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Brexit and its aftermath


By Dr Yeo Lay Hwee

The views expressed in this commentary are those of the author and do not necessarily reflect the views of the European Union or the EU Centre in Singapore.

A printable version of the commentary is available here.

Introduction

The British people turned out in great numbers to vote on 23 June for the “In-Out” referendum. The final result is in favour of Brexit, with 51.8% voting to leave the European Union (EU) and 48.2% voting to stay.

This is the second time British voters have been asked to vote on United Kingdom’s (UK) membership of the EU. The UK joined the EU (then the European Economic Community of six members – Germany, France, Italy, Belgium, Netherlands and Luxembourg) in 1973 together with Ireland and Denmark. The first referendum was held in 1975, and then the result was 67% for and 33% against.

So what are some of the immediate repercussions and potential implications of this Brexit vote?

A divided UK

While Scotland voted to stay in the EU, and Northern Ireland too (although not overwhelmingly so compared to Scotland), most of England (except London) voted to leave. Wales was also primarily in the Leave camp.

Breakdown of how the nations voted & voters turnout Leave Remain
England (73%) 15,188,406 (53.4%) 13,266,996 (46.6%)
Wales (71.1%) 843,572 (52.5%) 772,347 (47.5%)
Scotland (67.5%) 1,018,322 (38%) 1,611,191 (62%)
Northern Ireland (62.9%) 349,442 (44.2%) 440,437 (55.8%)

Source: BBC

With such division, the question is whether Scotland would indeed carry out its “threat” to have another independence referendum to leave the UK and join the EU.

And what about Northern Ireland? Would Northern Ireland also harbour thoughts on leaving the UK and enter into some sort of arrangement with its immediate neighbour – the Republic of Ireland? Northern Ireland’s Deputy First Minister Martin McGuiness has already issued a call minutes after the Brexit result for a poll for United Ireland.

The division is not just across the nations but also reflects a divide between London and the rest of England, particularly the rural and the de-industrailised parts of England.

As BBC noted, while London has voted to stay in the EU by around 60% to 40%, no other region of England has voted in favour of remaining.

This raises the questions of how the political class in the UK will govern the country, especially when they themselves are also divided. Both mainstream political parties – the Conservative and Labour Parties – have MPs and members for and against leaving. The UKIP (UK Independence Party) appears to be the clear winner in the Brexit vote but no one believes UKIP can “unite” the country.

Market volatility amidst uncertainties

As the results started to roll in, the pound plunged on the first sign that the Leave campaign was leading. With the final result of Brexit, the pound dropped to its lowest since 1985. While one can expect the pound to rebound and stabilise down the road, the uncertainties over the future of UK’s relations with the EU will continue to be a source of constant “irritant” and hence the market will remain volatile for some time. The political uncertainties in the UK will also contribute to the market volatility and affect business sentiments. New business investments will likely be put on hold, and concerns about the future of London as the key financial centre would no doubt weigh on investors and businesses.

Spread of Euroscepticism, boost to far-right and fringe parties across the EU

The campaigning in the UK on the referendum with its toxicity and negative narratives directed towards the EU would add to the spread of Euroscepticism and give more oxygen to anti-establishment fringe parties across the EU. The EU has already suffered great damage in its reputation in the eyes of its citizens because of the way various crises (from the sovereign debt crisis to the migrants / refugee crisis) have been handled. It is feared that Brexit would lead to a “clamour” for referendum by other EU member states leading to what analysts see as “disintegration” of the EU.

However, there is also the hope that Brexit would provide the shock for the EU to push through reforms resulting in a different EU that is more pragmatic and at the same time more coherent.

The “fate” of 3 million EU citizens in the UK and 1.8 to 2 million UK citizens in other EU member states

EU citizens currently working or living in the UK, and British citizens in other EU member states would be anxious as to how the Brexit vote is going to affect them personally.

But a far more important question is how the potential departure of many of the EU citizens working in the UK and the return of UK pensioners and retirees living in other parts of the EU will affect public finances, the economy and the job market?

These are just some potential repercussions of Brexit. The broader and full implications of Brexit will take some time to sink in as both UK and the EU prepare for some long drawn negotiations on their new relationship.

If the negotiations are acrimonious and terms set for the UK are unduely harsh, the tensions would in turn have broader geopolitical implications for UK, Europe and its transatlantic partnership.

Would the UK break up, how would the unity of NATO be affected and how would UK and EU relate to the US? All these are questions that in turn would have impact on the broader regional and global landscape.

About the author

Dr Yeo Lay Hwee is Director of the European Union Centre in Singapore and Senior Research Fellow at the Singapore Institute of International Affairs (SIIA). This article first appeared in The Straits Times.