Brexit 2: What Would This Mean for the EU?

Yesterday, Stuart Burns examined how the UK exiting the European Union would affect the UK. In part two he looks at the effects of a Brexit on the EU.

A Brexit would have a wider political impact on the EU, both by disrupting internal political dynamics and because of the risk of political contagion if the “proof of concept” of leaving the EU encourages disintegrative forces in other member states.

If the UK Goes First, Who is Second?

A Brexit would probably encourage some less committed member countries or regions to consider renegotiation or even outright exit, particularly if the UK were seen to flourish. It would change the dynamic between Germany and France, possibly allowing them to dominate European policy even more than currently but possibly showing up flaws in their relationship which have remained masked by having the third party of the UK to play off.

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Germany would certainly miss the UK’s more liberal influence as a counterweight to France in policy debates. France, on the other hand, may welcome that.

Global Council believes that the member states most exposed to a Brexit are the Netherlands, Ireland and Cyprus. Each has very strong trade, investment and financial links with the UK and — in the cases of the Netherlands and Ireland — are closely aligned in policy terms.

Italy is less directly exposed to a Brexit, while Poland’s interests are concentrated on the impact Brexit would have on the EU budget and the large number of Polish residents in the UK, over three quarters of a million by recent estimates.

Who Loses Influence?

All member states would, however, regret the loss of international influence enjoyed by the EU without the UK and the damage that the Brexit would do to the esteem of the EU globally. If Britain were the poorer for being outside the EU, so would the EU be likewise diminished. The outcome cannot be seen at this stage because 95% of the detail of what a post-Britain EU would look like can only be worked out by negotiation after the fact.

It is naïve, as some in the UK imagine, that Britain can have the benefits of free trade with Europe without having to accept many of the current restrictions it objects so strongly about like free movement and regulations. The best it can hope for is something like Switzerland enjoys, but with more influence over financial regulations and services by virtue of its sheer size relative to the EU, but such an outcome is far from a given. France, for one, would fight tooth and nail to claw back status for Paris in financial services to the detriment of London, and Frankfurt would not be far behind.

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In all likelihood, some form of open-market agreement would eventually be hammered out which would see Britain enjoying much of the current benefit of access, with less or no influence over policy while still accepting many of the current restrictions. You have to ask, if that is the generally accepted most likely outcome, why even bother?