Brexit from a global perspective

There are lots of misunderstandings about Brexit because Brexit is difficult to understand. For different reasons, some people have not been keen on trying to understand it. The fact that Trump was elected President of the United States a few months after the British referendum on leaving the European Union made the attempt to understand it much more complicated, because Brexit and Trump were cast as two sides of the same coin. And that is not a helpful way of understanding what had happened.

Instead, we can think about it in terms of Britain, then the European Union, and then the wider world. Starting with Britain, Brexit has a long history. In some sense, this begins with the way in which the British joined the European Union, or the European Community, as it was called, in 1973. There was always a problem in legitimating that decision in British politics, because British accession to the European Community had been pushed through the House of Commons without a referendum. That was a contested political question. When the Labour Party won the February 1974 general election, or at least became the largest party, it had a commitment in its manifesto to renegotiate the terms of membership and then hold a referendum. There was an attempt at retrospective legitimation of Britain joining in terms of democratic politics by holding a referendum in 1975.

The dominant arguments that had been used by those in favour of Britain being inside the European Community, both in terms of accession in the first place and then during the referendum, was that this was essentially a trade arrangement, an economic arrangement that did not have constitutional implications, and the European Community was not heading towards ever-closer union. This immediately put the issue to rest. But in the 1990s, it became much clearer that the European Union was a lot more than just a free trade agreement or a single market or customs union. That was going to cause significant problems for maintaining British democratic consent to the European Union.

Those problems probably were not sufficient to take Britain out of the European Union. But then the monetary union issue arose. Britain stayed out of the single currency. The Major government negotiated a formal opt-out so that Britain did not have a legal obligation to join, and Britain ended up on a different monetary path from the other large European Union states. There were other states that also stayed out of the eurozone, but none of them had a big financial centre like London. London would soon become the eurozone’s offshore financial centre.

Whilst you could keep the show on the road without too many questions being asked prior to the eurozone crisis, once the crisis hit in 2009, the question about what to do about the euro became the biggest question within the European Union. Being on the outside, Britain became somewhat irrelevant in terms of the future of the European Union. In some sense, Britain’s exit is playing out this fault line between weak democratic consent and, crucially, the fact that Britain stayed out of monetary union.

You can also tell a story about the European Union. Having eurozone members and non-eurozone members – being a political federation or confederation that simultaneously had a common currency but still remained a multi-currency union – caused issues for the European Union that go well beyond Britain. Some of those tensions have played out in the last few months over the EU’s recovery fund. The motivation for the EU recovery funds came out of the problem facing eurozone members and Italy, in particular, and the need for Italy to be able to sustain a higher level of borrowing in order to deal with the economic emergency.

But the eurozone does not have the structures and institutions for dealing with issuing common debt. The European Union, as a whole, does. The process of dealing with the eurozone crisis has run through the European Union institutions and the European Union budget. That gives non-eurozone members some say, potentially the threat of a veto, over what can take place in terms of helping Italy, and there will likely be ongoing tensions. So, you can tell the Brexit story in terms of a bigger picture: by having a common currency that was not shared by all its members, the European Union has got itself into a muddle that is quite hard to get out of.

There has been a backlash across the world against certain assumptions that took hold in the 1990s around a liberal international economic order. One can argue about how liberal that international economic order ever was, and I certainly would. But there was a certain set of political assumptions that went with it. A crucial assumption was that national democratic politics would be subordinate to some sense of an aggregate good for the world economy: what was best for as many people as possible in the world, for them to be living in economies with growth as high as possible. National democratic politics had to take place under parameters that were defined by that commitment to the highest level possible of world economic growth and the assumptions that went with that.

Over the last decade, we have seen that it is much harder than people thought in the 1990s to contain national democratic politics in this way. Questions about the ends of life, in some sense, not just the relationship between the economic and the political, have all come back. They cannot be taken out of democratic politics. In Britain, a chasm emerged between the large majority and the political class that had a certain kind of liberal economic worldview. A significant enough number of voters on 23 June 2016, the majority, were not prepared to accommodate at least some aspect of their political preferences to those economic assumptions. That is why Brexit is not just about what has been happening in Europe. It is part of a bigger story about whether democratic politics with its associated grievances can be contained within an essentially liberal world economic view.

It is clear that a lot of voters on the Remain side did treat the referendum as, fundamentally, a question about values and identity. I have been reading a diary of a British historian who is telling the story of his life and the football season after Brexit. He comes back time and time again to the values question and his anger and grief, because he feels that his set of values is the one that was rejected by Leave voters in the referendum. That makes sense in terms of the ways in which many young voters thought about the question. In some sense, they were not being asked whether Britain should remain in the European Union or leave the European Union. They thought they were being asked whether Britain should be a liberal, open, multicultural country: yes or no?

The fact that so many people feel that this is the deep underlying question of the referendum is part of why Brexit has been such a painful experience, collectively, but also individually. Part of the misunderstanding comes because many people on the Leave side do not think that this is what they were doing in terms of rejecting those values and saying that they thought that Britain should leave the European Union. In asking one question, the referendum acted as a proxy for many people for something else. And it is that something else – the identity issues, the value issues – that caused so much grief.

While this phenomenon and emotion exist, there is a problem in thinking about Britain’s membership of the European Union in these terms. Regardless of one’s values in terms of liberalism, the European Union is nonetheless a political entity. It is a site of authority with a certain kind of limited power in the economic sphere. Some of the difficulties in Britain’s membership, including the possibility that it could be ended in a referendum the way it was, arrived out of the EU’s own muddle about these kinds of questions.

On the one hand, the European Union gives citizenship to everybody on top of their national citizenship. With that EU citizenship comes certain economic rights, particularly in relation to freedom of movement. But, historically, citizenship has been a matter of political rights, not of economic rights. And what EU citizenship does not give is the right to vote in European-wide elections. People can vote in the European Parliament elections, but they are still organised on a national basis. So, you have citizenship rights in terms of freedom of movement, but you do not have a citizenship that allows you to defend those economic rights politically at the European level.

That can explain why we are in a situation where many people in Britain felt that something important to them in terms of their rights was being taken away from them illegitimately. They were losing rights that were constitutionally entrenched at the European Union level, but those rights could still be undone in national democratic politics. In the crucial moment of decision, national citizenship was what mattered. That tangle about citizenship, of trying to separate economic rights from political rights, is part of how the EU set-up contributed to the Brexit question becoming a values question. It also became a question about how Britain should be governed constitutionally, what Britain’s geopolitical place in the world is in relation to Europe, and the particular difficulties caused by Britain’s non-membership of the euro.

In considering what might happen after the end of the transition period, we have to separate the short-term issues from the medium-term issues. There are significant impediments at the moment to a new trade agreement between Britain and the European Union. That does not mean there will not be a trade agreement; indeed, quite the contrary. But it does not seem like one will be reached by the end of the year.

However, just because it is going to be difficult to agree a new economic framework for a relationship between Britain and the European Union in 2020, in the incredibly difficult circumstances of this year, that does not mean that we are stuck forever. If Britain exits the transition arrangements without having put a new framework in place, there will be other opportunities to try to reconstruct a more win-win relationship between Britain and the European Union in the future. Later, it might be possible to go back to the question about whether there can be a more formal framework for a security relationship between Britain and the European Union, because the British government took the decision to take security out of these talks.

One thing that will matter is the way in which the US–China relationship plays out, and how much autonomy the European Union is able to have from the United States in deciding how to deal with what is effectively the breakdown of the US–China economic relationship. There are already serious tensions between Merkel and Macron over this. Merkel’s preference is to try to keep as much of the China relationship going – for Germany, in particular – as possible. Macron is more nervous.

The Hong Kong situation has meant that British differences with Germany, in particular, perhaps less so with Macron, have been amplified over the last few months. Britain has taken a heavily critical line towards the Chinese government on the Hong Kong issue, much more so than the German government. The fact that it will be hard for Europe – the whole of the continent of Europe, so the European Union, Britain and the other non-members of the European Union – to navigate between the US and China will actually force some common ground back together again between Britain and the EU. It might take a little while because the German position is going to hold out for as long as it can, at least so long as Merkel is chancellor, to try to preserve the Germany–China economic relationship.