Humphrey School News—June 24, 2016

Humphrey Expert: 5 Things You Should Know About ‘Brexit’

The decision by voters in the United Kingdom Thursday to withdraw from the European Union has sent shock waves through economic and political circles around the world.

Mary Curtin, diplomat-in-residence at the Humphrey School of Public Affairs, offers her insights into the debate over the British exit, or “Brexit,” from the European Union. Curtin spent 25 years as a Foreign Service Officer with the State Department, including three years at the U.S. Mission to the EU in Brussels.

First, a definition

The European Union is an economic and political alliance of 28 countries, the roots of which were established after World War II to encourage Germany and France to form closer bonds as a means of avoiding future military conflicts. Each of the member countries are independent, but they agree to trade under the agreements made between them.

The EU operates a single market which allows for the free movement of goods, capital, services, and people among the member nations.

1. Why did this debate in the United Kingdom come about?

Many citizens of the UK have become resentful of the control that the European Union exerts over the country’s economic and political policies, believing it amounts to a loss of British sovereignty.

But the biggest issue is the migration into the UK of hundreds of thousands of people from countries who joined the EU relatively recently, mainly Poland and Romania. The EU makes it easy for people to work and live in other member countries. The new immigrants are taking lower-wage jobs in smaller towns, and residents of those towns are upset. They believe the immigrants are taking jobs away from natives, and feel that England is becoming “less English.”

This sentiment was evident in the voting patterns for the “Brexit” referendum. Regions of England with the highest numbers of immigrants were the strongest supporters of leaving the EU. London and its surrounding urban area, which has a younger, more highly educated population, was strongly opposed to leaving. Scotland and Northern Ireland also opposed leaving.

2. What happens next?

No one really knows at this point what happens next. Under the terms of the European Union charter, the UK and the EU have to negotiate the terms of the exit. No other country has ever chosen to leave the European Union, so it’s unclear how this will play out. It is expected to take many months to come to an agreement, and the uncertainty will fuel more anxiety over the ultimate outcome. The UK will probably want to keep its open access to European markets, while the Europeans may demand the continued free movement of workers into and out of the UK.

3. What does this mean for the United States?

The immediate impact will be felt in the American economy. The Dow Jones Industrial Average plunged by more than 600 points Friday after the outcome of the referendum became clear, and the negative pressure on the markets will likely continue. American companies that use the United Kingdom as a base of operations will also be affected. The economic uncertainty in Europe and the UK will continue for some time. Markets don’t like uncertainty, which leads to a loss in confidence that can have a long-term effect on the global economy.

On the political front, the U.S. will be working with an EU which is weaker without the United Kingdom. The EU is a stabilizing institution and political partner, which cooperates with the United States on any number of issues. For example, the two entities have worked closely on Iran, and on responding to Russia’s inroads into Ukraine. 

4. What are the political implications for the United Kingdom?

The first, and most obvious one, is the resignation of British Prime Minister David Cameron. He staked his political future on the expectation that voters would choose to remain in the EU. During his re-election campaign in 2013, he promised he would hold the referendum if he was returned to office. Cameron was likely assuming he could use the referendum as a bargaining chip with the EU. The debate has badly divided Cameron’s Conservative Party.

The reverberations could extend throughout the UK. The leader of Scotland has already suggested her country might call another referendum on independence from the UK, just two years after a similar measure was rejected. Scotland wants to remain in the EU, and it could do so if it were an independent country. There’s also speculation that Northern Ireland might consider a similar vote for independence.

5. What’s in store for the European Union?

Since this is the first time any country has decided to leave the EU, this is unknown territory. However, the outcome is likely to encourage nationalist sentiments, which are rising in other EU member nations such as France, Denmark, Finland, and Germany. Those countries may at some point be pressed to consider withdrawal from the Union. Even if those campaigns are not successful, the nationalist anti-immigrant movement would continue to grow.

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