On 23 June 2016, Britain held a referendum on whether it should remain a part of the EU and they will now exit the European Union. The country and world were shocked by the result. The elite choked on their scones and English footballers were so distracted they suffered an embarrassing defeat to Iceland. The financial markets have predictably reacted to the economic and political uncertainty, but also to their assumption that the referendum result would be remain.
Freedom of Movement
Essentially the British people voted against freedom of movement and the current EU model. Freedom of movement is a fundamental pillar which Brussels argues is necessary and the cost of trading with Europe. Freedom of movement allows European citizens to move freely and work in any European countries. The UK attempted to renegotiate the terms of freedom of movement. Earlier this year, British Prime Minister David Cameron could only convince Brussels to agree to a change in social benefits. He could not limit the amount of Europeans coming to the UK. The British people rejected this new deal.
A simplistic way of viewing the idea of freedom of movement is that any of your neighbours can move into your home and you can move into any of your neighbour's homes. Can this be a good thing? Certainly. If I have a lovely mansion with a swimming pool, why wouldn't my neighbour want to live in my home? Especially if there is an economic downturn, my neighbour has lost his job and is struggling to pay his bills. He will clean my house and tend to my garden. Why shouldn't I allow my neighbours to move in with me? Well how long can I afford for my neighbour to live with me? How long should I let them eat my food and sleep in my bed? The rules currently say that I have no control and must allow them to stay indefinitely in my home. It is not the fault of my neighbour that they will take up this opportunity. What has failed is the system.
Freedom of movement conceptually is noble and can provide benefits and opportunities for both countries and its people. However, freedom of movement has its shortcomings. In the case of the UK, during a long period of austerity measures and economic decline, there has been pressure on jobs, wages and government services such as education and health services.
It is a problem that the UK has recognised and which the EU continues to ignore. After the UK leaves the EU, other countries will continue to face the challenges of freedom of movement. It will in fact place even greater pressure on the stronger economies in the EU. The EU needs to find a solution to failing economies in the EU rather than ignore the problem. The boom-bust economic cycle is a given and Europe's success will be hindered. The EU needs to be more flexible and adapt to changing circumstances and the world.
Canada's trade agreement did not accept freedom of movement. There is a reason why the Canadians did not want to open their borders. There is a reason why many countries would rather not be a part of the single market - because the cost of freedom of movement outweighs the benefits that it provides.
The Democratic Process
The British referendum is a democratic process. The people evaluated and voted on the EU. The EU, unlike any government, is not subject to democratic elections. In the UK, the people will vote for one political party or another after it has considered the party's performance and it is held to account. The only way that Europeans can make such a democratic evaluation of Brussels is via a referendum to vote in or out.
British people have chosen to believe in their own government rather than look to the EU to steer its laws and regulations. The EU began as a trade agreement but has become a political vehicle. It is right and democratic that each country chooses whether it wants to remain a part of such a union. Each country should decide its own course. A country should not be bullied or threatened and has a right to make decisions that are in its interests.
Other European countries may be faced with this difficult decision to remain or leave the EU. They will be presented with a different world as a result of Britain's decision. If they vote to leave the EU, they will be free to trade with Britain and other countries. Or they may decide that they are better placed within the EU, that they want to continue to follow the ideals and direction that the EU is taking.
Businesses
Businesses will take a short and long term view on Britain and Europe. They will choose to link their fate to Britain, the EU or perhaps diversify into other countries. However, they will not want to overact until they have an appreciation of the new environment. There are uncertainties, but there are also opportunities. Over the next few months and years, Britain and Europe will be closely watched. The next steps taken will have implications for decades to come.
The UK's Strengths
The UK is a significant market with a pool of intelligent people. It has been the home to many great thinkers and has many achievements. It is looking to reinvent itself in a new global world - which means a change in laws and a business environment which could be favourable to corporates and a possibly diversified country as a result of Brexit. It has been European-centric to date, but it will now be open to trading and dealing with many other countries. It will no longer be a part of the slow bureaucratic machine that is the EU. The EU is an enormous market but it needs to overcome the difficulties which the last decade has revealed in its model. Growth continues in Asia and around the world. Britain's focus will now shift.
If Britain had voted to remain, there is no certainty as to the future. Europe is filled with sceptics and on the back of the debates and criticisms raised in the British referendum, France or the Netherlands or any number of other countries could have ended up leaving the EU. Britain has chosen to leave the EU and it will be the first major country to do so. This will have advantages and disadvantages. It will no longer be tied to the economic ups and downs of Europe. However, it will also stand alone unless it comes up with a new model or union.
The UK has a long and glorious history. Ok, may be not all of it is glorious - Henry VIII beheadings for example make for interesting stories, but not the leadership qualities we would hold up as shining examples today. In more recent history, the UK made the right decision to not adopt the euro currency. It made the right decision when it did join the EU. Whether it has made the right decision to leave the EU in 2016 remains to be seen.
People
This is not just about trade and businesses. This has an impact on people. There are people who have come to live in the UK and British people who have gone abroad. They are now unsure about their futures.
There are people who voted to exit the EU because they felt that they have been forgotten. They do not see a future for themselves or their children. This is a tragedy in a country that is economically strong.
What Next?
Politicians and bureaucrats' egos will ultimately play a role in the events that unfold. People still feel that they need to stand by their comments during the campaign to leave / remain. The EU is in fight mode because it does not want to be seen as weak. It will want to stand its ground. However, in doing so, it demonstrates that it continues to be inflexible and does not want to listen or collaborate or work together. If it does want to punish the UK and set an example so other countries do not leave, then it is using fear to rule. Is this what the EU wants to stand for? The remain campaign in the British referendum fought a campaign based on fear. The leave campaign also used a fear campaign but it also had a vision for Britain that it could succeed without the EU. The remain campaign suggested Britain would fail without the EU. The idea that a large country will fail is not inconceivable but is it plausible? Out means out. The EU have said there will be no discussions until Article 50 is invoked. It is not creating a mood for amicability. Dialogue is necessary. If both parties dig in their heals then that is no helpful for anyone. There is no room for trying to find a win - win.
Brussels might think this demonstrates they are not letting Britain drive this process or to have its cake and eat it too, but there will be people in the EU that may also consider Brussels as arrogant and out of touch with what the British referendum is ultimately saying - freedom of movement does not work. Britain has not taken into account that the EU has a view on when Article 50 should be invoked. David Cameron made the decision to resign and said that nothing can be decided until a new prime minister is in place. Britain and the EU need to change and both of them have lessons to learn.
This is messy divorce. It is about hurt feelings. One party feels rejected and wants the divorce immediately, no matter what that means. They do not care about joint custody or the kids (in this case people and business). They just want the divorce. They do not want to talk. Each party wants to be in a position of power. There will be no cohabiting and co-parenting like Jennifer Garner and Ben Affleck. There will be no will they or won't they get back together. This seems to be a relationship beyond repair. So, as with a divorce, financially both parties will initially be poorer as their assets are divided and the power of unity is diminished. However, as both parties move forward over the long term, they rebuild their fortunes and will ultimately be happier and better off apart than together. Look at Tom Cruise and Nicole Kidman. Both have gone on to have other families. They have each found a different kind of success from which their union brought them.
Britain, the EU and the world's future is not set in stone. There were predictions. What happens going forward is a complex set of dominoes. The UK Conservative government needs to make the best deal for the UK. It cannot be rushed into decisions, nor will it or can it give up any leverage that it has. However, it cannot sit back and let the world move on while it tries to make decisions. The government's actions will be remembered by generations and it will be written in history. There needs to be vision, ambition, courage and a setting aside of personal and political agendas. Similarly, Europe needs to think about its future. It must recognise and address its shortcomings. As a model, it needs to change.
The media also plays a role in how much it dramatises events and responsibly moves the direction of popular opinion both domestically and abroad. Where there is internal discord, we should be open to the different voices and seek to change where there is a need for change.
However, what should and must be remembered is that the UK shares many common goals and values with its allies. The failure or success of the UK will also have implications for its friends. In defence and terrorism, the fight continues. The world is not just about economics and trade.
As I walked around London's big tourist hubs - Borough market and St Paul's on the weekend, it is clear that the world has not come to an end and it will not come to an end. There will be change, but change can be positive. It is sad that after more than 40 years, Britain will leave the EU. However after the British referendum and in a world where Britain will exit the EU, we can either see the glass as half full or half empty. This is a chance for Britain, Europe and the world to re-evaluate our systems of government, our methods of trade and the way we do things. We are one world and people. We can do things better, be better and find a new way forward.
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