Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Posts Tagged ‘Leave’

Why the UK will vote to Leave the EU

Posted by butalidnl on 7 June 2016

On 23 June, the people of the United Kingdom (UK) will vote on whether their country stays in , or leaves, the European Union (EU). While most polls show that the votes for ‘Leave’ and ‘Stay’ are roughly tied; I think that the ‘Leave’ camp will get the majority of the votes.

I am not saying this because I agree with the ‘Leave’ campaign. In fact, I believe that Brexit will be bad for both the United Kingdom and the European Union. I couldn’t do anything about it, since I can’t vote in the referendum.

Let us look at some of the dynamics that will affect the Brexit (‘Bristish Exit from the EU’) vote.

Old versus Young
The overwhelming majority of the UK’s older citizens are inclined to vote to leave the EU. These people perceive the EU as gradually stripping their country of its sovereignty. At the same time, they do not feel or experience the advantages of increased travel possibilities, friendships throughout Europe, EU subsidies and grants, etc that EU membership brings.

On the other hand, the young generation has grown up with the UK in the EU. They travel, have many personal links in Europe, benefit from study grants or other EU programs, etc. They know that the EU could provide them with future jobs and opportunities.

The votes of these two groups should balance out. However, the older people are much more likely to vote, and are quite motivated to do so. The youth, in contrast, are less likely to vote. This is made worse by the referendum day falling in a time of college exams and the beginning of the summer vacation.

Feeling the Effects
Whichever way the UK votes, most of the effects will not be felt for some time. At least two years, in fact. This is because the UK will have at least two years to negotiate its exit from the European Union. Things will remain generally the same in this period.
One possible immediate effect would be the weakening of the British Pound if ‘Leave’ wins. This may lead to an increase in exports; as well as to more expensive imports.

When the UK finally leaves the EU (perhaps in 2019), the government will most likely restrict immigration. Fewer EU nationals will be allowed to move in and work in the UK; while fewer UK nationals will move in and work in other EU countries. What will be felt by more people is the lower level of immigration. For them, this will mean less congestion when availing of government services, and maybe lead to more jobs for UK nationals.
The decreased chance to live and  work in the EU will be felt by far less people..

On the longer term, Brexit will lead to a gradual transfer of companies to countries within the EU. Foreign companies which had built manufacturing plants or service hubs in the UK in order to serve the EU market will gradually shift operations to countries inside the EU. Big British companies will need to set up their Europe headquarters elsewhere; they may also shift some of their operations to within the EU. London’s role as a global financial center will diminish.

Scotland may decide to leave the UK because of the Brexit vote. There would be less trade, and increased cost of trade. There could be many other, mostly negative, effects.

UK citizens will anticipate the more immediate positive effects of Brexit; while discounting the possibility or the extent of the negative effects.  People are more likely to choose immediate gain over (bigger) future problems.

Managing Images
A big problem of the ‘Stay’ camp is that it does not promise anything – only a continuation of the present. The ‘Leave’ camp, on the other hand, promises a return of their country’s independence, less strain on the job market and social services due to immigration, and even a vision of a more powerful and prosperous country.

Efforts by the ‘Stay’ camp to show that a Brexit will cause an economic disaster have been met with accusations that they do not have confidence in the strength and vitality of their country and people. They then shifted tack to saying that Britain will still prosper outside the EU, but that it will prosper more within it. The result is that many people have gotten the idea that Brexit will not have long-term negative economic consequences.

The issue of sovereignty is a favorite of the ‘Leave’ campaign. They argue that the country has surrendered a big part of its sovereignty to the EU.  This is because the British parliament has had to pass a lot of laws to align with decisions made by the EU. The fact that the UK participates in making those decisions is discounted by saying that it has only one voice out of 28.  They create an image of the UK fighting against 27 others and losing; where in fact it is quite often in agreement with the majority.Also, when decisions are made in the European Parliament or even the European Council, the UK has a very big voice..
The ‘Leave’ campaign’s claim that Brexit will reduce immigration is brilliant. Most people have some (mostly minor) irritation due to recent immigrants (both from the EU, and elsewhere) – be it  longer queues for health services, scarcity of cheap housing, miscommunication with foreigners, etc.  And since cutting immigration is one promise a Brexit vote would most likely deliver; a lot of people will be more inclined to choose ‘Leave’.

The only way the ‘Stay’ campaign can win is if it manages to convince people that Brexit will lead to big economic problems and uncertainty. If enough uncertainty is generated, people will have a natural tendency to choose the status quo. Scare tactics worked to keep Scotland in the UK; it might be the only way to keep the UK in the EU.

 

 

 

 

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A Brexit Timeline

Posted by butalidnl on 2 March 2016

On 23 June 2016, the people of the United Kingdom will vote in a referendum on whether their country should remain in, or leave, the European Union. If a majority votes to leave (or ‘Brexit’, for ‘British Exit from EU’), then the UK will indeed have to leave the EU.
This is one possible timeline for what would happen after the UK votes in favor of Brexit.

24 June to 31 December 2016
On 24 June, the referendum results are declared in the UK:
The UK Cabinet and Parliament decide that the country will indeed leave the European Union by 1 January 2017.

Negotiations between the UK and the EU are held.
They agree to maintain the free flow of goods and services between the UK and the EU; and to allow for visa-free travel between the UK and EU on the condition: that the UK will continue to adhere with EU product standards, financial and employment regulations; and that the UK makes a substantial annual contribution to the EU budget. The contribution would be similar with the arrangement the EU has with Norway (i.e. around Euro 100 per citizen), the UK will contribute Euro 7 billion/year (compared to its Euro 12 billion contribution at present)

The value of the British Pound will decline relative to the Euro.

The EU budget for 2017 and beyond is adjusted to compensate for he loss of the UK contribution by increasing country contributions from 1.23% of Gross National Income to 1.29%.

The UK opts to maintain agricultural subsidies at the same level as that of the EU’s CAP (Common Agricultural Policy), at least for a transition period of 3 years.

EU free trade talks with the US are suspended, because of the pending Brexit.

Foreign investments into the UK are greatly reduced during this period, due to uncertainty over the effect of the Brexit.

2017-2018
UK exports to the EU increases, as well as tourist arrivals, as a result of the Pound’s devaluation. Prices of all goods imported into the UK rise.

British companies are excluded from bidding for government contracts in the EU.
UK goods entering the EU are subjected to border contols, checking of documents and VAT payment.

The number of EU citizens working in the UK reduced by half (from 3 million to 1.5 million),  the number of UK citizens working in the EU are halved as well (from 1 million to 500 thousand)..
The UK continues to allow skilled workers to enter and work, but blocks the entry of unskilled workers. As a result, a lot of  unskilled jobs go to British citizens.
Wages for skilled workers from the EU rise because the Pound has devaluated relative to the Euro. At the same time, unskilled British workers get paid more because of the tighter labor market.

The people of the UK feel that their lives have gotten better as a result of the Brexit.

The UK holds early elections, the Conservatives win.

2019-2021
Foreign manufacturers (e.g. in the auto industry) do not establish new plants in the UK, but instead locate within the EU. Some plants in the UK are downsized.
Multinationals transfer their Europe headquarters from London to within the EU.
Many UK medium-sized service companies transfer to the EU, in order to be able to access the EU market.

The exodus of many companies and the restricted entry of foreign workers cause the UK real estate market to collapse.

UK inflation rises significantly higher than the EU’s 2% (due to higher cost of imported goods, less efficient production, etc).

UK reduces agricultural subsidies to farmers by half. Agricultural production, and exports to the EU, decrease.

The UK signs a free trade agreement with the US. The EU does not.

The UK feels significantly non-EU. The exodus of companies, cut in agricultural subsidies and production, etc are viewed as natural results of asserting sovereignty. (at least, this is what politicians tell the people).

2022-2024
The European Council (composed of the heads of all EU member countries) abolishes the need for unanimity for any of its decisions. Decisions that previously required unanimity will then be decided by qualified majority. This will greatly facilitate decision making.
The Eurogroup (the group of countries with the Euro currency) also decide to abolish the need for unanimity.
The European Parliament acquires the power to supervise the European Commission. The EP could now approve the nomination of individual Commission members, and could depose them by a vote of no-confidence.

UK trade with the EU declines.

The EU welcomes Turkey as a member. Accession talks with Ukraine begin.

Sweden and Denmark adopt the Euro.

EU establishes a Common Energy Policy, which reduces import prices for imported energy (especially from Russia), and coordinates alternative energy development.

EU Finance Ministry is established. The EUFM supervises the implementation of fiscal guidelines across the EU. Tax rates can only vary within limited ranges. Government expenditure.are allowed to vary only within limited ranges. (For example, a country could not have a disproportionately large military budget)
The EUFM issues EU Bonds. These will gradually replace bonds issued by national governments.

Frankfurt grows in importance as a financial center, rivalling London.

The exodus of foreign companies from the UK hurt Scotland the most within the UK; the Scots then pushes for another referendum on independence. In May 2022, the Scottish vote to leave the UK, starting on 1 January 2025.

Being outside the EU irritates the people of Northern Ireland. With the secession of Scotland, they have two EU countries as neighbors; meaning that there are border controls on both sides of their country. Then, the cut in agricultural subsidies hurts them. Both Protestants and Catholics want to secede from the UK and join the EU.

In Northern Ireland, people are inspired by the Scottish example, and demand to also have a referendum on independence.

EU integration accelerates; the UK starts to disintegrate.

2025-2027
The Euro is adopted throughout the whole EU. New members are required to adopt the Euro upon entry.

All EU countries are required to join the Shengen agreement on the free flow of persons.

Scotland becomes independent. It then applies for membership in the EU, and is accepted within a year.

Corsica and Catalonia secede from France and Spain respectively. They are accepted into the EU as new members. Cyprus reunites.

Northern Ireland becomes independent after majority of its citizens vote for it in a referendum. The country then forms a federation with the Republic of Ireland.

Moldova forms a federation with Romania, effectively joining the EU.

Ukraine and Serbia become members of the EU.  EU Accession talks with Bosnia, Iceland Norway, Montenegro, Kosovo, Macedonia and Georgia begin. Association agreements are signed by the EU with Belarus, Armenia, Albania and Azerbaijan.

The name ‘United Kingdom’ is dropped after the secession of Scotland and Northern Ireland. The country is renamed ‘England & Wales’.

The EU is growing to finally encompass all of Europe except for Russia and England & Wales.

 

 

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