Brexit: What’s Next?

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In the space of five days England has voted to leave the European Union and crashed out of the European Football Championship; David Cameron and Roy Hodgson have both walked out the door; and despite everything, at the time of writing, Jeremy Corbyn still remains in post. This blog will consider the next steps and implications of the former Brexit; the football to be put down as a usual England performance that will be forgotten about in another five days.

With a 51.9% to 48.1% in favour of Brexit, the public have spoken and decided that the United Kingdom should leave the European Union. With a distinct lack of information made available from both campaigns about what will happen in the case of a vote to leave, the somewhat surprising result has left the public with no idea what will happen next.

 

What has happened so far

  1. Leaving aside the fluctuating stock markets and the initial loss of £120bn from the FTSE 100, more importantly, the ratings agencies Fitch and S&P have downgraded the UK’s credit rating. This means they think that lending money to the UK government is less safe than it was last week. Fitch said the outcome of the referendum would hit investment because of the uncertainty on three issues: the future of the UK’s trading relationship with the EU; the regulatory backdrop; and political uncertainty, including a possible referendum in Scotland.

 

  1. Reports of hate crime have risen 57 per cent in the aftermath of the referendum, according to the National Police Chiefs’ Council. The referendum result has perhaps emboldened racists by leading them to believe that the majority agree with their views on immigration and legitimising such public expressions of hatred.

 

  1. With Northern Ireland, Scotland and London all voting against Brexit, the nation has been firmly divided. Scotland is entertaining a second referendum on its future in the UK, along with possible hints of remaining in the EU. Moreover, a petition has reached over 4 million votes (a definite record) calling upon the Government to implement a rule that if the remain or leave vote is less than 60% based a turnout less than 75% there should be another referendum. Parliament will consider the petition for a debate in due course.

 

What will happen next

  1. EU nationals currently living in the UK, as well as UK nationals living in the EU, will not have to go home- for a long time at least. At present the UK has failed to invoke Article 50, the formal mechanism to activate our exit. The obstacles we need to get over to do so at present are stacked high. First, we need a replacement for David Cameron and then there is the possibility of an unplanned UK general election. After this we may see Article 50 invoked which would initiate a two-year (maximum) period of negotiating the terms of our exit. These negotiations will be important. There will be huge pressure in favour of remaining as part of the single market; however, in order to do so we will have to accept free movement. This will mean, ultimately, nobody will be going home in any event.

 

  1. £350 million a week will not go to the NHS. Nigel Farage admitted on the day of the referendum result that it had all been a mistake. The pledge was central to the official Vote Leave campaign and was controversially emblazoned on the side of the bus which shuttled Boris Johnson and Michael Gove around the country. Were voters misled? Did the mistake cause people that would have otherwise voted remain to vote in favour of leave? These are crucial questions which are being largely avoided by both camps, the politicians, and the media.

 

  1. Uncertainty will be rife and this will have a huge effect on the economy. Direct foreign investment will stall, interest rates may fall, inflation could rise, and the pound may drop further against the euro and dollar. The future is certainly not bright (as Orange once coined- perhaps they saw this coming and got out while they could).

 

  1. We might not even leave the EU. Our exit could be prevented by many factors. First, a legal challenge. Legal commentator Joshua Rozenberg stated that ‘if the remain side loses, some sort of challenge must be almost inevitable – if only as a way of buying time.’ The EU Referendum Act 2015 allows six weeks for anyone challenging the result to bring a claim for judicial review. That will take us into parliament’s summer recess. The courts also take a summer break. So it could be some months before any legal challenges were finally resolved. The next hurdle would be a debate in both houses of parliament. Supporters of the leave campaign might argue that the referendum result is sufficient, but parliament did not surrender its sovereignty to the electorate when it passed the EU Referendum Act. The legislation says nothing about the consequences of a vote. Many legal commentators take the view that there would have to be a Commons majority in favour of Brexit, at the very least. A vote in favour of Brexit in the Commons would be unlikely given that the majority of MP’s are in favour of remain. It would involve an intricate and interesting balancing exercise between the national interest and the ‘will of the people’.

 

Conclusion

Whilst the majority of the public will yet to have feel any effect from the referendum result, the signals are clear: the forecast for the economy is poor; hate crime has already increased; and the United Kingdom is no longer united. There has been at least one mistake (lie) from the leave campaign and nobody is going home just yet as the leave campaign’s van posters seemed to suggest. The uncertainty created is having, and will continue to have, an impact on the economy and what will it all be for? We might not leave after all… watch this space.

 

29 June 2016

Dale Timson

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