Some Reasons for and Consequences of Britain’s Departure from the EU

EU referendumPublished: 30 June 2016.
Author: Pat Byrne.

The unexpected vote of the British public by 52-48% to leave the European Union has rocked ruling elites worldwide. Not only are they worried that Britain leaving the EU will tip the UK into recession but could slow down the rest of the global economy. In the longer term, they also fear it could mark the beginning of the dissolution of the European Union itself. Moreover, they worry that this vote against the EU signals a growing rejection of international capitalist institutions and spells the doom of pro-corporate trade pacts like the Transatlantic Trade and Investment Partnership, better known as TTIP.

Reasons for the BREXIT Vote
Clearly, the success of the anti-EU movement in Britain has been especially fuelled by the massive economic crisis of 2008 and the anti-working class austerity measures implemented since. Meanwhile, with the help of the capitalist media and government propaganda much of the blame for falling living standards and welfare benefits, a growing housing crisis and cuts in public services, has been steadily shifted from the bankers who caused the 2008 crisis, onto the shoulders of foreigners in general and the European Union in particular. In this way, popular discontent with deteriorating living standards has been relentlessly directed at those least able to defend themselves, the poor, disabled, old and immigrants.

To make matters worse, the neo-liberal direction of the European Union since the 2008 crisis has undermined the more progressive aspects of the EU’s agenda. Instead of redirecting resources to the poorer members of the Union as was the original purpose of the EU, the economic crisis was used as an excuse to punish the poorer countries and compensate the banks and the rich. The arrogant and brutal treatment of Greece last year, along with the policies forced on Ireland, Portugal and Spain has caused massive unemployment and falls in living standards. Meanwhile, the rich in the EU have grown richer at a dramatic rate while paying little or no taxes. All of this has significantly reduced the appeal of the EU.

The “Special” Character of Britain
The development of an anti-EU mood in Britain also reflected deeper conflicts and historical factors.

Undoubtedly, there remained a nostalgic hankering for the “good old days” of the British Empire when England ruled the waves and dominated nearly half of the world. Thus the continuing attachment to the “great” British Pound, the royal family, the Commonwealth and all the other trappings of empire that linger on. Thus the majority of British people still do not describe themselves as Europeans. The anti-EU referendum campaign played to these historical yearnings, urging Britain to break free of Europe and turn to the Commonwealth and the world at large instead.

Perhaps even more important, is the intermediary role that Britain plays between America and Europe. In comparison to most of the countries of mainland Europe, Britain is much more closely linked to the United States, politically, economically, militarily and culturally. This is compounded by the dominance of the financial sector in the British economy, a sector far more aligned to New York than it is to Paris or Frankfurt. Last but not least, the UK and the US both adopted the reactionary neo-liberal economic agenda at the beginning of the 1980s in contrast with the more socially progressive Keynesian programme then being implemented by the European Community. It was largely on these bases that former British Prime Minister, Margaret Thatcher, launched her famous campaign against further European integration in 1988. This led to a major shift in British newspaper coverage of Europe the majority of which has been anti-EU ever since. It also led to the emergence of a large anti-European group within the Conservative Party and major external campaigns against the EU.

All of this formed the background to why the current Conservative Leader and Prime Minister, David Cameron, put forward the idea of a referendum on EU membership as a way of retaining the support of some of the anti-Europeans for the Conservative Party. He hoped that with the support of business and all of the main political parties that the referendum on Britain’s membership of the EU would win comfortably. Cameron’s gamble however, clearly didn’t pay off. Instead, it has blown up in his face, which explains why he was forced to resign within hours of the vote to leave the EU being announced.

EU Reaction
Since Britain’s vote for exit, the European Union’s parliament and the Council of Ministers have now had the chance to meet. And it is not good news for the British side who were hoping for a friendly divorce in which it could secure “the best of both worlds” as the anti-EU campaigners had promised. Instead, the European Union have announced that it will not allow Britain to remain in the European Single Market unless it meets all the conditions including paying contributions and free movement of labour, both points that were strongly objected to in the Brexit campaign. Thus, it looks likely that Britain will not be able to adopt the Norwegian model (which some of the anti-EU campaigners pointed to) and will have to leave the European Single Market.

Nor are the EU leaders willing to conduct informal negotiations in order to allow Britain to delay their exit for as long as they want while they work out the best deal for their future relations with the EU. Rather, the UK will have to trigger the formal exit procedure which then limits their negotiating time to two years.

This is an indication that behind the all kind words of regret, the EU is going to punish Britain for its decision to leave and to freeze it out of any future influence in and benefits from the European Single Market.

Perspectives for Britain
The anti-EU campaign laboured under an obvious economic contradiction. It trumpeted the fact that Britain had risen up the global economic league table to fifth place as evidence that it didn’t need the EU and could successfully stand alone. Yet, a major factor in Britain’s relative success, at least as measured in terms of the value of its overall economy, came from its membership of the European Union. For many international companies Britain was used as their bridgehead into the Europe Single Market, the largest market in the world. Britain was seen as the most attractive place to locate their European headquarters. Even more so for the financial sector where Britain’s position between the EU and the US made them a good base for their operations.

Leaving the EU and the Single Market will inevitably lead to a significant fall in foreign investment in Britain. Already, a number of multinationals have announced UK-wide hiring freezes, and some are considering transferring posts to other EU cities. More widely, the loss of confidence in Britain’s future is leading to major reforecasting for the economy. For example, projections for future economic growth have been downgraded from 2% to near to zero, with other predictions that Britain will go into recession.

Nowhere is more likely to be harder hit than Britain’s financial sector. The City of London is currently Europe’s financial hub and the biggest driver of the UK’s economic growth in recent decades. This financial sector employs over 2 million workers, almost as many as UK manufacturing and accounts for a greater proportion of GDP than any other major nation. The massive growth of the City of London was due to two main factors: the lack of UK regulation which allowed all sorts of corrupt and dodgy practices to be carried out with impunity and thus attracted “hot money” from all over the world; and the fact that London was directly linked into the European Single Market.

The exit of Britain from the European Single Market is likely to remove many of the financial advantages that it enjoyed for international financial transactions. This could have major implications for future growth.

Threat to Workers Living Standards
The immediate outcome of the Brexit vote is the forthcoming selection of a new Conservative leader which given the small majority held by the Conservatives in Parliament will mean s/he becoming the next Prime Minister. Although we can’t be sure who will be elected, the most likely winner of the largely anti-European Conservative Party membership will be Boris Johnson, the leader of the Leave campaign. This will mean that the laws that will be introduced in the British parliament to replace the EU legislation are likely to exclude those progressive measures that have helped to protect sections of the British workforce, measures that were forced upon an unwilling British establishment. The result will be an even greater impoverishment of British workers in the years to come.

A similar process of repeal of progressive laws is likely to happen with other aspects of workers conditions, such as with pensions, holidays, parental leave, health and safety, trade union rights and so on. So too with environmental standards and many other areas of society. It is often the way that people only realise the value of things when they have lost them. This could well be the case with Britain and the European Union. As millions become worse off in the coming years there may be a tendency among a significant section of those who voted to leave the EU to regret their decision and yearn for a return to it. But this of course will depend on what kind if any European Union remains to be rejoined.

Perspectives for Europe,
The departure of the second largest member of the EU is undoubtedly a blow to the whole project and severely threatens its credibility. Gone in one fell swoop is the image of an ever expanding union that would inevitably encompass the whole European continent. On the contrary, there exists similar levels of dissatisfaction with the EU in many other member countries. And given a chance to hold referendums on whether to remain in the Union a number of countries would probably vote to leave. Examples of this that immediately spring to mind include Denmark, Sweden, Greece and France. Undoubtedly there would be others. Even in Germany there is a rising tide of Euroscepticism.

On the other hand, one certain consequence of the Brexit vote is that the ruling elites of the main EU states will move heaven and earth to prevent membership ‘stay or leave’ referendums taking place. But if the EU continues to use austerity measures to drive down living standards then movements to leave the Union may become irresistible. By integrating austerity and neo-liberal rules directly into the EU’s constitution and institutions such a perspective becomes very possible if not probable.

The alternative is for a different kind of European Union based on a democratic socialist programme. A public and socially owned Europe that can overcome the current crisis of underinvestment and unemployment by democratically planning and mobilising its massive resources for the benefit of the whole population rather than for the rich. A Europe that raises all standards rather than setting the richer countries against the poorer ones.

The Greek struggle last year offered an opportunity for such a democratic socialist programme for Europe to be developed. There was huge support for an alternative plan for Europe. But SYRIZA’s leadership instead put all their effort into trying fruitlessly to persuade the neo-liberal European leaders to abandon austerity and allow Greece to follow a very different course. The Syriza leaders sought as Varoufakis expressed it “to save capitalism from itself”. The result was a disastrous defeat which still left us without any alternative worked out plan for Europe.

British Labour Party Crisis
We don’t have enough space here to go into the details of the crisis now taking place in the Parliamentary Labour Party. The only thing to say is that Jeremy Corbyn, the left-wing socialist elected leader of the Labour Party last year, was placed in a very difficult position in the EU referendum. If he had a democratic socialist alternative plan for Europe to point to it would have made it much easier to campaign positively and enthusiastically for continuing membership of the EU on a transformative agenda. In the absence of such an alternative, Corbyn was left having to campaign for a deeply flawed European project and being an honest politician felt he was unable to tell Labour voters that the EU was the answer to all their problems. As he himself put it on a TV programme during the campaign his passion for remaining in the EU rated at about “seven, or seven and a half” out of 10. Nevertheless, there was no reason why Corbyn could not have strongly and vociferously challenged the reactionary propaganda of the anti-EU Leave campaign, as some of his other colleagues did.

Similarly, Jeremy refused to appear on the pro-EU campaign platforms with the Conservatives, explaining that his reasons for staying in the EU were completely different from their pro-business ones. In this move the Labour leader was probably trying to avoid the mistake made by the previous Labour leadership when it so discredited itself in the referendum on Scottish Independence two years ago by standing shoulder to shoulder on platforms with the Conservatives. Moreover, Jeremy was also trying not to alienate anti-EU working class voters.

However, in hindsight, this refusal to share Remain campaign platforms was possibly a mistake. After all, there was no reason why the Labour leader could not have appeared on joint platforms but put a diametrically different case for Europe, something Labour failed to do in the earlier Scottish campaign. Such an approach would not have compromised Corbyn’s message but given him a much bigger audience for it.

Overall, the new Labour Leader did not come out of the British EU referendum campaign well. His hesitation and lack of enthusiasm for his Remain position, while understandable, projected him as a weak leader with little conviction. And his absence from the joint pro-EU platforms reduced his profile in the referendum campaign. All this has helped provide his enemies in the Labour Party with a stick to beat him with as we can now see in their campaign to remove him as Labour Party leader.

The future course of British politics offers the Labour Party under Corbyn many opportunities for success. But the anti-Corbyn forces in the Parliamentary Labour Party, despite their public claims, seem far less concerned with defeating the Conservatives than in defying the Labour party membership and removing the leader it so enthusiastically elected less than a year ago.

2 thoughts on “Some Reasons for and Consequences of Britain’s Departure from the EU

  1. In the section on ‘The British Labour Party Crisis’ Pat criticises Jeremy Corbyn for not campaigning actively enough in support of Britain remaining in the EU, despite its faults. It is implied that this is a reason for the success of the Brexit vote. This criticism is echoed by those right wing MPs who are trying to remove Jeremy as Party leader and is profoundly misconceived.
    In the first place Alan Johnson was put in charge of the Labour Party campaign to remain within the EU. Corbyn was called in later and campaigned tirelessly for Labour party members to vote to Remain. In fact this was a referendum not a party political election and, as Pat indicates, many Labour voters had sound reasons to register their dissatisfaction with the neoliberal tendencies of the EU. In the end two thirds of Labour supporters voted to remain, while only 40% of Tories did so, despite the urging of their Prime Minister.
    Jeremy’s critics have no reason to criticise Corbyn’s record. Tristram Hunt is the MP for Stoke on Trent. His constituencies voted 70-30 for Brexit, making it one of the 20 most Eurosceptic constituencies in the country. This record can be replicated for all the other right wing critics of Corbyn’s performance.
    Pat criticises Jeremy for not speaking on Tory platforms. It is not clear that he was ever asked to do so. Pat’s criticism of what would have been a Popular Front cross-class coalition is, in my view, misconceived. Pat mentions the catastrophic campaign conducted by Alistair Darling who campaigned together with the Tories against Scottish independence in the 2014 referendum. The slogan ‘Better Together’ could be read as ‘Better Together with the Tories’. As a result Labour’s hold on Scotland was destroyed. In the 2015 general election only one seat was retained, as against 41 out of 59 from the 2010 election. Corbyn’s “hesitation and lack of enthusiasm” was well-founded.
    He was seen as “weak” because that he was continually portrayed so by the press, aided and abetted by leaks and smears from the right wing in the Labour Party. These people need no “stick to beat him with”, and no help from The Socialist Network!

    • Thanks Mick for your comments. I am happy to bow to your better judgement on these things given your presence on the ground, so to speak.
      Just on one thing, having read John McDonnell’s account of how he and Jeremy offered their services so passively to the Labour Remain campaign, perhaps it was a mistake to leave it so much in the hands of such neo-liberal pro-EU types. I think that it would have been much better if the official Labour Remain campaign had been run on the critical support position of the Labour leadership rather than as a pale echo of Cameron’s neo-liberal campaign. That said, I agree with you that Jeremy had little chance of influencing the outcome with a media determined to almost freeze him out.
      Pat

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