Brexit in the short run has done a lot of nasty things for the UK. Racist outbursts, a weakening pound sterling, and severely hurt financial markets. But in the long run, some claim, this is independence day. Short term uncertainty be damned. Heck, they claim, even if the EU collapses it’ll be OK because we’re out of it. If we’re out of the EU when it collapses we won’t have to deal with the bureaucracy in the meantime, and we won’t be dragged down by it. This isn’t obviously true for several reasons. The most significant reason is that the UK will still be economically tied to the economies of mainland Europe, and an unstable EU will lower investment and trade (see: Brexit but much worse)
A recession or political turmoil in Europe is clearly not good for the UK. It’s one negative thing which occurred as a result of Brexit, but in the long-run, some claim that the EU was somewhat doomed. Ian Bremmer said that in some sense the EU’s eyes were larger than its stomach. The total lack of respect given to David Cameron’s ‘renegotiation’ and the tendency to kick pressing issues down the road, as in the case of the Greek debt crisis don’t say good things about the EU’s ability to solve issues. In the short run, this isn’t good for the UK, which at this point wants as clean of an exit as possible. Nonetheless there are benefits to an intact Europe for Britain (from an economic standpoint) I suppose the questions become:
- Is the EU doomed regardless of Brexit, or is Brexit something that is required for EU collapse?
- If it is doomed regardless, does Brexit accelerate its collapse?
- How much more does the UK suffer if it’s in an imploding EU than if it is separate?
Even if we assume the EU is dysfunctional (which I do believe it is to a quite significant degree), if the UK leaving causes the EU to disintegrate it’s possible the UK would be better off in an intact but dysfunctional EU, than outside the EU and dealing with an imploding one. So… one at a time.
Is the EU doomed regardless of Brexit, or does Brexit enable it?
Essentially, is the EU going to collapse in the following (10?) years? One must consider what the chances of EU collapse or severe degradation are if Britain does not exit.
This is perhaps the hardest thing. Europe has repeatedly proven to be unwilling to cut to the core and resolve difficult issues, preferring to kick them down the road. That being said it’s real hard to know if UK withdrawal will catalyze EU failure. Without Brexit there are still tremendous pressures at play (see below), so I would contend Brexit isn’t required for EU collapse. So far so good for the Brexiteers.
Does Brexit accelerate its collapse?
Yes. This has been widely admitted by both sides. Brexit is really bad for Europe. Some have claimed it will force the EU to address its core issues, but I see nothing that indicates they will. Sure, Germany may push for reform but they have been for some time, to little avail. The structure of the Commission more or less guarantees reform would need to be widely backed. Brexit is unlikely to change the convictions of those committed to the European project, but not committed to reform. It applies pressure for reform, but to reform as a result would be admitting error, something the EU has been relatively loath to do.
Brexit does however (see above chart) push nations already trying to leave closer to leaving. With Austrian elections redux forthcoming, Marie Le Pen changing her profile picture to a Union Jack, and Wilders pushing for a referendum in the Netherlands, and Five Star making progress in Italy, Brexit has catalyzed all sorts of nationalistic wall-building.
How much better off is the UK outside of the EU than in it if the EU collapses?
I’d argue not much. This is where the real difference is between those arguing for academic reasons on both sides. Generally though I think the main issue is economic. The UK will probably be somewhat less tied to the EU, although trade deals will take a long time to negotiate. The UK might however be able to stymie EU collapse or at least with its deep banking ties keep it afloat with much-needed liquidity in times of economic uncertainty (such as EU collapse). That being said those pushing for a Norway style solution (most individuals, looks like both May and Gove are at this point in time) want the same sort of trade ties to be in place as before. If this goes through I see nothing to suggest that the UK would be better off outside of the EU. It’s already excluded itself from the Euro, which seems to have been the prudent move, and thus has its own monetary policy. This is good for them, but has nothing to do with Brexit. Furthermore the UK contributes a relatively small sum to the EU in terms of net outflow, and in a time of recession I find it highly unlikely that they would be forced to put in more than the status quo amount. Again, in discussion of Exit vs Voice, the UK decided to exit instead of exhibit voice. This may prove disastrous for the EU, and a weak EU weak
Furthermore, the UK can probably maintain stronger ties with the USA if it remains in the EU. As a result if the EU did collapse, but the UK was inside of it it could potentially leverage these US ties in a way that is highly unlikely should they exit. If the USA tries to deal with Germany as the primary European power, it’s probable that the UK would be better off in the EU in the event of EU collapse.
Another argument to this effect is that of uncertainty. Should the EU collapse, the UK will be forced into decision making. Uncertainty will be limited. Policy makers can wholeheartedly commit to proposals. Where we stand the area is awash with uncertainty. We don’t know when article 50 will be invoked or even what sort of deal will be made. If the EU collapsed, this sort of lingering uncertainty wouldn’t exist: a sort of national urgency would probably provide direction.
In any case, for Brexit to be worthwhile economically, the economic benefits of EU membership and of certainty must be less than the benefit obtained by not being in the EU if/when it collapses. I very much think that the benefits of being outside the EU during its collapse, regardless of the consequences, are not very large. Furthermore, Brexit will likely expedite EU collapse (if it happens) and hence hurt the UK’s outcome over time, shortening its period of prosperity. Brexit invokes many costs, but provides relatively few benefits, even in the long-run.
This is of course rather null if there is no EU collapse, but it was a rather talked about subject during the campaign in pro-brexit academic circles. I just don’t buy it.