Political campaigns in the UK have often been run on the platform of withdrawing from the European Union. In 2014, the Independence Party, which is in opposition to the European Union, became the largest UK party in the European Parliament. Though Prime Minister David Cameron fought back against the call in 2012 for a referendum, the promise of a vote by 2017 was a major part of his re-election campaign. The vote, scheduled to take place on June 23, 2016, will have a profound impact on Europe and the rest of the world regardless of the outcome. This was the subject of discussion at the meeting of APCO’s International Advisory Council on May 5, 2016.

Sir Graham Watson, former member of the European Parliament from the UK, outlined three phases of the Brexit debate, the first phase occurring after the UK general election in the summer of 2015; the second phase when the campaigns for and against truly began to take off; and the third phase beginning after local elections on May 5, 2016. Thus far it is apparent that Prime Minister Cameron has succeeded in winning the intellectual case for Britain remaining in the European Union, but this optimism is dependent upon his campaign going smoothly between now and the referendum on June 23. He is helped by the fact that the opposition has not made a compelling or cogent argument for how Britain would be better off outside the European Union.

External factors must be considered, and the very real threat of those, such as ISIS, who would like to cause chaos between now and the vote are simply unknown. Any type of terrorist event inside of Europe would have a tremendous impact on the vote; and it’s worth noting that in the immediate aftermath of the Brussels attacks, support in the UK for leaving jumped to 45 percent. And recent statements by the EU Commission recommending visa-free access for Turkish tourists entering the European Union in exchange for Turkey assisting in keeping migrants and refugees from Greece bolster the opposition. This decision is quite explosive in Britain, where the main supporters of exiting the European Union are those concerned about loose borders.

Another factor to consider are the demographics of the vote, which appear to be counter-logical to a typical electorate. Older voters are more likely to support exiting the Union, while younger voters are more likely to support staying. However, the propensity to vote is higher in the older generation than it is in the younger, buttressing the movement to depart. In terms of the education demographic, those with higher education levels are more likely to want to stay, and the Prime Minister has the majority of intellectuals on his side. Those with a lower education level and less experience travelling abroad – the so-called “losers” from globalization – are angry with the government and find that their real incomes have not risen since the 1980s, fueling their desire for Britain to depart.

President Barack Obama’s recent visit to the UK, and his comments on the Brexit issue, were generally viewed as helpful to the prime minister. President Obama’s message that a British exit would put them at the back of the queue for trade deals with the United States was very effective. Simply having the president of the United States express his reasoned opinion in favor of a united Europe appealed to some of those who might otherwise vote to depart. President Obama’s comments were very sensitive and have appeared to turn the debate in Prime Minister Cameron’s favor. While some tabloids disparaged the comments as “meddling” in UK affairs, most agreed that it provided important input.

Tim Roemer, former U.S. congressman and U.S. ambassador to India, commented on the geopolitical and strategic reasons for Britain staying in the European Union. In terms of terrorism, the response to recent attacks in France and Belgium, two countries very close to the United States, demonstrates the importance of remaining together and staying unified in the face of the global terrorist threat. To defeat terrorism, better sharing of intelligence and law enforcement efforts are critically important. Additionally, any instability in Europe and NATO would send ominous signals to those groups who prefer chaos. Economic instability resulting from a British exit would likely lead to slower growth and increased unemployment in the UK and across Europe. While President Obama emphasized hope that the Britain and European Union’s relationship would be “eternally strong,” the message was clearly delivered that the United States would negotiate with Europe first on trade issues such as TTIP (and Britain would move to the end of “the queue.”)

President Obama invested his personal time and capital in the Brexit question. He made trips to London, where he spoke specifically to the British people about his views while remaining politically sensitive to the delicate issue of British sovereignty. He later traveled to Hannover, Germany, where he addressed the wider impact of a possible British exit from the European Union on NATO, trade and immigration.

Turning to India, Ambassador Roemer noted that Britain is seen as the gateway to Europe for Indian businesses, with London viewed as India’s bridge to Europe. The British influence on the Indian economy is significant: 800 Indian business are owned in Great Britain creating 110,000 jobs; India is the third largest foreign direct investor in Britain after the United States and France; in 2014 Indian investment in Britain increased 64 percent, and; the Federation of Indian Chambers of Commerce have warned that there will be great uncertainty within the business/investment community if the UK left the European Union. The Brexit debate has caused uncertainty and anxiety in India and there is a great deal of interest in what might happen next. India is maintaining a careful position and watchful eye on the situation. 

Chris Murck, former head of the American Chamber of Commerce in China, remarked that generally the Chinese are opposed to Brexit. The European Union is their largest trading partner and Britain is China’s largest destination for foreign direct investment. Many Chinese companies use London as the headquarters for their European operations. China has supported a prosperous and united European Union, and while they have not actually campaigned against Brexit, their opinion has been clear. From an economic point of view, a united Europe is much easier for the Chinese to deal with as an export market. Britain’s exit from the European Union would bring unwelcome uncertainty for the Chinese.

In sum, three takeaways from the discussion are:

  1. The Brexit vote will be close, and a victory for either side will be narrow. Right now it appears the momentum is against the opposition.
  2. If the opposition wins on June 23, the United States has made it clear that it will negotiate trade deals with Europe first, pushing Britain to the end of the queue.
  3. A victory for the opposition would create tremendous uncertainty for the two most populous and fastest growing economies in the world. The instability an exit would cause in China and India would have major impact on the global economy. 

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Watson
Graham Watson

Graham Watson formerly served as a member of the European Parliament (MEP) and leader of the Alliance of Liberals and Democrats for Europe (ALDE) Group in the European Parliament. Read More

Murck_Chris_fl
Christian Murck

Christian Murck is a member of APCO Worldwide’s International Advisory Council. He is an expert in East Asian studies and has more than 30 years of experience in finance, public affairs and foreign business operations. Read More