INTRODUCTION/OVERVIEW
From the systematic scrutiny of history, it is evident that changes in the realm of economy bring major changes in social and political realms. For instance, Industrial Revolution of the 17th century not only altered methods/volume of productions and restructured markets, but also it gave birth to political ideas, such as capitalism and Marxism, which matured into political systems (Martill and Staiger 45). However, evidence/history also suggests that political developments too yield new economic realities. For instance, after the emergence of the Soviet Union as a major global power, Western European countries agreed on more economic cooperation to produce rewarding opportunities (economic) for their citizens (Bretherton and Vogler 90).
To realize this political-economic objective, of a strategic nature, Western European Countries chose trade as an instrument and mean (Bretherton and Vogler 81). It was suggested that tariffs should eliminate gradually and the trade between the regional countries (Western European Countries), must be based on Ricardian principles. This political-economic notion of free trade and a collective pool of resources, evolved into the European Union. The Political-economic union has 28 members, which are represented by the head of their states. Also, the citizens of these countries are also represented directly by Members of European Parliament (Europa).
It is quite evident that the Union was formed, primarily, to realize economic objectives. However, with time its political aspect also became quite potent. The platform was used to put diplomatic pressure on countries and alliances. For instance, the European Union was very critical of Russia’s annexation of Crimea, and it mounted great diplomatic and economic pressure on Russia as a punitive measure (Cameron).
European Union remained a highly functional and effective organization until the Great Recession of 2007. It was after the 2007 global recession when the cracks started to appear in the European Union (Magen 1053). Central Bank, which devices and implements monetary/economic policy of the European Union, not only failed to predict the economic crisis but also failed to tackle, effectively, it. It relied solely on monetary and austerity policy to bring changes in the economy. For instance, the prime focus of the European Union was inflation rather than consumption and the size of the investment, which must be focused to increase economic growth during an economic recession or depression. However, some studies suggest that there were other political and social reasons too, which weakened European Union and eventually led to Britain divorcing European Union (Goodwin and Heath 326).
In the year 2016, Britain, one of the major countries of the European Union, decided to part its ways with the European Union. The majority of the studies inferred that Britain took this decision of the European Union to project and manages economic disasters effectively. However, some studies also infer those changes in society, law, and political system, influenced by the European Union, also became a major reason for the Brexit.
To understand Brexit and it causes, it is imperative to understand the structure and role of the European Union. It will allow us to understand various episodes and failures, which pushed Britain to move out of the Union, which is considered one the most influential alliance/union that has a large impact on both global economic and political system (Odendahl).
EUROPEAN UNION
The European Union is a political-economic organization with various institutions, which allow the organization to implement its political and economic agenda. The Union formed after the World War II, which destroyed the industrial and physical infrastructure of Europe. From the scrutiny of history, about the European Union, we learn that the predecessor of the European Union was EEC or Common Market, which matured into the European Union. As the organization became more effective, more European countries became part of it. The criterion was devised for potential members, which made the admission to the club more systematic and cumbersome. However, the organization truly became an effective organization after the collapse of the Soviet Union, which changed the political landscape of Europe. As the global economy and trade started to grow at a considerable rate, the significance of the organization also augmented, as major global economies, such as Britain-Germany-France, where a member of the European Union (Europa).
Two major institutions, of the European Union, are European Central Bank and European Parliament. Role of European Central Bank (ECB), which is based on the notions and principles of Germany’s Central Bank (Deutsche Bundesbank), is to devise and implement monetary policy for member states and facilitate member states in realizing their economic objectives. On the other hand, European Parliament, which is a directly elected institution (parliamentary), it passes legislation, which influences political-legal systems in member countries (Odendahl).
There are other political and economic institutions too, such as Council of the European Union, which facilitate the European Union in the implementation of the agenda.
For Instance, the European Union’s Convention on Human Rights was adopted by member states, including Britain, which brought changes in law (Doward). Similarly, the member also considers policies and suggestions of the European Central Bank, which subtly (in some cases very evidently) affect domestic economic policies of a member state.
It suggests that the European Union is a powerful institution, which affects member state in various manners. It is political and economic realms, which European Union subtly tries to influence. However, it is a known fact that changes in political and economic landscape influence social realities. Therefore, the influence of the European Union as an institution, on member states, is very profound thus controversial.
It is quite apparent that the organization has a political-economic agenda, which it intends to implement with the help of members of the European Union, as per some critics. However, the fact is that member states devise agenda, after discussions and debates (a methodical and lengthy process), which is then implemented by 1) European Union’s institutions and 2) States (through their institutions). As the agenda and policies are devised through mutual consent (democratic norm); therefore, they are sometimes in controversial in a certain country (Doward).
BRITAIN’S DECISION
In the year 2016, Britain decided, with 51.9% vote, that it would part ways with the European Union. The decision, of Britain, created strong shockwaves around the world, which immediately affected 1) major economic currencies, 2) Major Stock Markets and 3) Investment (particularly in Britain and European Union). Therefore, this decision, of Britain, to divorce European Union, not only had political significance, but also it had immense economic relevance (Hobolt 1266).
Study of evidence and literature, about Brexit, suggests that it was not an economic recession, of 2007, which played a part in Brexit, but also there were several political factors, which facilitated the exit, of Britain, from the European Union. However, these political-economic dissents, about the EU, grew stronger during the recessionary period and made right-wing political notions (such as protectionism) more receptive.
History reveals that during the recessionary periods, that space for liberal political-economic ideas begin to shrink (becomes less receptive) and right-wing conservative ideas become more receptive. One such example is of the Great Depression of 1929. During this period, moderate political voices, which favored moderate and conventional political-economic strategies, became less popular/strong and controversial views, such National Socialism (in Germany), became receptive. In some countries, the Great Depression caused major changes in the political-economic system, such as the introduction of the fiscal instrument, whereas, in other countries, it brought in power, such political parties that had a very controversial and strong viewpoint about international politics and the economy (rise of Hitler to power). Therefore, during recessionary periods, extraordinary political and economic incidents occur, which give direction to the political-economic evolution of a system (Doward).
The Brexit also seems to be one of the consequences of The Great Recession (2007-8); however, the economic reasons were not the only reasons that had caused the divorce. British people, who are very independent, traditional and inward looking, did not truly accept the concept of collective responsibility, progress, and decision-making. There was a strong discord, in a small segment of British society, against the influence of the European Union of Britain’s political, economic, and legal systems, which gradually augmented. The 2007 economic recession strengthened these views and translated them into votes, during the Brexit polls.
As the electoral opinion was very closely split; therefore, the final verdict was very controversial. Only 51.9% people favored the idea of leaving, which questioned the validity of a verdict itself. Nevertheless, the Conservative government decided to acknowledge and implement the electoral verdict of leaving the European Union. The of the electoral process, which was adopted to learn the will of the majority, was followed up by long rounds of negotiation between European Union and Britain to determine how Britain would leave the European Union and what would be its relation, with the EU, in the post-Brexit period (Goodwin and Heath 328).
RULES OF PARTING
During the negotiations, the parties (European Union and Britain) agreed to settle three issues in a particular manner. The first issue was how much UK owes the EU. It means that how much money does Britain owes to European Union and how this money would be returned. The second issue was also related to money; however, it was money that EU owed to Britain. The third major issue was related to 1) European citizens, who were living in the EU, 2) and British citizens, who were living in the UK. Other major issues pertained to the status of businesses, in the European Union and Britain, owned by EU citizens and Britishers. These matters or issues were discussed at length it was decided that there must be a transition period that would allow these matters resolve efficiently (Doward).
Transition Period
To address various issues, which were yielded by Brexit, it was decided that a transition period was essential. The period of this transition, which was decided by Britain and European Union, is 9 months, which will expire in December of 2019 (around 11 pm; UK time). During this period, businesses are allowed to make necessary adjustments. It is imperative to understand that entire scheme of the European Union is devised to facilitate businesses. Therefore, no such measure European Union would take, which hurts (in any manner or fashion) economic interests of the corporate system. Therefore, not only the process of Brexit was segmented, but also smoothened by collective efforts. Also, Britain acknowledges the political and economic relevance/significance of the European Union, and therefore, she does not want to deteriorate its relation with it. In fact, it desires special relations with the European Union, which is why it is cooperating fully with the EU to make the process of existing (from EU) smooth and less damaging (Hunt and Wheeler).
It is also essential to understand that both future relations between UK/Britain and European Union are not finalized yet. The process of negotiations, about the future relations between the UK and European Union, is about to start (during the transition period), which is why both UK and European Union are both tentative and complaints (to some extent). Both UK/Britain and European Union understand the significance of one another, which is why both do not want to end the relation hastily, which may leave a bad taste in the mouth.
CAUSES
When we explore reasons for Brexit, we learn that was no Single cause, which resulted in Brexit. In fact, there was some causes. These causes continued to simmer for a long period and eventually came out of the pot during the 2007 economic recession. In this section, of this academic exercise, we will discuss the various causes in detail to understand the UK’s decision to leave the European Union.
Immigration
Immigration is considered one of the major causes of Brexit. Britain’s economy is one of the largest and robust economies of the world. As it is one of the robust economies, it produces more lucrative corporate and economic opportunities, which is why European Union’s citizens, of less robust/healthy economies, migrated to Britain in large numbers. This directly affected economy, as the supply of labor, increased, which put downward pressure on nominal wages.
It is universally admitted the fact that the decrease in employment level and wages (nominal or real), cause massive changes to political-economic and political-social systems. The massive increase in the supply of labor caused various changes within the UK and developed a sentiment against immigration, as there were few lucrative opportunities per capita than before. Therefore, immigration, primarily caused by European Union’s policy and regulations, became a major cause for Brexit (Hobolt 1270).
Sovereignty
Another major cause for the Brexit was Sovereignty. We have already established that people of Britain are fiercely independent and very traditional. Polls reveal that those, who favored Brexit, were very concerned about sovereignty. They were of the view that decisions, about Britain, must be taken in Britain. Some of the polls suggest that sovereignty was the single largest cause of Brexit.
The conservative politicians, who disliked the Union, had always highlighted the “surrendering of sovereignty” to the European Union. Through various political platforms, these conservative politicians suggest that the European Union was undermining the not only sovereignty of the UK, but also attempting to change its culture and traditions through its policies and regulations (Hunt and Wheeler).
This message or notion became more receptive during the recession, during which most of the population of the UK believed that decisions about the economy must be taken in London.
Voting pattern
The voting pattern also played a major role in the final verdict. As per statistics, there is a strong correlation between old age and the decision to leave. The further investigation of voting pattern also suggests that there is a correlation between the level of education and decision to leave. For instance, those, who had voted in favor of leave, had a lower educational qualification. Those, who had higher qualifications (educational), favored staying in the European Union (Goodwin and Heath 324).
Ethnicity
Ethnicity was also very crucial in the Brexit vote. According to studies, the majority of the members of ethnic minorities voted against Brexit. It is natural, as most minorities tend to favor such systems that are diverse and transparent. Most of the White Britishers, from deprived urban regions, voted to leave, as they believed that inclusion in European Union reduced economic and corporate opportunities for them (Doward).
British values
As mentioned earlier that the British are very proud of their history and culture. The membership of European Union affected its culture, as it allowed people from other member countries (member of the European Union) to freely enter Britain and settle there (according to a section of society). These people, from different parts of Europe, brought their own culture and values, which diversified British Culture, as per their assertion. However, the fact is that for a long period, Britain’s culture is very diverse, as colonial Britain allowed people from its colonies to settle in the UK. Large Indian and Pakistani communities thrive in the UK, which endorses the argument that Britain’s culture was a diverse culture for a long period. Nevertheless, most of those, who voted to leave the European Union, believed that British culture and values were under threat (Martill and Staiger 36).
European Identity
One of the interesting findings, about an UK’s exit from the European Union, was that large section British population did not consider themselves European. The population generally and preferably identifies itself as British, rather than European. It helps us in understanding why Britain finds it difficult to integrate into the European Union. This information also suggests that prime objective, of Britain to become a member of the European Union, was to improve the economy (Clarke, Goodwin and Whitele 72).
CONCLUSION/ IMPLICATIONS
In the end, it can be concluded that most of the studies have inferred that implies, of leaving the European Union, would be negative for Britain. The immediate impact will be on trade, which is considered a major component of any economic strategy. Countries rely on trade to realize their political (and in some cases strategic) objectives. If the UK did not stay in the Single Market, then it would have to renegotiate trade deals with the European Union. Experts believe that it will be a difficult process, which will be long and cumbersome. As there is a lack of information; therefore, it is extremely difficult to predict the outcome of these negotiations, which are about to take place during the transition period.
It is also evident that Brexit will occur and it would not reverse, as both Conservative and Labor parties agree to leave the European Union. However, the Labor party is of the view that it desires a progressive partnership with the EU, which mirrors single market benefits.
Work Cited
Bretherton, Charlotte and Bretherton Vogler. The European Union as a Global Actor. 2. Routledge, 2005.
Cameron, Fraser. “The European Union as a Model for Regional Integration.” Council on Foreign Relations. Council on Foreign Relations, 24 September 2010. Web. 28 April 28. https://www.cfr.org/report/european-union-model-regional-integration.
Clarke, Harold D, Matthew Goodwin and Paul Whitele. Brexit. 2. Cambridge University Press, 2017.
Doward, Jamie. “Brexit bill leaves a hole in UK human rights.” The Gaurdian. The Gaurdian, 13 January 2018. Web. 28 April 2018. https://www.theguardian.com/law/2018/jan/13/brexit-eu-human-rights-act-european-charter.
Europa. “About the EU.” Europa. Ecuropa,1 January 2018. Web. 28 April 2018. https://europa.eu/european-union/about-eu_en.
Goodwin, Matthew J and Oliver Heath. “The 2016 referendum, Brexit and the left behind: an aggregate‐level analysis of the result.” The Political Quarterly 87.3 (2016): 323-332.
Hobolt, Sara B. “The Brexit vote: a divided nation, a divided continent.” Journal of European Public Policy 23.9 (2016): 1259-1277.
Hunt, Alex and Brian Wheeler. “Brexit: All you need to know about the UK leaving the EU.” BBC. BBC, 12 April 2018. Web. 28 April 2018. http://www.bbc.com/news/uk-politics-32810887.
Magen, Amichai. “Cracks in the Foundations: Understanding the Great Rule of Law debate in the EU.” Journal of Common Market Studies 54.5 (2016): 1050-1061.
Martill, Benjamin and Uta Staiger. Brexit and Beyond: Rethinking the Futures of Europe. 1. UCL Press, 2018.
Odendahl, Christian. “The ECB Is Not The German Central Bank.” Centre Fo European Reform. Centre Fo European Reform, 2 December 2014. Web. 28 April 2018. http://www.cer.eu/insights/ecb-not-german-central-bank.
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