Up to the very end, neither opinion pollsters nor politicians, neither economists nor journalists really believed it would happen but now it actually has happened. The majority of the British have voted to leave the European Union.
They made the decision, despite a high voter turnout, even higher than the last parliamentary elections. The vote caught the opinion polls, the market traders and even the betting shops off guard since the polls had shown a trend turning toward remaining in the European Union in the ten days leading up to the referendum.
It had looked like, in the end, that voters were tending in the direction of the status quo, as is so often the case in such votes.
But now it can be seen that the anger of the silent majority was so great that even traditional non-voters set out to teach the country’s political and economic elite a lesson. It would be completely wrong to take this vote at face value and see it simply and alone as a protest against the European Union.
The European Union is only the scapegoat here that the political establishment and media in Britain had agreed upon a long time ago. The real culprit is what some populous parties label “the system,” namely the global economy.
Not only in the United Kingdom, but in other industrial countries as well, people are sensing their country’s political loss of control in the face of global market forces and unleashed international financial markets. The voters have responded to it with the demand that national governments, which they have directly elected, be given more power again to take care of the needs and concerns of their citizens.
Ultimately, the vote in favor of a Brexit is a belated reaction to the shock of the global financial and economic crisis of 2008 and ’09. It wasn’t just in Britain that the people were taught the lesson that governments are prepared to spend inordinate amounts of money when it comes to saving the banks, but don’t have the money when it is a matter of providing affordable housing, hospital beds and teachers.
Great Britain is a country that absorbed the consequences of the global and economic crisis comparatively well. The banks were turned around by the speedy intervention of the government, the rates of growth were higher than the E.U. average and unemployment was lower.
But economic growth wasn’t based on rising wages in thriving companies but rather almost exclusively on the integration of new workers, and particularly in the area of low-wage jobs in the service sector. With living costs rising at the same time, that meant for broad sections of the population that their standard of living has hardly improved, or not at all, in the last ten years. The immigrants, about half of whom primarily come from other E.U. member states in Eastern Europe, appeared to them as competition.
It was this point that populists of the Conservative Party and the United Kingdom Independence Party, or UKIP, focused on and stoked a campaign of fear. They presented leaving the European Union as the only possibility to take back control of immigration.
However, those backing E.U. membership also relied on a campaign of fear. The leader of the government, David Cameron, and his Chancellor of the Exchequer, George Osborne, raised the specter of the negative impact of leaving the European Union and threatened their citizens with announcing an emergency budget in case of a vote for Brexit that would entail spending cuts and tax increases. They didn’t even attempt a positive campaign with serious reform proposals for the European Union.
What does the Brexit vote now mean for Britain? Almost every economist has predicted losses for the British economy. Some expect a recession, some only a somewhat flattened path of growth.
Erik Nielsen, Unicredit’s London-based chief economist, predicted at a Handelsblatt event in London that potential growth in the United Kingdom would fall back to the level of Italy. Financial markets are already reacting with panic. Not only the pound, but also the euro and share prices have plummeted in reaction to the Brexit vote, a flight to safe-haven assets has started.
If there’s one thing financial markets hate, it is uncertainty and there will be more than enough of that in the coming months.
There is no routine for exiting the European Union and the myriad of details now have to be worked out in at least two years of negotiations between Brussels and London. In the meantime, investors will be avoiding Britain.
Now that Cameron has announced his resignation, it remains to be seen whether the Tories will shy away from making the mercurial, political clown Boris Johnson the head of their Party and choose him as their next prime minister. He would have to change very much to be able to steer the country safely and confidently through the coming crisis and negotiate with the European Union.
The Brexit vote will also throw the European Union into a severe crisis. The British may have never had the emotional attachment to the E.U. that the Germans and French did because of their historical experience, but their exit will leave behind a painful void.
The European Union will lose importance economically but also politically on the international stage and is now more than ever facing the question of how to proceed, given that the euro debt crisis is far from having been overcome.