote (Oliver, 2015).

Furthermore, even the EU Scottish National Party agreed with this decision, though it

was mainly in the hope of a future referendum for Scottish liberation (Oliver, 2015).

Table 2. Major UK problems and demands, as stated by PM Cameron’s

letter, in 2015 (Traynor, 2015)

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After the renegotiation process finished, and a new agreement had been reached by

the European Council, the Conservatives still went on with their verdict of a national

poll (Butler et al, 2016).

1.4.2 External Political Situation

Generally, northern EU member states champion the reforms that UK policies pursue,

and vote accordingly, because their positions on common issues correspond, contrary

to the southern states which are less inclined to agree, thus their positive position to

Brexit which will add more power to the Mediterranean bloc (Kroll and Leuffen,

2016, Oliver, 2015).

Thus, after the announcement of a possible referendum was issued, PM Cameron held

meetings with all the EU associates because its outcome would impact EU greatly,

politically and economically (Kroll and Leuffen, 2016, Oliver, 2015).

1.5 Eurozone

The common market, and afterward the single market, was the motivator behind the

British desire to enter the EU (Sapir and Wolff, 2016, Marshall, 2013). Firstly, this

market comprised of the free transportation of goods, labour, and later of services and

capital (Sapir and Wolff, 2016). However, in the European spirit of integration, in

1991 the Maastricht Treaty was introduced, promoting a unitary monetary system

(Sapir and Wolff, 2016). Shortly in 1997, the British signed the Amsterdam Treaty

which incorporated the Schengen Agreement, thus, agreeing to eliminate physical

borders between allied countries (Sapir and Wolff, 2016).

Since the British were against the “one money, one market” (p.4) scheme they did not

agree and never signed the Maastricht Treaty, thus abdications were issued to them,

Denmark and member states that had not reached their economic conditions yet (Sapir

and Wolff, 2016). However, before the Eurozone crisis in 2010, no issues had arisen

among the non-Euro and Euro countries even if there was imbalance, so after the

crisis, Britain found itself at a disadvantageous spot since their banking interests, in

the wider Single Market, were affected (Sapir and Wolff, 2016). Subsequently, the

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protection of the Single Market was among the major concerns raised by president

Cameron in the reform efforts, thus illustrating the importance and significance of this

issue (Sapir and Wolff, 2016).

2. Consequences

The implications of a positive response to the British exit will cause a shift in the lives

of not only Europeans, but people worldwide, since politics and economics are

symbiotic in today’s globalized society (Jensen and Snaith, 2016, Oliver, 2016). The

Bank of England issued a warning in March 2016 of increased interests rates for

mortgage loaners and businesses, even “a run on sterling” due to the probability of

Brexit (Farrell and Elliot, 2016). Additionally, Allen (2016) and Kollewe (2016),

highlight the dive of buyer confidence in England, since according to a GfK study,

UK customers’ optimism dipped, with the index descending from O, in March to -3,

in April.

Consequently, the suggestion of EU departure has already caused a change in the

English economy and welfare, however, there are arguments of further consequences,

for example, the potential loss of movement and subsidizing to physician researchers

and subsequently to global cooperation in the study of cancer (Taberno and

Ciardiello, 2016).

2.1 Legalities

Separating UK and EU is legally complicated and involves operational expenses, even

if the Treaty of Lisbon established Article 50 Treaty on EU, providing autonomy to

the member states on their continued association based on their constitutional

requirements (Butler et al, 2016, Jensen and Snaith, 2016). There is ambiguity on this

regard, as there is no precedent, thereby, the laws applied from EU legislation would

need to be addressed anew domestically while international treaties negotiated afresh

(Butler et al, 2016). Lastly, UK-EU after-exit affiliation could be a matter of dispute,

as interstate arguments may occur, as far as what kind of agreement is to be followed,

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for instance, one like Switzerland’s or Iceland’s, which is a member of the European

Economic Area (Butler et al, 2016, Oliver, 2016).

2.2 Economic

The UK is one of the world's driving money related focuses, and EU is its greatest

client, so British fund is obviously threatened by a possible Brexit, even if Euro-

sceptics highlight future lighter controls (Jensen and Snaith, 2016).

In studies by Dhingra et al (2015, 2016), the economic consequences of Brexit are

stressed because UK exports to the EU stand for roughly 15% of national GDP.

Table 3. After-Brexit implications in some areas (Dhingra et al, 2016, Dhingra et al, 2015)

Moreover, British attempts such as the Transatlantic Trade and Investment

Partnership (TTIP) with the USA and Japan would suffer because if England leaves

the Union it will decrease its bargaining power, resulting in a negative outcome for

them (Dhingra, 2016, Dhingra, 2015).

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2.3 Political

Politically, a possible Brexit could affect several interest groups, presumably the most

monetarily capable, which would strive to reach a better political position in the

adaptation process after the exit, thus destabilizing the overall parties’ powers in

Britain (Jensen and Snaith, 2016). Besides, the existence of Scotland, Ireland and

Wales, semi-autonomous regions, connotes that the after-exit agreements would need

to correspond with their interests as well, thereby complicating the political agenda,

with the probable threat of Scottish independence impending (Butler et al, 2016).

Lastly, even if Brexit does not occur, the issues between UK-EU relationship would

remain unresolved (Butler et al, 2016).

Simultaneously, in Europe clout would change hands as well, since different member

states would try to further their influence in the absence of this great power (Butler et

al, 2016, Oliver, 2016). Thereby, the EU would endeavour to increase the integration

process by turning to higher monetary unity and German collaboration, in order to

retain its competitive position worldwide (Oliver, 2016). Hence, eliminating the

geopolitical fears of their international affiliates (Oliver, 2016).

3. Conclusions

The UK-EU turbulent relationship has its origins at the beginning of the European

integration process and, unfortunately, no step so far has accomplished in eliminating

their differences, leading to the 2016 in-out ballot. The consequences of this decision

would influence the political, economic and social environment throughout the world

due to globalization, illustrating the weight behind this result.

Maintaining their EU place may bring about political inconvenience, yet, in the event

that the UK leaves the EU, the monetary inconvenience will be twofold (Dhingra,

2015).

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4. References

Allen, K. (2016). Consumer confidence in UK at lowest level in 15 months, survey

suggests. [online] the Guardian. Available from: https://www.theguardian.com

/business/2016/apr/29/uk-consumer-confidence-barometer-eu-referendum-gfk

[Accessed 1st May 2016].

Baimbridge, Mark (ed) (2015). The 1975 Referendum on Europe - Volume 1:

Reflections of the Participants. Exeter, Andrews UK Limited.

Bulmer, Simon and Burch, Martin (2005). The Europeanization of UK Government:

from Quiet Revolution to Explicit Step-Change?. Public Administration, 83(4),

p.861-890.

Butler, Graham et al (2016). ‘Slow change may pull us apart’: debating a British exit

from the European Union. Journal of European Public Policy, pp.1-7.

Dhingra, Swati et al (2016). The consequences of Brexit for UK trade and living

standards. CEP Brexit Analysis, (2), p. 1-10

Dhingra, Swati et al (2015). Should We Stay or Should We Go? The economic

consequences of leaving the EU. CEP Election Analysis Paper, (22), p.2-10.

Dinan, D. (2014). Europe Recast: A History of European Union. 2nd ed. Boulder,

CO, Lynne Rienner Publishers, p.1-20.

Elliott, L. (2016). Brexit fears weighing down UK manufacturing? Dream on. [online]

the Guardian. Available from: http://www.theguardian.com/politics/ 2016/

may /03/Brexit -fears-uk-manufacturing-eu-referendum-george-osborne

[Accessed 1st May 2016].

Farrell, Sean and Elliott, Larry (2016). Bank of England warns that vote to leave EU

risks a credit crunch. [online] the Guardian. Available from:

https://www.theguardian.com/business/2016/mar/29/bank-of-england-clamps-

down-buy-to-let-lending [Accessed 1st May 2016].

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Jensen, Mads D. and Snaith, Holly (2016). When politics prevails: The political

economy of a Brexit. Journal of European Public Policy, 63(17), p. 1-9

Kollewe, J. (2016). Brexit jitters dent UK consumer confidence, study claims. [online]

the Guardian. Available from: http://www.theguardian.com/politics/2016/mar

/31/ Brexit-jitters-uk-consumer-confidence-eu-referendum [Accessed 1st May

2016].

Kroll, Daniela A. and Leuffen, Dirk (2016). Ties that bind, can also strangle: The

Brexit threat and the hardships of reforming the EU. Journal of European Public

Policy, p.1-10.

Marshall, S. (2013). Forty Years On: Britain in the EU. The Round Table, 102(1),

p.15-28.

McCormick, J. (2014). Understanding the European Union: A Concise Introduction.

6th ed. Basingstoke, Palgrave Macmillan.

Mourlon-Druol, E. (2015). The UK’s EU Vote: The 1975 Precedent and Today’s

Negotiations. Bruegel Policy Contribution, (8), p.1-10

Oliver, T. (2016). European and international views of Brexit. Journal of European

Public Policy, p.1-8.

Oliver, T. (2015). Europe's British Question: The UK–EU Relationship in a Changing

Europe and Multipolar World. Global Society, 29(3), p.409-426.

Pilotto, S. (2012). Europe and United Kingdom of Great Britain and Northern Ireland:

a peculiar relationship. Instituto Per Gli Studi di Politica Internationale Analysis,

94, p.1-6.

Sapir, André and Wolff, Guntram B. (2016). One market, two monies: The European

Union and the United Kingdom. Bruegel Policy Brief, (1), p.1-8

Tabernero, Josep and Ciardiello, Fortunato (2016). Brexit: A European

perspective. The Lancet Oncology, 17(5), p.558-559.

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Traynor, I. (2015). David Cameron's EU demands letter explained. [online] the

Guardian. Available from: http://www.theguardian.com/politics/2015/nov/10/

david-camerons-eu-demands-letter-explained [Accessed 1st May 2016].

Walsh, J. (2016). Britain's 1975 Europe referendum: what was it like last time?.

[online] the Guardian. Available from:

http://www.theguardian.com/politics/2016/ feb/25/britains-1975-europe-

referendum-what-was-it-like-last-time [Accessed 1st May 2016].

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Brexit_ Origins and Implications