June 23 of this year will be a historic day in the United Kingdom. It’s on this date that British Prime Minister David Cameron has set a referendum in which the British people will decide to stay in or leave the European Union. Recent polls have indicated that as much as 56% of the British population is at least highly considering voting to leave. Several of Cameron’s own cabinet ministers have joined the so called “Leave campaign,” most notably Boris Johnson, the Mayor of London and a popular figure in British politics.
The possibility of a British exit from the EU, known in the UK as Brexit, has been making headlines in UK newspapers for some time. So why exactly do so many want to leave? In the 1970s, the idea of European economic integration was favorable in the UK, as it was a way for Britain to remain a global influence after the loss of its empire. With access to a single free trade market, it was believed that economic prosperity would follow. Those who have taken a less favorable view of Britain’s place in the EU, known as “Eurosceptics,” have been around since the 1980s, during the time that Margaret Thatcher was Prime Minister. Thatcher, originally pro-Europe, switched positions after the European Union began to seek out not just economic integration, but political harmonization as well. She and many others have since felt that the increasingly supranational character of the EU threatens Britain’s longstanding tradition of Parliamentary sovereignty. Recent crises and controversies, such as the Eurozone crisis with Greece and the current migrant crisis, have convinced many that the intended result of the EU is no longer acceptable for Britain.
Although Brexit might give UK citizens more of a sense that they are being governed by themselves rather than by Brussels, the economic and security risks are far too great to call it a wise decision. First, consider one of the reasons the EU was created in the first place: security. In the 1950s, after two catastrophic world wars, both of which started in Europe and were very much rooted in nationalism, European integration was seen throughout Europe and the world as a way of reconciling former enemies and preventing future war. As more countries went through the accession process, especially at the end of the Cold War, democracy in Europe spread and the concept of European citizenship, in addition to national citizenship, was born. It is this European identity that keeps member countries from in-fighting. If Brexit were to occur, it would be a major blow to confidence in the future of the EU. With the UK, one of the EU’s biggest powers, gone, the rest of Europe would have reason to examine their own place as member states.
The UK is not the only EU country to have Eurosceptic movements. In places like Austria and France, nationalist movements are on the rise, and Brexit would only encourage them further. Why is this a problem? If other member states decided to follow a similar course as Brexit, then the European Union could cease to exist as a legitimate entity. Europe would begin to look much as it did before 1914, the year that World War I began. While saying that another European war is in the near future is probably an exaggeration, tensions would run high and the leverage the European Union now has against countries such as Russia, in both political and military power, would greatly decrease. This type of scenario would also have profound effects on US security policy, as the EU would no longer be there to help advance national interests and Russia would become a much greater concern.
Britain outside the EU would also be in a much weaker position to negotiate with larger powers, leading to the deterioration of the trade relationship the US and UK have maintained for years. One example is the consequences of the Transatlantic Trade and Investment Partnership. TTIP, as it is known, is a negotiation between the US and the EU, expected to be implemented within the next year or so, that will strengthen transatlantic ties, lessen trade barriers, and stimulate economic growth throughout the EU. One report shows that the EU economy could make gains of up to £100 billion, with the UK economy alone benefiting £10 billion. Without the EU, Britain would lose out on the opportunities presented by TTIP. Although some Leave campaigners argue that a trade deal with the United States would be easily negotiated, US officials have already said otherwise. At an April 2015 press conference, US Trade Representative Michael Froman said, “I think it's absolutely clear that Britain has a greater voice at the trade table being part of the EU, being part of a larger economic entity… We're not particularly in the market for [foreign trade agreements] with individual countries.” With TTIP, the US will turn to other major European trading partners, such as Germany, if Britain leaves the EU. The allure of the UK as a major US trading partner will lessen as US-EU trade becomes more accessible and lucrative. A vote to leave would greatly upset transatlantic trade and will affect economies in the US, Britain, and the EU.
London is a major global economic hub, and as such many US companies, particularly banks, operate corporate branches there. London is a crucial access point into the Single European Market for these businesses. In the case of Brexit, they would be left out of the SEM, rendering their location useless. Furthermore, businesses feel that Brexit would put their investments at risk. As one senior US banker suggested to Financial Times, Brexit would mean “every single contract would have to be renegotiated – that means every credit default swap, every derivative, every loan agreement. It’s a nightmare.” Concerns about the potential effects of Brexit have already become apparent among the business and investment community when on Monday, February 22, the pound sterling fell nearly 1.7% after several cabinet ministers announced their support for leaving.
Finally, the existence of the UK as it is would be jeopardized. After a narrow referendum in Scotland in 2015 in which voters said no to independence, Scottish First Minister Nicola Sturgeon promised that another independence referendum would not take place in the next five years unless there is “strong evidence” to suggest that a majority of Scots support breaking away. Certainly, a British exit from the EU would be a change in context. Scotland has always tended to be more pro-Europe as it’s one aspect that sets them apart from England. If Brexit occurs and things start going downhill for the UK, Scotland is likely to once again seek independence, this time with a greater likelihood of success.
Those in the UK who want to leave the EU are not wrong in saying that Europe has problems. In fact, it has many. But Britain’s future looks much brighter as part of Europe rather than as an outsider. The consequences of Brexit would be detrimental to the UK’s economic and political clout, as well as to global business and trade actors with significant investments in the UK. Instead of running away from Europe’s problems, the UK should begin to take a lead in solving them.