The United Kingdom voted to leave the European Union (EU) with the slim defeat of the Remain campaign by the Leave supporters. Illinois State University’s Professor of Economics David Cleeton is co-chair of the Economics and Political Economy Interest Sections of the European Union Studies Association, and an affiliated faculty member of the European Union Center at the University of Illinois. He explains the questions that arise for the departure, and how the vote was not a huge surprise.
It was thought to be a close race, and in this global climate of scattered information and reaction over substance, the results were not a huge surprise. Though it was unexpected in many quarters, especially London, the biggest banking center in the world. With the decision of the United Kingdom (UK) to leave the European Union, markets are taking a dive, and London will be in a state of institutional transition for an extended period which will include a significant exit of particular sets of financial services from the city.
The real question is what will happen in the next steps. People can talk about not being happy with overregulation and excessive rule-making, but what they face in the future will be even more uncertain than their accusations of mismanagement and feeling disenfranchised.
People have talked for decades about how to address the environment of a “democratic deficit” in the European Union. EU citizens don’t see a real connection to their representatives in the EU Parliament and the impact they have on it. There have been important reforms to give the EU Parliament more of a co-role of passing and reviewing legislation, but it’s clear people in the member nations still feel divorced from the process and decision making.
It doesn’t help that the EU often serves as a scapegoat for domestic politics. Leaders can point to rules “coming out of Brussels” as what ails their country. But these leaders are part of the decision-making process. And often when they find a decision to which they agreed does not turn out the way they planned, then the EU can serve as a foil or punching bag to try and improve their standing.
It will be interesting to see how the exit plays into the upcoming elections of EU nations, such as the presidential election in France. And perhaps more interestingly, what will happen in the United Kingdom now that Prime Minister David Cameron has announced he is resigning. It could lead to a new leadership circle within the Conservative Party or potentially result in a new parliamentary election.
The Labour Party in Britain should have been the biggest supporter of the Remain campaign. But the party has been in such disarray since the last election that the left wing did not put in much of an effort in pushing for Remain. It wasn’t just the Tories who brought up the idea of the exit that caused the outcome of the vote, but the lack of a clear message and support emanating from Labour.
Greatly increased uncertainty seems to be the path for the near future, which is never good for markets, or for the UK economy. The Scots overwhelmingly voted for Remain, so we will surely see another vote for them to leave the UK. A bigger problem could be Northern Ireland, which voted for Remain. Especially with the past turmoil in Ireland, one wonders if this will lead to the northern area looking to leave the UK as well.
Though the vote was not a huge surprise, it opens up more questions than answers for Britain. It seems as though the British have decided to jump into the pool to try and learn how to swim, and this is not the way to do it. There will be so much risk and uncertainty going forward that it cannot be a good thing. And it will take a long time before we see the full consequences of this decision play out in the future paths of the UK and the EU.
Cleeton can be reached via Media Relations at (309) 438-5631 or MediaRelations@IllinoisState.edu.