So the UK has decided to leave the EU. What are the ramifications? The scope of their decision is enormous. On one hand, it is wise: the EU, after all, has become home to stifling bureaucracy, and if one sees its construction as the great neoliberal project of the last century, then leaving it is a rejection of neoliberalism. On the other hand, idiotic and even insane: the UK is itself a confederation, and by leaving the EU, the seeds of its own undoing have been cast.
Applying my prognostication powers, I see that the long-term Brexit effect will be, bluntly, catastrophic for Britain — but it will also begin an EU-wide internal crisis. In the long run, the major effects seem to be (a) an unwinding of the UK, and (b) at minimum, some badly-needed reorganization within the EU.
(It is also interesting to note that the Leave vote spread’s demographics seems to correlate closely with the American far right’s.)
Some of the effects are very short-term and we can suspect them being played out within the next few years.
Decamping of London’s financial sector. Much like New York, London is a financial services city, first and foremost. And also much like New York, it is a city that functions as a financial command and control center on a continental scale.
By voting to leave the EU, the British have effectively shorn themselves of the advantages London offered. While the city will remain as a center of local finance, the global financial sector will be forced to move elsewhere on the continent (Paris, Frankfurt, and Dublin all seem to be natural choices here — Paris because it is the EU’s largest city; Frankfurt because it’s the largest financial center on the mainland; and Dublin because it’s the largest city in the Anglophone EU and a financial center in its own right).
It is the very presence of the global financial services industry that bids up London housing prices into the stratosphere, which means that anybody, and I mean anybody, who owns even a scrap of land in London will be looking to get out now. Which brings us to…
British recession. While this is unlikely to hit the already-economically-depressed British Rust Belt, aka its North, all that much, prices in the London property market will massively fall as the financial services sector leaves, in turn taking a large suite of ancillary services and hangers-on with it. I’d say that prices throughout the city will fall by 25%-50%, and the economic reordering that comes with it will plunge Britain into a protracted recession — unitary states function as overlarge city regions; the country as a whole is dependent on its dominant city.
But wait!, you say. The UK is not a unitary nation — it’s a confederation. Well, that leads us to…
The end of the UK. Note not “as we know it” — the UK as a sovereign nation will be ended. Why? Well, leaving the European Union is politically divisive throughout the UK — even more so when one considers that, while the Brexit heartland was Northern England, the Scottish and Northern Irish both voted to stay in (and every part of Scotland voted to remain).
The UK’s EU membership was a key part of why Scotland’s recent independence referendum failed, and as such, Scotland has already signaled it wants to pursue another independence referendum — one now tied with accession to the EU in its own right. Similarly, over in Northern Ireland reunificationist politicians (like Sinn Fein) are signaling that they want a referendum on whether to secede from Great Britain and unify with Ireland.
Of course, the Troubles still scar the latter, but in Scotland the political calculus has changed to such a degree that most will be in favor of independence (remembering that last year’s referendum barely failed). The bottom line here is that the UK is toast, the catalyst for its long-term disintegration laid.
An interesting subplot here is that Scotland may seek to be named legal successor to the UK’s EU membership (contingent on an independence referendum, of course). If this does indeed turn out to be the case, then Scotland finds itself in the advantageous position of being able to secede from the UK and accede to the EU in one swift stroke. Let the curmudgeonly Tories run their own damn country into the ground!
The overall effect of all of this is a shifting of political and economic power away from London; London has no say in an independent Edinburgh, nor will it have anywhere near the financial clout it used to. In fact, in the Scottish succession scenario, Scotland may well turn out to be the most advantageous position for the EU’s financial muscle to congregate, flipping the British Isles’ economy on its head!
We can also see some medium-term Brexit effects brewing, most of them manifesting in deeply ironic ways.
Greater European Regulatory Control. Even though England is out of the EU, that does not mean they are free of EU regulatory meddling. Quite the contrary, in fact. England’s economy is so interdependent on Europe’s and the UK had amassed so many EU opt-outs that — in their natural next step, EFTA membership — they will have to renegotiate quite literally everything.
One of these, hilariously, is border control. While the UK and Ireland had identified their open border across Ireland as the reason for Schengen opt-outs (with eurozone Ireland likely to join Schengen should the border across the island cease to be a problem), every other EFTA member — Switzerland, Norway, Liechtenstein, and Iceland — is part of the Schengen community, and indeed, common Schengen membership may well be now seen as an implicit part of any EFTA member’s EU relations …
The long and the short of this is that England just bungled away a status quo that actually gave it the strongest border control in all of Western Europe. There are very few universes in which Brexit does not lead to England joining Schengen, mostly out of economic necessity.
The same holds true with the way EFTA broadly applies the EU acquis, the shared law that enables the implementation of the common market. Which, of course, has to be applied for any European good imported into England, or any English good exported to the EU.
Diminution of English influence, both in Europe and around the world. This happens on two fronts — first of all, the diminution of influence one would naturally expect, given that it’s now only a matter of time before Scotland leaves for Europe’s bluer pastures; and second, because England just rid itself of the representation it had within the EU.
There’s also the question of the military costs of Scottish independence, which — again — is all but inevitable, given that Scotland wants in even more badly than England wants out. Much of the UK’s ability to project military power was and still is based in Scotland … and other areas which the Brits own due to military reasons, such as Gibraltar, are themselves intimating they’d rather be in the EU.
In short, the next few years will determine whether or not the EU is indeed Europe’s hegemon. The cards are stacked against England: London’s might as a financial center? Gone. Its ability to use EU membership to carve out opt-outs hither and yon? Gone. The Brexiters’ own stated goals of greater British autonomy? Gone in the most ironic way possible.
What about the EU, anyway? Here there is no easy answer. A number of European states have strong independence movements, some led by charismatic idiots; members of this bloc have cheered Farage’s apparent success.
For them, Brexit is just the first step in dismantling the EU. Nationalist politics — Britain for the Brits, Denmark for the Danes, Holland for the Dutch, Czechia for the Czech, etc. — come to dominate the European continent again. But the problem of this is that it flies in the face of the reason the EU came about in the first place. Sovereign states need to be bigger in a smaller world to survive; states like Denmark or Czechia are deeply interdependent on their neighbors, their blocs, and Europe as a whole.
But Brexit is also a grand experiment in whether this politics is even viable. (Spoilers: It probably isn’t.) Obviously, Brexit and its ancillary effects — devaluation of the pound (perhaps long-term as kicking the financial sector out may well be a loss the country can never recover from), recession (what, other than the financial sector, does Southern England have that makes it wealthier than Northern England?), disintegration of sovereignty (the surety of Scottish secession), and so on all make the UK look like an early-2000s’ Austria-Hungary.
However, there are other real effects elsewhere in the EU. Obviously, this reawakens the whole question of European sovereignty; recall that its greatest structural problem is that it is a pooling of sovereignties but not a fully independent sovereignty in its own right. A second major problem is military projection: With the UK out, France is now the EU’s strongest military player. For nationalists like Farage or Wilders, a collapse of the European project is to be applauded; for most workaday Europeans, such a scenario, with internal trade subject to punitive tariffs, decreased continental mobility, and so on, is terrible.
My Own Prediction: Brexit is tantamount to England kicking London’s financial sector out. This sector has been what has powered the British economy; with it gone, Southern England starts to look an awful lot like Northern England. Obviously, the European financial sector will reestablish itself elsewhere on the continent — where, exactly, is unknown.
Meanwhile, Scotland will begin working on its next independence referendum. Behind the scenes, Scotland will lobby to succeed the United Kingdom as an EU member. If successful, Scotland would secede from the UK and accede to the EU the same day the UK’s EU membership ends. This begins the UK’s breakup.
With its financial sector gone, England sinks into a deep recession. Unable to receive EU monies, England cannot subsidize Wales and Northern Ireland — and the increasing economic gap between the latter and Ireland leads to calls for them, too, to pursue seceding from England.
In order to access the European market in any meaningful way, England must join EFTA. Not doing so enforces punitive tariffs on a sluggish economy; doing so forces England to submit to Schengen and the EU acquis despite it not being a EU member.
The EU is forced to reexamine itself — in particular, its central bureaucracy. Perhaps Brexit is a significant enough crisis of sovereignty to force it to a constitutional convention.
Meanwhile, the economic malaise — coupled with inflated living costs — leads to a migration reversal. Opportunity is no longer found in Britain for Britons, and this in its turn leads to a re-accession movement, as the full scale of what the EU offers England is gradually realized.
This is probably going to be the biggest long-term Brexit effect: Breaking Britain’s belief it can go it alone, giving way to a generation that realizes England needs Europe even more than Europe needs England.