Another referendum might be what U.K. needs

The Conservative party in the United Kingdom seems to have a death wish. In their first neardeath experience, then-prime minister David Cameron, plagued with a small but vocal part of his caucus that was calling for Britain to leave the European Union, decided to squelch this group by holding a referendum on the question of whether or not to leave.

Anti-EU forces within and outside the Conservative party launched a campaign that focused on the costs to the U.K. of remaining and stoked fears of unlimited immigration from the rest of Europe. The forces advocating remaining in the EU assumed victory was naturally theirs and mounted a middling effort. The result was a 52 per cent vote to leave. With that piece of political legerdemain, Cameron, in effect, threw away his country.

In the referendum, both Scotland and Northern Ireland voted to remain in the union as did greater London.

The Irish were afraid that leaving the EU would restore the border controls that had been abolished by the peace agreement between the Catholics and Protestants. Moreover, the Protestant north felt any move to unify the island would operate to their disadvantage.

The Scottish National Party indicated their desire for another referendum on separation from Britain.

And the financial district in greater London feared leaving the EU would put at risk its special access to European and world financial markets. A strong belief that the financial industry would in large measure decamp to mainland Europe spread quickly.

Cameron did the right thing and resigned, both as prime minister and as an MP. He was replaced by Theresa May, historically a somewhat lukewarm supporter of remaining in the EU who was nevertheless determined to respect the results of the referendum by leading the U.K. out of the EU.

She claimed that she would make a deal to leave the EU, but would simultaneously be able to negotiate a trade treaty with the Europe, as well as other nations. She also stated openly that, even though the leadership of the Conservatives had changed, there was no reason to seek a new mandate from the voters.

May’s Brexit agenda was always highly ambitious, given that all matters relating to trade outside the EU had been handled by the EU staff in Brussels ever since Britain had joined.

Not only did she have to build a negotiating team from scratch, but she also faced a formidable determination by major EU powers such as Germany and France to make sure the price of leaving is high indeed.

They reason that imposing major costs on Britain will discourage other nations from following the British action and they are probably right.

May was initially undeterred by these problems and pushed ahead with her plans to begin negotiating the withdrawal this June.

However, domestic conditions in the U.K. changed. Economic growth slowed appreciably, unemployment grew and the business community was holding back on investment, fearing that access for their goods and services to the EU (more than 50 per cent of all British exports) would be severely constrained under any new arrangement.

So, May decided that, after all, she needed a new electoral mandate with a substantially stronger majority in the Commons to bolster her negotiating position.

With polls indicating a 20-point advantage over the Labour party led by Jeremy Corbyn, a far-left and little known leader, she called a snap election.

Corbyn ran a superb campaign focused on a range of pressing domestic concerns while May portrayed the Conservatives as the party best able to administer the nation and negotiate Brexit.

On June 8, the Conservatives lost their majority, thereby greatly weakening their position going into negotiations with Europe. May could well be turfed as PM by her own caucus.

The future for the U.K. looks increasingly uncertain and voters may demand another referendum to reverse this suicidal death spiral.

David Bond is an author and retired bank economist. Email: curmudgeon@harumpf.com.