17 April 2019

Does Brexit Matter?

If you spend much time in Europe, chances are that the dominant topic of conversation over the past few years has been Brexit, the impending withdrawal of the United Kingdom from the European Union. In fact, it is hard to remember a topic that has been discussed with so much doom and gloom since the Y2K “crisis” that gripped the world just before the dawn of the 21stcentury. Within the United Kingdom, it can be argued that no issue has divided the country as much as Brexit since the English Civil War in the 17thcentury, and these divisions appear unlikely to be bridged any time soon.  Within the European Union, there are mixed emotions, ranging from anger to betrayal to frustration, while old prejudices towards the English and the UK have come to the fore.  For the rest of the world, Brexit is nowhere near the top of the list for topics of discussion, but when it is considered, there is nothing but a sense of bewilderment at the scene being played out in the UK and in Europe.  Unfortunately, bewilderment is probably the proper response to this issue, as few, in any, people in the UK or the rest of Europe fully understand what is taking place.

An important question for the world to consider when it looks at this issue is whether or not Brexit really matters. Of course, it clearly matters for the United Kingdom, and it also matters a great deal for much of the European Union.  For those opposed to the greater integration of Europe, Brexit could be seen as the beginning of the process that leads to the dismantling of the European Union, and is thus a most critical issue.  However, for the rest of the world, Brexit is unlikely to have a major impact.  This is due in large part to the decline in the relative power and influence of the United Kingdom over the past 125 years. Today, the UK accounts for just a little more than 3% of global economic output and less than 1% of the world’s population.  At the same time, Europe is no longer the center of global economic and political power as it once was.  Therefore, much of the world is asking itself why it should care if the UK withdraws from the European Union and why is should be concerned with what this withdrawal entails.

From the standpoint of the United Kingdom, Brexit is the single most important issue to face the country since the Second World War and could be a turning point in the country’s history. As Europe moved to pick up the pieces from the devastation of the Second World War and the post-war dominance of the region by the United States and the Soviet Union, it moved to economically and politically integrate the countries of the region.  However, as the region’s sole major victor in the Second World War, and as an island nation, the UK was always a reluctant European, seeing itself more as a bridge between Europe and the rest of the world and as a balancer of power on the continent, than as an integral part of the region.  For the UK, Europe was attractive as a market for its goods and services, but not as a fully-integrated region.  Now, the UK faces the prospect of losing preferential access to the market that accounts for 43% of British exports.  Worse, the UK’s run of economic growth since the early 1990s was due in large part to the fact that the UK was the preferred destination for foreign investors in Europe.  Now, the UK has jeopardized this position in what can be seen as a gamble that the UK will remain attractive for businesses and investors even after it leaves the EU.

Brexit will also have a major impact on the rest of Europe.  For the EU, the loss of the UK represents the loss of that bloc’s most successful large economy over the last 25 years and the most attractive market within the EU for foreign investors.  It will also lose London, the most powerful economic center in Europe by a wide margin. For those EU member states that favor less centralization and a less statist approach to economic policy, the loss of the United Kingdom is a massive blow, as it was the largest voice within the EU supporting less state intervention in the economy, while favoring a slower pace of integration.  Meanwhile, Britain is by many measures the most powerful European country in terms of military power, and there are fears that a painful Brexit could result in a major rift in European defense efforts, particularly as most of the remaining larger EU member states have seen their defense capabilities decline precipitously in recent years.  Finally, many EU leaders are fearful that Britain’s withdrawal from the European Union will embolden anti-EU elements in other member states.  Already, there are strong Eurosceptic elements in many EU governments, most notably in countries such as Italy, Poland and Hungary.

The withdrawal of the United Kingdom from the European Union could also have a lasting impact on the West, which here refers to North America, Europe and Australasia.  This is due to the fact that, since the Second World War, the UK was the champion of a strong military and economic presence by the United States in Europe.  In fact, the UK was in many ways the bridge between its former Western colonies and continental Europe, keeping the two sides aligned even when major differences arose.  Now, as Europe is facing renewed threats to its security from the east and the south, there are fears that Brexit could accelerate the US’ withdrawal from European affairs, particularly at a time when European defense capabilities are at their lowest relative level in centuries.  Meanwhile, the UK will certainty attempt to strengthen economic and security ties with the United States, Canada, Australia and New Zealand after it withdraws from the EU, something that could further weaken the increasingly-frayed NATO alliance.  In fact, Brexit could be a critical factor in what eventually becomes the full-blown split within the Western alliance.

Outside of Europe and the West, Brexit is not likely to have much of an impact, if any at all, in the coming years. With or without the United Kingdom, the European Union’s relative power has been waning for decades, a trend that is forecast to continue for the foreseeable future.  Of course, the withdrawal of the UK will accelerate the decline in the EU’s relative political and economic influence, particularly given its strong role in attracting foreign investment to Europe.  Likewise, should a major rift develop between the EU and the UK in the post-Brexit period, this will weaken common European efforts to maintain a degree of influence outside of Europe.  A good example of this is in Africa, where the UK and France have often worked together to maintain a sphere of influence in that region against the increasing presence of the United States, China and others.  As for the global economy, apart from adding to the already-considerable uncertainty facing many leading economies today, Brexit is not expected to have much, if any, of an impact on economies outside of Europe.  In fact, Brexit will hardly be noticed by most people outside of Europe, with many other issues playing a much greater role in influencing the rest of the world.

While Brexit may not have a global impact, it is nevertheless important to understand as it can teach the world a number of lessons.  First, the decision to hold a referendum on the UK’s membership in the European Union was a reminder that direct democracy can be unpredictable and lead to unintended consequences.  Second, an increasing number of voters are opposed to globalization, including the integration of the global economy and the free flow of migrants around the world. Third, the parliamentary form of democracy is in severe jeopardy, as the rising popularity of far-right and far-left movements has led to a proliferation of political parties entering parliaments, making it difficult to form and maintain coalition governments, something that has played a key role in the recent political chaos in the UK. Fourth, the world is no longer looking exclusively to the West for leadership, with Brexit serving as an example of the political decay in the West in the eyes of many.  Finally, countries such as the UK that have benefitted immensely from globalization are now turning inwards, often imagining a glorious past that needs to be recovered in the face of inexorable globalization. While Brexit will most likely come to pass and the world will get on with its business, the lessons imparted by Brexit will be its greatest long-term influence on the world.