Saturday, August 15, 2020
 

The Brexit referendum, pros and cons

by Francesco Salustri

On 23 June 2016 the UK citizens are called to vote for the EU membership referendum. The consequences of the Brexit, that is the withdrawal of the UK from the EU, are hugely discussed especially from a political perspective, but little is known about its effects as a whole. Vote Leave– the campaign supporting the Brexit– argues that the EU undermines the Parliamentary sovereignty, and that being independent would make the UK able to control migration and to conduct trade negotiations without the unnecessary EU burocracy. On the other hand, the campaign Britain Stronger in Europe argues that the loss in terms of Parliamentary sovereignty and the EU inefficiency is largely compensated by the benefits of being a member of the EU, in terms of regional benefits, intra-EU trade benefits and common security policies.

To analyse the effect of Brexit on the UK, we cannot ignore that leaving or staying the EU have different impact in different sectors, such as energy, transportation, healthcare, financial service, migration, and security – and what could be positive for some sectors might be the opposite to others. From an broad economic perspective, the OECD states clearly in its latest Policy Paper that a UK exit would negatively affect the UK economy reducing the UK GDP by 3% in the next few years, and by 5% in the next decade [3]. Similar results were also discussed in the UK Treasury analysis, finding negative impact on GDP in all possible future scenarios [4].

Concerning Politics, Brexit would make Parliamentary UK sovereign and allows it to address immigration and trade policies independently. Without discussing whether this would increase the respective policies’ efficiency, it is a fact that Brexit would negatively affect the devolved nations and this can threat the unity of the UK. Leaving the EU two years after the Scottish referendum would create a push toward a new federal UK, which has not (yet) established but largely debated during the Scottish independence referendum. In addiction, devolved nations such as Scotland, Wales and Northern Ireland have different reasons to vote for stay as their respective governments have already expressed. In particular, Wales and Northern Ireland are net recipients from the EU Budget, and therefore leaving the EU would exclude them from the regional EU benefits [2]. Also, the opportunity to set a precedent, therefore encouraging other EU members to (potentially) leave the EU, cannot be ignored by the EU itself.

While at the beginning of the 2015 the polls in support for Brexit were poor, more recently the Brexit option is not so unlikely to win, and this rise is mainly due to the EU’s migration crisis. However, the UK economy is largely based on EU and non-EU migrants and the cost of reducing migrants will be charged to UK taxpayers. In addition, the recent immigration crisis, which involves mainly refugees, has roots going behind the intra-EU problems.

Brexit or not, the EU cannot ignore that the UK is asking for new challenges. Sovereignty, immigration and security are often myths rather than real issues (cfr. [1] and [4]);on the other hand, the EU is urgently called to deal with a more efficient fiscal system together with inclusive migration policies. Addressing these two issues is the first way to let the UK remain in the EU.

References

[1]       Dabrowski, M. (2016)
http://bruegel.org/2016/03/brexit-and-the-eu-uk-deal-consequences-for-the-eu/

[2]       Douglas-Scott, S. (2015),
http://blogs.lse.ac.uk/eurocrisispress/2015/03/09/would-the-united-kingdom-survive-an-exit-from-the-eu/

[3]       Kierzenkowski, R., N. Pain, E. Rusticelli and S. Zwart(2016), “The Economic Consequences of Brexit: A Taxing Decision”, OECD Economic Policy Papers, No. 16, OECD Publishing, Paris.

[4]       Sapir, A. and Wolff, G.B. (2016),
http://bruegel.org/2016/03/the-uks-sovereignty-myth

 

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