BREXIT AND BREGRET
An unexpected majority of Britons voted to exit the European Union – but as Brexiteers come to understand the ramifications of their decision, confusion and Bregret loom.
It was an outcome so unexpected that not even its most ardent supporters thought it would happen. When Britons marked their ballot papers in the UK’S European Union membership referendum on June 23, the odds were in favour of a Remain vote. Opinion polls showed the Remain side had a narrow but solid lead, while betting markets predicted an 85 per cent chance of staying in the EU.
Yet in the early hours of Friday, June 24, it became clear that the pollsters had got it wrong. When the last ballot was counted, 51.8 per cent of the UK electorate had voted to leave the EU. While Eurosceptics were celebrating, the response elsewhere was anything but jubilant. Stock markets experienced an inevitable dip, but it was in bond and currency markets where signs of fear were brewing. The pound fell to its lowest level against the US dollar in 30 years, while UK government bond prices soared.
Before the dust could settle, Prime Minister David Cameron, who had campaigned to remain in the EU, resigned, stating: “The will of the British people is an instruction that must be delivered,” thereby indicating fresh leadership was needed. Within a matter of days, Jeremy Corbyn, leader of the opposition Labour party, saw his position challenged by his MPS on the basis that he failed to shore up support for the Remain side during the campaign. But perhaps more importantly, the shock decision to leave the EU set the country down an uncertain path of profound political and economic upheaval – something that many people say never needed to happen.
The leaders of the Leave campaign, Boris Johnson and Michael Gove, appeared to be caught by surprise following the referendum victory. During a press conference on the morning of the result, their ashen faces spoke far louder than their prepared statements. Widely believed to have little confidence that the Leave side would ever win, their involvement was seen to be more about advancing their political careers than expediting a British exit from the EU. Indeed, Boris Johnson, a lifelong rival of Cameron, had been widely tipped to move into the prime minister’s office at the next election.
But anyone who thought the leaders of the Leave campaign would swiftly take over the reigns of government was mistaken. As Johnson and Gove vied to become leader of the Conservative Party, they effectively knocked themselves out of contention through a round of infighting, betrayal and backstabbing that many compared to Shakespeare’s Macbeth. In the end the home secretary, Theresa May, emerged as the strongest candidate, having not only vanquished Johnson and Gove, but also every other rival in what was a short and efficient contest. In a final and unexpected plot twist, May proceeded to appoint a beleaguered Johnson as foreign secretary, ensuring a series of awkward – if headline-grabbing – meetings with EU leaders to come.
BREGRETS, THEY’VE HAD A FEW
Under normal circumstances, the political chaos would have been the biggest story about Brexit. But these aren’t normal times and this was no normal referendum. Less than 48 hours after the result was announced, a stream of Leave voters began expressing regret for their decision, adding another dimension of unease and casting doubt on the validity of the vote. It was of little help that the referendum campaign was bitterly contested, one in which rhetoric and hyperbole drowned out hard facts. As a result, it’s been claimed many voters had little understanding of what they were voting for – whether sovereignty, tighter controls on immigration or something else.
This lack of understanding has come to be ascribed to a phenomenon known as agnotology, or culturally constructed ignorance, where interest groups create confusion and suppress the truth around an important issue. Some of the best examples of this came from Nigel Farage, the leader of the UK Independence Party and a vocal Leave campaigner. The day after the vote, he quickly retracted his assertion that leaving the EU would free up £350m (Hk$3.6bn) a week to spend on the National Health Service and climbed down from claims about immigration that were intended to frighten the public. But
the damage had been done. When the real consequences of leaving the EU began to hit home, so numerous were the expressions of regret that a new buzzword – Bregret – entered the national lexicon.
Beyond the political crisis and the deeply divided electorate, the biggest concerns coming out of the Brexit vote are the consequences for the UK economy. If businesses and financial markets have a common enemy, it is uncertainty. And Brexit created plenty of it. While financial markets saw short-term turmoil in the days that followed the vote, the long-term effects of Britain’s decision to leave the EU have yet to be realised.
The exact economic impact this will have on the UK economy is down to the deal that May and her new government can broker with the EU and how soon this can be achieved. This will prove challenging, given EU leaders are reluctant to make it easy to leave the trade union. One possibility that has been mooted is a quickly agreed Norway-style trade arrangement that gives the UK unfettered access in exchange for some of the “burdens” that come with full EU membership. Another possible outcome is a drawn-out trade negotiation process that lacks any agreement on freedom of movement or other elements of the EU. On the other hand, the worst possible outcome is one where trade talks ultimately stall, denting business confidence and sowing the seeds of anti-eu sentiment that causes instability across the continent.
In the near-term, the uncertainty caused by Brexit is expected to cause businesses to defer spending and put major projects on hold. The weaker pound will cause imported goods to become more expensive, pushing down wages and causing spending power to fall. This will have an immediate impact on economic growth and many believe it will lead to a recession and the longer the matter remains uncertain, the more damage it will cause. The long-term consequences of leaving are now for the politicians to decide. While the new prime minister can push the referendum result into the long grass and maintain status quo, she has made a point of saying that she will honour the will of the people and take the UK out of the EU – along with all that comes with renewed isolation.