Friday, July 01, 2016

Anarchy in the UK - Brexit vote brings chaos & uncertainty

If it were not so tragic, the fallout from Britain's EU referendum result could be seen as some sort of political farce or Greek tragedy [Guardian].  

But it's a very English tragedy and one that's very real, very dangerous and may completely destroy the country altogether both politically and economically.

Cameron's unnecessary gamble

In a vain attempt to quell the Eurosceptics in his party and stop defections to UKIP, Prime Minister David Cameron last year promised a referendum on whether Britain should remain a part of the European Union. The promise may have won him an election, but his gamble has cost him, his party and the country dear.

Perhaps he thought it would be a slam dunk, a sure bet, a no brainer. After all Britain benefits hugely from the EU - though Eurosceptics would doubtlessly argue to the contrary.

But rising immigration and the emotive issue concerning sovereignty and the feeling that British laws were made by so-called 'unelected bureaucrats' swayed many to the Leave camp.

Perhaps Cameron should have made clear that the referendum was not legally binding or suggested that a pull-out would only be implemented upon a decisive majority - say two thirds of the vote, or that it should even be compulsory to vote. Indeed he could have decided not to call a referendum in the first place and not made it an election promise. Neither Labour or the Lib Dems would ever have called a referendum and UKIP would never win under the first-past-the-post electoral system.

But Cameron did none of these things and the result - after months of wasted electioneering - was a 52% to 48% split in favour of leaving the EU. With a 72% turnout it means that only 38% of the electorate actually voted to leave. But Cameron was adamant that the people should be heard and plans should be made to extricate Britain from the European Union [BBC].

Anger and buyer's remorse

However, that decision has in itself left many people, potentially up to 16 million of them who voted to remain, extremely angry [New Statesman]. The anger is compounded particularly by the lies and half truths used in the Brexit campaign [New Statesman]. There is also a sense, especially amongst the young, of being betrayed by the older generation who tended to vote to leave. There is also a sense of buyer's remorse with many people - amongst them Kelvin McKenzie of The Sun [Independent / Guardian]. And America is watching closely on this one too [Vox].

Resignations and party splits

After the vote came one tragedy after another. Cameron announced he was to step down as leader of the Conservative party. The stock markets went into a spin and the pound crashed to a 30 year low. Then there were calls for opposition leader Jeremy Corbyn to quits as party members saw him as being partly responsible for the result having not made clear Labour's stance or forcefully put the case for remaining a part of the EU.

"I know the honourable gentleman says he put his back into it. All I'd say, I'd hate to see him when he's not trying," Cameron said as he scolded Corbyn during PMQs before telling him to step down. "For heaven's sake, man, go!" Cameron hollered across the chamber [Guardian].

Labour certainly have their own issues [Newsweek]. But for Cameron he is likely to leave behind a legacy that he triggered the disintegration of the UK. Scotland will almost certainly leave - or at least try - should the British government follow through and actually leave the EU. There are even rumblings that Northern Ireland and the Republic of Ireland in the south could unite to join EU — which would certainly be ironic, given their history.

Gibraltar, a British Overseas Territory, voted overwhelmingly to Remain, as did Scotland.

And Gibraltar's First Minister Fabian Picardo said on the Monday following the referendum that he's been in talks with Scottish First Minister Nicola Sturgeon to find a way for them to unite in some fashion to stay in the EU.

Boris leaves the battlefield

A week after the Britain's went to the polls the front contender for the next Tory leader Boris Johnson decided he was not the right person to take the party forward [BBC]. Only a week before he had spoken of rebuilding Britain and bridges but now he was quite chapfallen [BBC]. It is often said in Tory ranks that "He who wields the dagger never wears the crown" and this appears to have come true for Boris.

It was almost as if he'd gambled by playing the part of a Eurosceptic in order to take over the party and lead it through the next election with a populist following. In other words he'd hedged his bets on Remain winning before launching a coup against Cameron. But despite the upbeat comments from Boris Johnson and others in the Leave camp, things have not gone quite as planned. Whatever his intentions, the aftermath is being felt far and wide.

The dismay expressed concerning Boris Johnson's announcement was almost immediate. "So Cameron destroyed, Johnson destroyed, just a shame the country is also heading that way" the Guardian's Jonathan Hayes wrote on Twitter.

"So Boris smashed up the whole place for nothing. For nothing." wrote Philip Collins a writer and contributor to the The Times and chair of trustees of Demos.

But it wasn't just the columnists. Former Deputy PM Michael Heseltine waded in calling Boris Johnson a disgrace. Lord Heseltine said Boris had "ripped the (Conservative) party apart, he's created the greatest constitutional crisis of modern times he's knocked billions off the value of the nation's savings. He's like a general, that led his army to the sound of guns, and at the sight of the battlefield abandoned the field."

"I have never seen so an irresponsible and contemptible situation," Lord Heseltine added [BBC / BBC]

Tory leadership battles

Meanwhile other Conservatives had already thrown their hats in the ring. One major contender, and the only one who originally came out to remain in the EU is the Home Secretary Theresa May.

However in her leadership announcement launch, May seemed resolute and claimed she was the right choice to, "Bring together the country and a sensible organised departure from the EU".

But her statement "Brexit means Brexit" will hardly bring about confidence in the City where there was a feeling Article 50 might never be invoked. Indeed her assertion that there will be "no rejoining the EU by the back door" gives no wiggle room.

There appears to be strong backing for May within the party. "The UK needs strong and proven leadership" Michael Ellis MP told the BBC echoing the words of another May supporter Chris Grayling MP.

She certainly has some support but there'll be few making bets quite yet given the series of unpredicted events that neither the bookies, political pundits nor polls got right.

The bookies and many polls seemed to hinge upon the Remain camp having seized the day. But by 1 a.m in the morning on Friday 24th June it appeared clear that the vote had swung the other way.

Repercussions of Brexit vote

The repercussions were almost immediately felt as the markets crashed around the world. More than $2 trillion were wiped off the value of shares globally and Sterling sank to a 30 year low against the US dollar.

While there was some recovery the following week, the pound still remained low. Meanwhile three major ratings agencies all downgraded Britain's credit rating removing its AAA status [BBC]. And less than a week after the vote had been declared others were declaring UK banks a bad bet.

RBS and Barclays, which had seen up to 10% wiped off their share value in the days after the EU referendum, were declared as "uninvestable for months" according to investment management and research group Bernstein [Reuters].

Of course Leave campaigners insist that the downturn would only be short-lived and that confidence would return.

Those in the City are less optimistic with some commentators predicting a recession. Martin Wolf, associate editor and chief economics commentator at the Financial Times, has described the fallout of the Brexit vote as probably "the most disastrous single event in British history since the second world war" and says he would not be surprised if Britain fell into recession [Yahoo - Video].

Wolf was one of several who had aired the possible outcome of Brexit being abandoned .

"Prime Minister Johnson might, to paraphrase Emperor Hirohito's remarks at the end of the second world war, declare that, given the "unexpected" economic damage and the risk of a break up of the UK, the situation "had developed not necessarily to the UK's advantage". He might forget the whole thing or, alternatively, call another referendum, merely to make sure the people remained as determined." [FT]

Little hope of a U-turn

A U-turn on Brexit seems unlikely with hardline Tory candidates such as Andrea Leadman and Michael Gove. Even former Remain campaigner Theresa May has left few options open after declaring "Brexit means Brexit".

On the other side of the house, Labour remains in disarray with its own leadership battles as Jeremy Corbyn clings onto his position despite countless votes of no confidence.

No Future?

So what's the future for Britain? Simply put everything's gone tits up. Bank stocks are down with the outlook negative. Ratings are down from AAA to AA with an outlook of negative. Vodafone is mulling over the possibility of leaving the UK while some tech start-ups have already left as uncertainty of the next two years takes hold [Business Insider / Register]. Ryanair has also hinted at shifting focus as have other firms in the City [BBC / Guardian / Sky News].

There is an irony that London this year 'celebrates' the 40th anniversary of punk. The Sex Pistols anthems Anarchy in the UK and the lines 'No future in England's Dreaming' taken from God Save the Queen seem particularly apt at this time.

It's easy to fall back on metaphors, but as regards Britain's future there is little to fall back on. Certainly one should not fall on one's laurels.

In the last week there have been headlines such as "Britain sailing into uncharted waters" or "Heading into a storm without a captain" or "The only thing certain is uncertainty" [Economist].

"The futility of it all"

And for what? Politicians continue to maintain Britain will recover and build by trading with other countries. This may be true, in the medium to long term. But all the signs point to uncertainty and an unwillingness to invest in the UK.

The weak pound may encourage some tourists to Britain's shores. But equally the rise in xenophobic and racist attacks on Muslims, Poles, Romanians and even an American of mixed race, could deter people from wanting to visit [Express & Star / Al Jazeera / Guardian]. More than 300 hate crime incidents had been reported to a national online portal in the week since the referendum - compared to a weekly average of 63. While the numbers are small in the great scheme of things such incidents are still disturbing.

How long before people become impatient with politicians as wages freeze or even diminish as Mark Carney, the Bank of England governor, indicated might happen in the third and fourth quarter of 2016 [BBC / City Wire].

It is all very well for the Leave camp to say people should not talk Britain down, but what else can one do? To take another metaphor one should call a spade a spade. If the market is unstable, if the pound is at its lowest for 30 years and there is political and economic uncertainty and chaos, one can only call it what it is; utter chaos. The front page of one Australian paper perhaps had it right when is headlined with the slogan "Anarchy in the UK" above the word Brexit as the results became clear last week.

With the experts, that said that Brexit would be a disaster, being proved right it is hard to be anything other than pessimistic [Bloomberg / Independent].

Many economists have argued that the longer the uncertainty drags on, the more investments will be delayed, or even scrapped altogether. A fall in investment, especially from abroad, poses a significant threat to the UK economy, although there is varying opinion on how bad it is [ZeroHedge].

Some have been somewhat flippant almost to the point of showing signs of Schadenfreude. "You have to admire Leave Brits. They were so worried about immigrants ruining their economy than they preempted it by doing it themselves," wrote one Twitter user soon after the result was announced. Many papers around the globe were also rather bemused or even ridiculed of Britain's decision [New Statesman].


But how long is the uncertainty going to drag on? In short no-one knows - or at least no-one's prepared to say.

Without implementing Article 50 Britain remains in the EU. However, while there is an element of status quo before that happens, no company is going to set up shop in the UK before it's clear whether the UK is actually going to follow through. Indeed miracles can happen. An election could be called and a party promising to reverse the decision could be elected! The Lib Dems have already promised such a move, although the odds of them winning would be slim.

Even with Article 50 implemented there can be up to two years of negotiations before Britain is actually outside the EU. And currently there is a stalemate with the EU which states there will be no cherry picking and that Britain will have to accept free movement if it wants to remain in the single market. There may even be difficulties should Britain try to secure the so-called Norway or Switzerland options as even they are currently borderless and within the Schengen zone, something which Britain has previously rejected [Independent]. There are five proposed models Britain could follow, although pro-Remain campaigners would argue that none are as good as what Britain already had [BBC].

Few choices

To quote an oft used American phrase, Britain is now caught between a rock and a hard place with few options on the table.

The government could turn around and make excuses to the electorate and say without remaining a part of the EU the economy is sunk, but promise to keep fighting for further reforms. There is some commentary suggesting a Brexit may never happen [France 24].

However following this route does rather lead to Britain forever being remembered as someone who said "I'm so sorry I made a mistake".

But perhaps that's better than flushing the country down the toilet.

The futility of it all

Today, 1st July, marks 100 years since the Battle of the Somme began and saw more than a million men were wounded or killed in the 141-day battle, the most devastating encounter of World War One.

And 100 years on Britain is now set to tear apart a union of nations which came together to end such battles and wars.

One might end with this line in which one soldier talks of the first day of battle. "At noon I went to Brigade to report the futility of it all." One hundred years on many might be feeling the Brexit battle was just as futile. Indeed what has it achieved other than create divisions, uncertainty in Britain's economy, precipitated the murder of MP Jo Cox [BBC] and encouraged racist attacks.

Brexit may not lead to war, but it may lead to deep depression and a prolonged recession which will be just as futile and unnecessary.

tvnewswatch, London

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