Following the United Kingdom’s (U.K.) decision to leave the European Union (EU) in a referendum held on June 23, 2016, there are still many questions regarding the future of the U.K.’s relationship with the EU and other impacts throughout Europe. The ruling Conservative Party of the U.K will begin to formally elect a new leader early this week (July 4–8, 2016) to replace outgoing Prime Minister David Cameron. Cameron announced his intention to resign as Prime Minister on June 24, 2016, a day after the U.K. voted to leave the EU. The fallout from the vote will have many implications for the U.K.’s place in Europe and Europe itself as the politics of “Brexit” reverberate around the continent. Cameron was the leader of the “remain” camp in the U.K., and has said that the next Prime Minister should be the one to negotiate the terms of the U.K.’s separation from the EU after 40 years of membership. Nearly two weeks after the vote, the U.K. government has not yet officially notified the EU (by triggering Article 50 of the Treaty of Lisbon) that it intends to leave.
It’s also possible that the U.K. may not end up leaving the EU at all. After all, the June 23 vote was a referendum that took place outside of the constitutional process in the U.K. and is not binding on the government. The market may be anticipating some sort of face-saving deal between the parties, where U.K. politicians can be seen as following the will of the people (mainly, restricting the flow of immigrants in the U.K., but also restoring some of the sovereignty the U.K. has lost in the past 40 years), while still allowing trade between the parties on essentially the same terms as it is conducted currently. Though possible, such a relationship will be difficult to achieve.
One sticking point may be movement of people across borders. The EU is founded on the “four freedoms”:
• Free movement of goods.
• Free movement of services.
• Free movement of persons (and citizenship), including free movement of workers.
• Free movement of capital.
At the meeting of European leaders that ended last Wednesday, June 29, a number of elected officials, including German Prime Minister Angela Merkel, reiterated the importance of all four freedoms, or pillars, of the EU. Given that immigration was one of the major issues in the Brexit referendum campaign, this makes it hard to find an acceptable compromise. However, given the importance of the trading relationship between the parties, there is great economic incentive to find some way out of this position.
Political Chaos In The U.K.
As we and many other observers expected, the U.K.’s vote to leave the EU has caused nothing less than political chaos in the U.K. The current Prime Minister, David Cameron, announced his resignation the day after the referendum. The leader of the largest opposition party in Parliament (Jeremy Corbyn, leader of the Labour Party) held and lost a no confidence vote by the members of his own party in the week after the referendum. As of Tuesday, July 5, 2016, his status as Labour leader is tenuous, at best. Over the weekend of July 2–4, 2016, Nigel Farage, leader of the far right U.K. Independence Party (UKIP), who strongly advocated for “leave,” also resigned, adding to the chaos.