UK Referendum – what now?

At Thursday’s referendum, the UK voted to leave the European Union, 48:52.

  • England outside London voted 43:57 for Leave, relatively evenly across all regions of the country;
  • London voted heavily (60:40) for Remain;
  • Scotland voted heavily (62:38) for Remain;
  • Northern Ireland voted (56:44) for Remain;
  • Wales voted (47:53) for Leave; and
  • Gibraltar voted (96:4) for Remain.

Turnout was higher than some projections, at over 70% in much of England, but this was not as helpful to Remain as some suggested. Indeed, much of the pre-vote punditry (which also assumed the Welsh vote would be similar to the Scottish) was nonsense.

So, what now?

European Process

The UK has voted to leave the European Union, but in fact remains a full member until it actually leaves.

It is envisaged in treaties, notably Article 50 of Lisbon (2009), that withdrawal from the European Union be carried out upon notification of intention to withdraw to the European Council, over the course of a two-year negotiation including future relationship. However, as there is no real precedent for this (the example of Greenland is given, but that was a territory not a member state and long pre-dates current treaties), so we are definitely in uncharted waters.

There is already a debate about what constitutes “notification”. It is assumed by most that this needs to be in writing, and thus would be carried out by the next UK Prime Minister in the autumn (note that the Prime Minister has the authority to invoke Article 50 without reference to Parliament). Even this alone, however, is uncertain.

UK Process

Legally, the UK Parliament’s role is to approve any treaty in departure from the European Union (including the new relationship with the European Union and any relevant deals with countries with which it currently has trade deals as a member state of the European Union).

The UK Parliament would also wish to repeal the European Communities Act 1972 which applies EU Law to the UK (either Regulations or Directives). This will be extraordinarily complex as it would create an astonishing and unprecedented legal wrangle if EU Law in its entirety were all assumed no longer to apply (as if the UK had never been a member), so some means will have to be found to clarify it still does apply, up to the date of withdrawal, with some mechanism in place for repeal of particular regulations as required. There is another constitutional wrangle here as both Scotland and Northern Ireland have to give consent in their devolved legislatures to this repeal, even though neither voted to leave the EU.

Practicalities

For now, the UK remains a member of the European Union. UK passports remain EU passports; on security, intelligence and warrants continue to apply; the UK retains trade deals it has as part of the EU and remains part of the single market; agreements on EU funding for everything from major infrastructure to housing projects stand; nothing, in fact, has changed.

Of course, the risk is forward-focused. Devolved governments, local authorities, universities, housing associations, R&D departments, community associations and all sorts of other bodies may have to think again about applications for EU funding or other assistance and certainly should not bank on them in the medium term. There is uncertainty in the longer term about what trading relationships will apply, and this uncertainty also applies to sharing arrangements for everything from intelligence to medical research. Any contracts already signed for EU funding programmes will be honoured until at least late 2018, but nothing should be assumed behind that.

Economy/Finance

The notion that the UK would have more money to spend on public services through not having to make a contribution to EU funds was seriously flawed, for the simple reason that economic uncertainty would reduce economic growth and investment and thus revenue from the creation of wealth and jobs into the UK Treasury for allocation on public services.

The most direct hits will be felt by Third Sector bodies reliant on EU funding, which will no longer have access to it. This is a problem because even if the UK were to set up replacement funds (which is unlikely), they would not be as reliable in the long term. Thus, jobs in the sector will go.

Some of the projections for jobs leaving the UK in business are probably overstated, but there will be a loss of interest in inward investment over the period of negotiating its withdrawal.

There will be significant problems with funding public services because the cost of borrowing for the UK Government will rise as its credit rating declines.

In the longer term, one trend should see the rebalancing of property prices in the UK, and thus less consumer spending. That will be presented initially as a problem, but may well bring longer term benefits to the rebalancing of the UK economy.

Constitutional

Scotland and Northern Ireland did not vote to leave the European Union and the consent of devolved legislatures would be required to repeal the European Communities Act 1972 with reference to devolved issues.

There is an assumption that a second independence referendum now becomes likely, given not only Scotland’s desire to remain in the EU but also the marked divergence of opinion between it and England & Wales. However, there will be a balance between increased sympathy for independence on one hand and referendum fatigue on the other. The chances of a second independence referendum depend on the negotiations around withdrawal.

The EU has also already spoken of a favoured relationship with Scotland and Northern Ireland specifically. This may in fact make more sense in the case of the latter, given the importance there of cross-border relationships (everything from the desirability of customs union to maintenance of the European Arrest Warrant will be on that table). It is hard to know whether such status would stabilise the UK or make its existence even more precarious.

Future

No one knows what will happen in the short term, and anyone suggesting they do is not to be trusted! There are numerous potential scenarios and versions of them; apparent promises made during the referendum campaign are to be ignored.

One scenario is a quick exit, based on what is often referred to as the “Norway Model” with free movement of labour. This may be done temporarily to enable further negotiations to take place, but end up becoming the norm; or it may be the deliberate outcome (less likely for a range of reasons).

Another scenario is a longer period of negotiation requiring at some stage further consultation with the people, most probably in the form of an early General Election. Such a route is entirely unpredictable, not least given there are scheduled elections in both Germany and France during 2017.

Another scenario, which is bizarre (but we live in bizarre times) is that Scotland and Northern Ireland remain to almost every intent and purpose members of the European Union, by maintaining the European Communities Act in operation for devolved matters and a favoured access status of some kind. Such a status may even include a contribution from them to the EU for “favoured access” but also, by return, access to funding streams (including potentially maintenance of CAP and options around research funding programmes). Reciprocal programmes (for example access to healthcare) could also be retained in the basis these are devolved. Northern Irish people already have the option of taking Irish citizenship thus retaining EU citizenship.

Another scenario which has been suggested is that the UK simply does not leave the EU. It is wishful thinking by those who lost to think that an incoming Prime Minister will not move fairly quickly to open negotiations with the intention of exiting the EU, and indeed anything otherwise would be a democratic outrage. However it is not impossible, as implied above, that the new Prime Minister would consult the people again either to seek a mandate for the negotiating position or (more likely) to endorse the outcome of the negotiations. This would more likely take the form of a General Election than a referendum, but anything is possible.

Those are just a selection of the potential scenarios and variations of them which now lie before us.

Public Affairs

Those lobbying on aspects of government policy will find themselves in uncertain and challenging times.

Nevertheless, the best thing for now is to continue as if nothing has happened, while keeping a very careful eye on monitoring negotiations between the UK and the EU. Pundits are largely to be ignored; they represent a particular segment of public opinion (generally the losing segment, in the case of this referendum).

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: