Could Brexit Mean European Renewal?

Graham Room is Professor of European Social Policy in the Department of Social and Policy Sciences at the University of Bath.

On 24 June 2016, the day after the UK referendum on EU membership, the Institute for Policy Research (IPR) published a prescient blog on the result and likely politics of its implementation. It anticipated that in the negotiation of our withdrawal, and of our future relationship with the EU, Brussels would drive a hard bargain. Political elites in the UK and in Europe might well develop an informal alliance to reinforce that resistance. There was no guarantee therefore, of a bright future for the UK post-Brexit, at least in regards to its major trading partner. The UK Parliament and Government might then conclude that there was no alternative, but to put the results of the negotiations to a new referendum. Nothing in the EU Treaty prevented the UK government from doing this - and then allowing the result of that second referendum to abort the withdrawal process. So it has so far proved – helped of course by the Conservatives’ loss of their Parliamentary majority following the 2017 general election. The Prime Minister is taking the deal she has negotiated to Parliament but it seems doomed to rejection. So what happens next? It seems generally agreed that there are four possible scenarios.

First, the Prime Minister returns to Brussels, negotiates some nominal ‘improvements’ to the deal and brings it back to Parliament. Given the ‘red lines’ in both Brussels and in London, these improvements are unlikely to change the Parliamentary arithmetic. Second, there is the ‘Norway option’, with the UK joining EFTA. That however (like the Prime Minister’s present deal) would leave the UK as a rule-taker or what the hard Brexiteers call a ‘vassal state’ – and the Government just as exposed therefore to the hostility of large swathes of the Leave vote. Moreover, it would require the agreement of the existing EFTA members, notably Norway, and this seems unlikely.

Third, there is a ‘no deal Brexit’ – with the UK ‘crashing out’ at the end of March 2019. Dominic Grieve’s amendment to the Government’s proposal is meant to avoid this, although it is not legally watertight. Nevertheless, it seems clear that not only the great majority in Parliament, but also in the Cabinet, will recognise what a disaster this would be for the country, and indeed for the Conservative Party itself. Fourth and finally, Parliament – and with some reluctance the Conservative and Labour front benches – put the choice back to the people, asking them to decide between the Prime Minister’s deal, a no–deal Brexit and remaining in the EU, as a full-voting member (probably using a single transferable vote).

The last of these scenarios now seems most likely, not least because it limits the danger for both major parties of being blamed for whatever future the people then choose. Those who want the UK to remain in the EU are optimistic that the electorate will vote to stay. That cannot however be taken for granted: opinion polls show the outcome of a second referendum being very close. If the vote is still for leave, the politics of withdrawal – and the strains and fractures across Westminster – will only grow worse. We might see a minority government of the hard Brexiteers taking the UK out of the EU in a no-deal Brexit, with the Parliamentary majority cowed into silence by this popular reaffirmation of the ‘will of the people’. This raises two urgent questions for the various political actors involved.

First, the ‘will of the people’ is an artefact of the referendum process. For a start, the referendum was framed on an all-UK basis, ignoring the various constituent nations. Both Scotland and Northern Ireland voted to remain, but their voice was drowned out by the majority for leave across England. This has produced major strains for the Union of these nations; the UK might well not survive a hard Brexit. In addition, the referendum allowed just two choices: leave and remain. The ‘will of the people’ took the form of this binary choice. This tended only to polarise opinion, along lines which were already evident in relation to immigration (there are parallels here with a jury trial, where there are dangers if the jury begins its discussion by asking for a show of hands, as to the guilt or innocence of the defendant). It would have been much better, in the aftermath of the vote, to establish a public forum for deliberation of the fears and hopes of both sides, before the UK government framed its plan for negotiation of a new future with the EU. Such a process of public deliberation – forging a shared vision of our future – is still needed, if only through cross-party discussions at Westminster and in concert with the Parliaments of the constituent nations.

Second, a new referendum could easily turn into a re-run of the 2016 campaign, with Leave relying on the abuse of Eurocrats, experts and metropolitan elites, while Remain relies on ‘Project Fear’. For Remain to win, and to win with a positive message about the UK in Europe, it will need to present EU membership as a positive benefit for all. Not least, that is required if the Corbyn leadership of the Labour Party is to take a positive, rather than a reluctant role in the campaign, and to see the EU as a vital factor in its own programme for social and economic reform at home.

The EU has played a major part in bringing peace and prosperity to its peoples. Nevertheless, it also has important failings, which have played some part in producing the disenchantment that Leave voters expressed. This has made the EU a convenient scapegoat for cynical domestic politicians, blaming their audience’s woes on distant foreigners. The Leave victory in 2016 demonstrated that across broad swathes of the UK – including areas that have benefited from EU regional support – the European project has become a toxic brand. It will not be enough to tell those who voted to leave that they should be less xenophobic and that the City of London needs to be part of the single market.

A reform message for the EU can grow out of the concerns felt by communities across the UK that voted leave but it can also engage with wider concerns expressed by their counterparts across Europe. This will involve reforms to the institutional order of the EU and more active democratic engagement with markets and corporate interests.

Such a reform message might have four elements:

1. It will be necessary, first, to confront the toxic austerity regime that Berlin has imposed on much of Europe, echoing that imposed on the UK by successive Westminster governments since the financial crisis. Austerity insists that reduction of the public sector deficit must be the principal economic goal, pursued mainly through cuts in public expenditure. The market, left to itself, will produce investment, full employment and economic growth (Blyth, 2013). There is however an alternative and very different analysis. Government must play a leading role, in maintaining the general buoyancy of the economy, and in using public investment to build its long-term capacity. Otherwise, the economy is likely to stagnate; and the most vulnerable communities will disproportionately bear the costs. A positive industrial strategy of this sort, rejuvenating the European economy, would include investment in infrastructure, human capital and the science base. It would aim to spread jobs and useful work to all localities and regions, revitalising local communities and pushing back against predatory financialisation. Without this, European economic and monetary union tends to reinforce the advantage of regions already enjoying dynamic growth, in a virtuous circle of accelerating productivity and export surplus. Meanwhile the burden of social benefits – unemployment benefit in particular – tends to grow fastest in the countries with the weakest economies. Here is a fiscal vicious circle, conjoined with a vicious circle of stagnant productivity (Kaldor, 1971). Emigration is then the only alternative to poverty or even starvation.
2. Free movement also needs re-thinking. Being forced to migrate north because of the economic desertification of one’s home region is no freedom. It is also no ‘free movement’ if rich countries denude poorer countries of their highly skilled people, because they have themselves failed to invest sufficiently in training. Free movement also requires some collective responsibility for the infrastructures of the communities to which large numbers of immigrants come, rather than ‘devolving’ this burden to the local areas in question. This is true, whether those incomers arrive from outside or inside the country in question. Indeed, it is part of the larger question of how national and European policies can support local communities more generally, especially those facing major social and economic change. Leaving them at the mercy of global markets risks community disintegration – whether through the exit of secure jobs, or the arrival of incomers. This will require investment in the social and economic security of all our communities. It will also mean re-embedding capital within national and local communities, including for example reforms to encourage community co-ownership of local businesses. This is central to the reforms of the UK economy proposed by Hutton (2015: Ch 5), with business ownership a vehicle for innovation and community benefit as much as for profit.
3. Individual security against the risk of income interruption was the heartland of traditional welfare states. In times of rapid economic change, it is the more necessary. A modern economy also depends on human investment and skills. This is especially important for the demographically challenged societies of Europe, which can ill afford to waste their scarce human resources. This makes an active and inclusive social policy central to a dynamic economy. Over the last half-century, however, such social policy has been on the defensive across much of the industrialised world, in the face of neoliberal hostility to state welfare. Competitive markets are no substitute for such collective solidarity. The solidarities of strong national welfare systems must be retained, not dismantled, in the face of neoliberal markets (Polanyi, 1944; Rieger and Leibfried, 2003). The successful functioning of European markets may thus depend on the strength of national solidarities. What is needed is a Europe-wide social contract, with investment in the social and economic security of communities across the Continent – and in their active citizenship, putting them confidently in charge of their own destinies, and with none feeling left behind. This is a necessary bulwark against social and political dissolution.
4. The EU Council and Commission have developed a wide range of instruments for monitoring the economic and social policies of member states, checking them against centrally agreed standards and identifying the leaders and laggards. The Parliament has steadily expanded its powers of co-decision. The appearance is therefore of a more orderly but also democratic Union. Nevertheless, the democratisation of European politics and society must be reconstructed bottom-up. Policy monitoring will only become a dynamic force for change when local and regional social and economic actors drive the process of comparison and policy learning, depending on their specific needs and interests. This would expose domestic policy-making to alternative approaches and intelligence from across Europe, enriching policy debates. It would recognise different scenarios of potential development, with real political choices and trade-offs. This would address the ‘democratic deficit’ by connecting up communities and associating them in a transnational demos critical of the prevailing order. Domestic political leaders could no longer rely on the relative ignorance of their population regarding practices elsewhere; they would instead need to justify their performance, by comparison with good practice in other countries. This involves not just securing respect for what Scharpf (2014: 1, 16) terms ‘legitimate diversity’, but also building new forms of that diversity, through transnational association and practice. This suggests balancing an ‘ever-closer union’, as the goal of European development, with an ever more diverse and creative union, enjoying strong social solidarity and participatory democracy (Leonard, 1999: Ch 5).

Here are principles of reform that address the anger and dispossession felt by many Leave voters in the 2016 polling booths. The UK political parties now arrayed behind the campaign for a second vote are better placed than the Eurosceptic parties of the right, to champion such a programme of reform. This would also resonate with many of the reform aspirations across the Continent. The pains and conflicts though which the UK has been going could yet be the spur needed to rescue the European project as a whole.

References

Blyth, M. (2013). Austerity: The History of a Dangerous Idea, New York: Oxford University Press.
Hutton, W. (2015). How Good We Can Be, London: Little, Brown.
Kaldor, N. (1971). 'The Truth about the 'Dynamic Effects', New Statesman, (12 March).
Leonard, M. (1999). Network Europe: The New Case for Europe, London: The Foreign Policy Centre.
Polanyi, K. (1944). The Great Transformation, New York: Rinehart.
Rieger, E. and Leibfried, S. (2003). Limits to Globalisation, Cambridge Polity Press.
Scharpf, F. W. (2014). After the Crash: A Perspective on Multilevel European Democracy. (MPlfG Discussion Paper 14/21) Max Planck Institute for the Study of Societies.