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The Ambiguities of Brexit

March 08, 2017
The United Kingdom has always had a tenuous relationship with the supranational European Union. Protective of national sovereignty and parliamentary inviolability, the United Kingdom has had a ‘natural’ enmity toward continental power.

The Present Situation

The United Kingdom only approached the European Project after the rapid disintegration of the British Empire, when federalism appeared to be the only path to sustain national relevance. Nonetheless, British membership was twice vetoed by the French, and when the United Kingdom finally ascended to the European Economic Community, continued membership was domestically divisive. From the right, conservatives rebuked the European Community’s infringement on national sovereignty, while trade-unionists in the Labour Party feared supranational corporate power and free-trade agreements.

Across the political spectrum, Euroscepticism has been a persistent factor in British politics. The European Community’s reputation in the United Kingdom has not been aided by events; British membership in the EEC failed to provide the promised economic remedy of the 1970s, Black Wednesday caused billions of dollars of losses to taxpayers, immigration intensified to record highs, unpopular Brussels directives made front-page headlines, and the Great Recession tainted Europe’s financial record. Whether these accusations were justifiably attributed to the European Union or not, the European Union became the catch-all boogeyman of the United Kingdom. The combination of these public disasters, compounded by widespread discontent with the so-called “London elite,” created a predictable backlash against the supposed embodiment of these discontents: the European Union. In June 2016, the British public backed British departure from the European Union by a vote of 52% - 48%. [1] Despite recent accusations to the contrary, there is little indication of “Bregret” — promises of restored sovereignty and reduced immigration remain foremost in the public mind. [2]

<p>Image: Results of the UK vote to leave the European Union. Source: <a href="http://www.bbc.com/news/politics/eu_referendum/results">BBC News</a></p>

Image: Results of the UK vote to leave the European Union. Source: BBC News

In the aftermath of the referendum and the resignation of David Cameron, Prime Minister Theresa May resolved the controversy over whether Britain’s exit would be a soft-or-hard Brexit with the definitive answer that “Brexit means Brexit.” But even that assertion proved to be short-lived. A few weeks afterwards, the Her Majesty’s High Court ruled that Prime Minister May could not trigger Article 50 [the mechanism for EU departure] without the consent of Parliament. [3] Beyond the legal reality, the political results of the referendum have demonstrated a clear disconnect between the pro-Remain Parliament and the pro-Leave public. A recent map of the UK indicates that many MPs will have to cautiously maneuver next election as to not upset their constituents and lose their seats. [4] The issue is compounded by the marginality of the election result; the same source indicates that several MPs face a slim divide among constituents as to whether they wish to leave or stay in the European Union. Conservative MP Byron Davies of Gower, who supported Remain, presides over a constituency that voted 51.5% for Leave and 48.5% for Remain. The division in the political class will compound departure from the European Union; Theresa May will have to maneuver around internal party factions, a pro-Remain parliament, and European negotiators.

Trade Ambiguity and Opportunity

As the world’s ninth-largest exporter and the eleventh “most complicated” trade country, the United Kingdom already had a unique trade situation before Brexit. [5] But the recent vote for British departure from the European Union has caused ambiguity across trade lines. After the United States, the next four major importers from the United Kingdom are all constituent members of the European Union. [5] As current EU trade relations with the United Kingdom are uncertain, the British economy is languishing between economic opportunism and financial trepidation.

The biggest question for many exporters and importers is the possibility of a renewed enactment of tariffs on a considerable portion of the $473 billion (USD) that constitutes British exports. While exporters would prefer to see the continuation of the tariff-free European Single Market, the issue is complicated by supranational regulations. [5] If the United Kingdom maintains the tariff free trade-zone enshrined under the Single European Act (SEA), the free-trade preservation will cause a stir within the World Bank Organization, which highly discourages so-called favoritism of trading partners. [6] The British Government will therefore be compelled to participate in lengthy trade negotiations to ensure that the United Kingdom can benefit from favorable trade agreements without violating the regulations of the World Trade Organization.

<p>Image: Economic significance of U.K. Source: <a href="http://atlas.media.mit.edu/en/profile/country/gbr/">MIT</a></p>

Image: Economic significance of U.K. Source: MIT

Alongside difficulties from the renegotiation of trade changes within the European Union, Britain will also have to barter with a concerned international community in order to preserve international exchange deals. [7] Rather than depend upon the European Union’s institutions for diplomatic support, the Foreign Office will have to subsume the obligations of trade negotiation and cease reliance on the European Union for the procurement of bilateral agreements. As the economic ramifications of Brexit remain unknown, the United Kingdom will not have the advantage at the trade negotiating tables; an advantage the British Government enjoyed whilst within the European Union. [7] This ‘independence’ does, however, afford the United Kingdom the opportunity to renegotiate unfavorable trade terms and take advantage of increased trade with non-EU countries that is presently regulated by European Union trade laws. [8] President Trump and Republican lawmakers, for example, will most likely pursue a bilateral trade deal with the United Kingdom to supplant previous arrangements with the European Union. [9] Other possible trade opportunities include agreements with India, which Prime Minister Theresa May recently courted in a November state visit to New Delhi. [10]

Social, Economic, and Governmental Effects

Amidst the disarray of Brexit that still plagues British Parliament, citizens of the United Kingdom now wonder whether the social implications of the political separation will have long-lasting effects. Recently, the former European Commission worker deemed that Brexit’s ramifications will be most strongly felt in employment and social policy, regional development, and education.

Brexit’s impact on employment and welfare legislation can be interpreted from the number of pro-Brexit conservative MPs that occupy labor and welfare-related positions in the cabinet. Over the past few years, the conservative government has embraced an austere stance towards social and welfare policies, including the rejection of the European Social Fund to ameliorate the pressure of migration on municipalities and the deployment of the ESF to “boost the capacity of the food banks.” [11] For the Government, the rejection of ESF support was advanced to reassure the fiscal-minded and anti-EU factions within the conservative Party. Despite the scrapping of former Chancellor George Osborne’s “surplus by 2020” motivation, it is indicative of past approaches that policy shifts after Brexit will be tilted toward entitlement reduction as a method of deficit containment. [12]

The European Union will also withdraw their institutional funding and support for the Department for Work and Pensions. Currently, many health and social care professionals in the UK are migrant workers from other European Union countries. The social care sector, for example, has an estimated vacancy rate of 5.4%. [13] Unless the United Kingdom can find ways either to keep migrant workers or ingratiate more British citizens in migrant-dependent sectors, the British economy will be forced to retract welfare benefits.

The welfare shifts are not confined to entitlements or social care. In fact, British universities are funded and provided for by the European Union in all aspects ranging from staff funding to research grants. As a result of EU funding withdrawal, British departure will alter both the admissions rate and the price of attending British universities. [14]


While there is plenty of uncertainty on the road ahead for the U.K., the ripple effects of the decision to depart from the European Union will be felt across several sectors. The U.K.’s complex economy, due to its integrated nature and the need to redraw trade agreements, will surely be dramatically impact the withdrawal. And surely, it cannot be underestimated how deeply U.K. citizens and laborers working in the United Kingdom will be affected; while it is certain that tuition to British universities will rise, it is uncertain what will happen to migrant workers coming in and out of the country from member countries of the European Union.



  [1] http://www.bbc.com/news/politics/eu_referendum/results

  [2] http://ukpollingreport.co.uk/blog/archives/9776

  [3] https://www.nytimes.com/2016/11/04/world/europe/uk-brexit-vote-parliament.html?_r=0

  [4] https://www.indy100.com/article/mp-brexit-vote-article-50-high-court-parliament-trigger-eu-referendum-latest-7395451

  [5] http://atlas.media.mit.edu/en/profile/country/gbr/

  [6] https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

  [7] http://www.reuters.com/article/us-britain-eu-trade-analysis-idUSKCN11D1CH

  [8] https://fullfact.org/europe/uk-eu-trade/

  [9] http://www.politico.com/story/2016/06/brexit-us-britain-trade-deal-224776

  [10] http://money.cnn.com/2016/11/04/news/economy/theresa-may-india-trade/

  [11] http://ec.europa.eu/esf/main.jsp?catId=381

  [12] http://www.bbc.com/news/business-36684452

  [13] http://www.boeckler.de/pdf/v_2016_06_16_vortrag_andor.pdf

  [14] https://www.thecompleteuniversityguide.co.uk/international/eu-referendum-how-does-the-european-union-affect-universities-and-students/

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