The vote took most commentators and experts by surprise. In the lead up to the referendum the Pound was rising on the foreign currency markets and the bookies had Remain as clear favourite. They normally get it right even if the opinion polls do not.
Usually, when an election is too close to call with certainty it swings in favour of the status quo as the large block of voters who were undecided or not adamant on their decision are wary of change and a leap into the unknown. It appears that in this instance the financial markets, bookies and opinion polls had either already factored that in or the usual switch to stability did not take place. In the end it came down to an argument between sovereignty and economics. Nobody was arguing that leaving was not going to cost Britain in the short term but presumably the leavers decided they were prepared to suffer financially to get back control of our borders and laws.
There is some collateral damage. Scotland clearly feels betrayed by being forced out when it overwhelmingly voted to stay in. Calls for another referendum are already being aired but Nicola Sturgeon will not push the button on that unless she is sure that those who voted Remain will also vote leave in an independence vote. At the moment that is far from certain.
And in a place where this correspondent has a particular interest, Gibraltar, there are real concerns. Membership of the EU was thought to protect Gibraltar from the continuing claims over sovereignty from Spain. The Gibraltarians are very politically active and when Cameron flew there for a rally shortly before the vote, almost everyone attended and expressed overwhelming support for Remain. Gibraltar voted 95.91% for Remain. Gibraltar’s worst fears were immediately realised when, straight after the Leave vote, Spain put out a statement again claiming at least co-sovereignty over the Rock. Fears about the border being closed again were immediate and palpable.
We are still not clear about the economic repercussions but the large devaluation of the Pound, the fall in the stockmarkets and the negative economic sentiment speak for themselves. And it is clear that the country is divided. A sentiment which is being much expressed is that the older generation have sold out the younger. The voting was clearly divided along age groups with a considerable majority of under 45’s voting to remain and over 45’s voting to leave. The young are accusing the old of ignoring their interests. The argument goes that the oldies have had the best of a prolonged economic boom with record pensions, access to free health service and all sorts of other benefits which the young may not be able to enjoy now we have left the EU. They have a point.
It was always thought that free and unrestricted access to the European Union for trade would be easy to obtain because the UK has a large current account deficit with the EU so the EU would be keen to strike a trade deal. It was also thought that the real loser would be the City of London which has nothing much to offer the EU and refusing free access for financial services would result in jobs moving to Frankfurt, Paris, Amsterdam etc. Both these scenarios have yet to play out but the murmurings from Brussels are that free access to trading markets must come only with continued free movement of labour so the immigration problem would remain. That is not likely to be acceptable to Brexiteers who campaigned on the fear of Britain being overrun by immigrants from poorer EU nations.
We have not left the EU. The next step is to give notice under Article 50 that we wish to leave. This triggers the negotiations to leave which must be completed within 2 years. The EU want to start leave negotiations now but it is highly unlikely that anyone in the UK government is going to serve an Article 50 notice until the successor to David Cameron has been elected. And then the fun will begin.
The EU will be a weaker trading bloc with much less negotiating power without Britain. On the other hand the EU is cognisant of the fact that other countries will be keeping a close eye on how attractive a deal Britain is able to negotiate and may decide that they also want to leave if it is a good one. It is unlikely that the EU is going to give Britain all the advantages without some of the disadvantages. If it does why would anybody want to be in the EU? Goods moving into the EU are clearly going to have to comply with EU standards so will still be subject to all those silly regulations governing how hard our hoovers can suck and how hot our hairdryers can blow. That is not going to change but is probably more irritating than important. Will the goods be subject to import duties is the important question.
Britain must now use the next 2 years to negotiate an exit on the best possible terms. Until the terms are clear, fears over the British economy will remain and investment will be stalled. Britain will need a different strategy to build its economy. But it did not become head of the largest empire the world has ever seen by being a member of the EU did it? Altogether now: ‘Land of Hope and Glory, et cetera…