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Britain has always felt awkward in the EU, so its exit is sure to be bitter and chaotic

An anti-Brexit protester carries flags past the Houses of Parliament in London, Britain, December 11, 2018.
Reuters/Peter Nicholls
No hard feelings.
Published Last updated This article is more than 2 years old.

In September 1946, British prime minister Winston Churchill called for building “a kind of United States of Europe.” A more tightly knit Europe, Churchill believed, would “give a sense of enlarged patriotism and common citizenship to the distracted peoples of this mighty continent.”

But even when the idea of a European project to secure peace held such powerful attraction, Britain wanted no part of it.  Churchill was clear. A “United States of Europe” was for the continent. Britain needed to preserve its historical and trade relationships.

A “no deal” Brexit is the most likely outcome, now or in the years to come.

The British were tempted soon enough by the transactional value of Europe—the economic benefits of a larger European market. However, those transactional gains were unwelcome if they required surrendering authority over national economic and political levers. In addition, from the early 2000s onwards, British workers and their families grew increasingly conscious that while they faced the onslaught of cheap Asian and Eastern European goods alongside competition from European migrants, the country’s elite benefitted disproportionately from access to the European market.

Today, the balance of these influences has led to an increasing likelihood that Britain will “crash out” of the European Union. Despite scare stories, including from the Bank of England and the UK Treasury, sound economics do not justify the high projected costs of Brexit. Thus, since the transactional value of the EU will not be sufficient to hold Britain back in the EU, a “no deal” Brexit is the most likely outcome, now or in the years to come.

Not long after Churchill’s speech, in May 1950, French foreign minister Robert Schuman initiated the first step towards what we today call the European Union. France and Germany would pool their coal and steel industries. Schuman and French bureaucrat Jean Monnet travelled to London eager that Britain join the proposed coal and steel community. But British prime minister Clement Attlee brusquely rejected the idea. He feared the “High Authority” created to govern the new community would acquire sweeping powers and undermine British sovereignty. The British also stayed out of the 1952 treaty to create a European army—a plan that the French in any case gutted.

The British government did show an interest in the next phase, the Treaty of Rome, designed to open European borders to trade. The economic gains were clearer. But not nearly enough, as Princeton political scientist Andrew Moravcsik has argued.

However, by late 1950s, Britain fell into a despondent mood of national “declinism,” and Britain’s leaders began knocking on Europe’s doors, believing that joining the trade bloc would “remedy” the country’s economic failures and increase its international political influence. But French president Charles de Gaulle twice vetoed British entry, in 1963 and 1967, presciently warning that Britain was a “proud” nation and would disrupt a truly “European Europe.”

Margaret Thatcher unabashedly placed the transactional value at the center of Britain’s relationship with Europe.

In 1973, Britain was finally admitted into the then-European Economic Community (EEC), a precursor the EU. In the 1975 referendum on membership, proponents stressed the transactional gains and placed virtually no weight on wider benefits the EEC might bring. Seeming to confirm the economic claims, British trade with the EEC countries rapidly increased. By the mid-1980s, prime minister Margaret Thatcher—who unabashedly placed the transactional value at the center of Britain’s relationship with Europe—was in the vanguard of promoting a single European market, which she described as her “overriding goal.”

Thatcher’s contrasting implacable opposition to the European single currency, the euro, highlights Britain’s other abiding concern. A monetary union would inevitably infringe on the UK’s ability to set tax policy, which Thatcher understandably saw as “a crucial element of national sovereignty.” Her successor, John Major obtained an “opt-out,” which relieved Britain of the obligation to adopt the euro.

But Britain’s “top academic economists” heavily favored the UK joining the eurozone, as did Adair Turner, then director general of the Confederation of British Industries. Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown understood that a single monetary policy for divergent countries was likely be a case of “one-size-that-fits-none,” causing endless frictions among member states. However, as committed pro-Europeanists, they were nonetheless inclined to join. Blair backed down only when he realized the depths of the proposal’s unpopularity.

The loss of influence in EU decisions is unacceptable to Remainers and loss of British sovereignty is abhorrent to Brexitiers.

Today, Britons are skeptical of Europe, in part, because many of them associate membership with job losses and wage stagnation. In addition, as former British ambassador to the EU Ivan Rogers has underscored, there are legitimate grounds to worry that the harmonization required by the EU has gone well beyond the “technical regulatory domain into huge areas of public life,” leaving Britain under the “intolerable” control of an unaccountable European technocracy.

The vote in favor of Brexit in the referendum on June 23, 2016, reflected primarily the economic despair of those being left behind, especially those who see a bleak future for their children. But the vote also included a large chunk of those who regard regaining parliamentary sovereignty as a crucial objective.

The Brexit decision has boiled down to whether the deep economic relationship with the EU brings sufficiently widespread gains to compensate for the loss of parliamentary authority. Nobel laureate Paul Krugman and former Bank of England governor Mervyn King have argued that the government’s estimates of the costs of exiting the EU do not pass the smell test. While real, these costs are modest, they say. As Harvard’s Dani Rodrik explains (pdf), overall economic welfare changes only slightly when countries with extensive trade relationships increase or decrease the extent of their international trade.

Making matters worse, these small gains from trade are inequitably distributed. Critics are right, Rodrik emphasizes, that trade agreements primarily benefit business elite, while governments pay “lip service” to protecting those displaced by cheap imports.

As Europe’s economic attraction diminishes, the political pressures to break firmly from the EU will strengthen.

Prime minister Theresa May has agreed to a 21-month transition during which Britain will remain in the EU’s single market but will not have a say in the rules under which the union operates. Even in the long term, the common goal of preventing a hard border between the Republic of Ireland and Northern Ireland will require the British government substantially to follow laws and regulations set in Brussels. Such an arrangement is not politically sustainable: the loss of influence in EU decisions is unacceptable to Remainers and loss of British sovereignty is abhorrent to Brexitiers. A second referendum could possibly authorize reversal of the Brexit decision, but the close vote could tear the nation further apart.

The Brexit-induced trauma is but an act in an evolving drama. Britain’s share of exports to the EU has fallen to about 45% from 61% in 1999. The reason is simple. European economies grow relatively slowly, leading British exporters to turn to dynamic markets in Asia and the US. Thus, over time, the transactional value of Europe will diminish further. And absent resolute action by the government to help those left behind, worries about inequity bred by international trade and fears about losing sovereignty will heighten.

Nobler claims that European unity is necessary to preserve international peace and promote democracy have never moved the British. Put simply, as Europe’s economic attraction diminishes, the political pressures to break firmly from the EU will strengthen.

Ashoka Mody is the author of  EuroTragedy: A Drama in Nine Acts, published by Oxford University Press. 

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