The United Kingdom (UK) voted to leave the European Union (EU) with a final exit date set for December 31, 2020, just two weeks away. The European Union, formed in November 1993, created a free market across the European continent. This included free movement of citizens in the Union across countries.
Dissatisfaction with the agreement spread across the United Kingdom after the Financial Crisis of 2008, with many British citizens feeling there were few economic benefits to the UK and that it had resulted in an invasion of “foreigners” who were taking the jobs of native UK citizens. The election of Boris Johnson as Prime Minister cemented the fate of the UK’s membership in the EU, and negotiations for the UK leaving the EU (Brexit) have been going on ever since.
Despite the belief of many in the UK that membership in the European Union has brought few economic benefits, the reality is that living standards in the United Kingdom had to rise with the increase of trade that resulted from EU membership. The reason for the disconnect between what actually happened and what many British citizens believe happened is explained in my book Capitalism, Socialism, and the Promise of Democracy. The key is that the distribution of the benefits of the agreement have disproportionately benefitted higher income/higher wealth households at the expense of middle income/lower income/lower wealth working class households.
Negotiating the UK’s exit has proven to be extra-ordinarily difficult for three main reasons:
- The Ireland-Northern Ireland divide
- A lack of trust in Boris Johnson
- The political benefits to Johnson of a no deal exit.
Ireland and Northern Ireland have been striving for and moving towards increasing unity over the last few decades. Progress has been made. However, with Ireland being part of the European Union and Northern Ireland being part of the United Kingdom, Brexit will inevitably result in a greater economic divide between the two. Trade between the two will become more difficult, making it harder for the two to increase unity. Finding a solution to this problem has proven to be challenging.
Second, Boris Johnson has consistently shown that he is willing to go back on his word, break any agreement, and say whatever is necessary if he perceives it is beneficial to himself. The result is that other Europeans have difficulty believing that he will live up to any agreement he signs. The distrust of Johnson has increased as a result of him trying to play other members of the EU against each other. He has placed private calls to different leaders trying to broker individual agreements with them. To his dismay, leaders of other EU states have refused to take his calls and remained united in their commitment to the EU. They know that the best way forward for their nations is through the economic and political unity offered by membership in the second largest trading bloc in the world.
And perhaps most importantly, politically for Johnson and the Tory party, it may well be leaving the European Union without an agreement is preferable to leaving with an agreement. Despite the claims of Johnson and his allies, and the beliefs of many Britains, the United Kingdom benefitted greatly from membership in the European Union. Brexit will bring a great deal of economic hardship to the United Kingdom. Jobs will be lost, incomes will fall, prices will rise, and living standards will go down regardless of whether there is a negotiated exit or “crash” out of the agreement. As a result, for Johnson and his allies it may well be that a “crash” out is preferable to a negotiated exit.
With a negotiated exit, Johnson could be held more accountable for the economic fallout that will result from leaving the EU. British citizens will either blame him for not negotiating a better exit deal, or will blame him for misleading them on the benefits of Brexit. By leaving the EU without a negotiated settlement, Johnson will be better able to blame the economic problems that are sure to come on the unreasonableness of the other European nations. He will be more able to rally Britains to be on his side with an us against them attitude.
Brexit will happen on December 31, 2020. One way or another, the United Kingdom will leave the European Union. They have about two weeks left to fully figure it all out. Regardless of what happens, the economic future of the United Kingdom seems bleak.
