Brexit is not a one-off, look at Europe’s woes

There is a way of thinking about Brexit that has proven popular because it is of comfort both to the UK and to the remaining 27 member states of the EU. This is to view it as a uniquely British affair, one that realigns this country with its old traditions – in Europe, but not a direct part of it; a bridge between Europe and the US. The continental version, meanwhile, views Brexit as a liberation for the EU after putting up for decades with grumbling Brits. As one French journalist put it a day after the referendum: “My English friends, thank you for your sacrifice.” This is wrong.

Far from being an isolated event, Brexit is representative of growing economic and political tensions within Europe on the matter of European integration. Look at the political tremors now shaking the EU’S keystone nation, Germany, which have even threatened the position of Angela Merkel.

Importantly, both Britain and nations of the Continent have economic frustrations with the EU. As there is no single European economy, citizens in Europe experience “ever closer union” through their national growth models. In Britain’s case, the economy grows by expanding the labour market. This injects life into the country’s service sector-dominated economy but makes the UK dependent on very high levels of net migration. This model delivers low unemployment but also low productivity and low wage growth. The tensions produced by this growth model were important drivers of Brexit.

Germany’s experience of the Single Market is quite different, but also problematic. Lying behind Germany’s success in export markets is an economy characterised by low aggregate demand and high savings rates. Labour market reforms have led to a decade-long squeeze on wages, meaning that most Germans don’t feel rich. This is why there is so much opposition in Germany to a European fiscal transfer union. “We’ve not had it easy,” goes the argument, “so why should we help out the Greeks and the Italians?” Further integration of the eurozone will run up against ordinary Germans’ experience of life in the single market.

There are also frustrations common to Britain and the Continent with governments which seem more focused on striking deals in Brussels than in representing the wishes of their citizens. The European orientation of the administrative British state was on show throughout the referendum campaign, with major British institutions – such as the Bank of England and the Treasury, and the “deep state” of the higher education sector – openly backing the Remain campaign. Since the Brexit vote, British diplomats have been pushed to act as if the UK were a 19th century nationstate, when in fact it is a 21st-century EU member state, accustomed to the pursuit of consensus and compromise.

Their refusal to consider Brexit as a challenge to transform the state continues. British civil servants currently working within the Department for Exiting the European Union (DEXEU) are only seconded, for a term of two years, from their original ministries – the implication being that their services will only be needed for a short transitional period. This is clearly a dramatic under-estimation of the administrative, constitutional and economic challenges posed by Brexit.

Brexit reveals in a dramatic fashion the way in which EU member states struggle to fulfil even the most basic functions of self-government associated with the model of the modern sovereign state. This is by no means only a British affair, as we saw it also in 2015 when the Greek government was unable to translate the wishes of its own people into a new deal with its creditors. This is an urgent issue for all European citizens who believe in the capacity – and duty – of governments to represent the will of their citizens.

Brexit should not be treated as a stand-alone phenomenon, isolated from the rest of the European continent. It is unlikely that other countries will follow suit in the near future, not least because of the difficulty in leaving an integrated currency union. But Brexit nevertheless expresses fundamental tensions at the heart of “ever closer union”. Ironically, it is precisely in its decision to exit the EU that the UK has identified itself most as a European state, whose fate has many lessons for the EU’S 27 remaining members.