June the 23rd 2016 will go down in history as one the biggest collective lapses of reason. Answering the political messaging ‘dog whistle’ a majority of United Kingdom citizens, 52% to 48%, voted to leave the European Union. It is a decision that has ramifications well beyond the borders of the current UK and Europe, some of those felt early in the days following where the British Pound suffered a 13% loss and stocks reeled. The markets will settle quickly, our world may not.
For context. I am lucky to be born Canadian, from British parents. They were UK born and bred, emigrated in the mid-sixties to be teachers in rural Alberta. They reached the immigrant’s dream obtaining PHDs, new careers in universities and in business, and had me and my sister. One legacy for us kids: the right to British citizenship, and a passport. I used that to full advantage. In 1992, at the end of a back-packing trip through Europe, I parked myself in Brugge, Belgium: met my life partner, we had a son, created a business, and frankly lived the EU ideal of no borders. I was helping manning a hotel and bar till machine at midnight as the Euro was introduced – exchanging Belgian Francs for Euros – and in 1995 with the Schengen agreement all border controls dropped. It was a seminal moment leading a bike tour on that day when we crossed from Belgium to the Netherlands: no passport checks, just a sign saying welcome.
In 2005 we moved to Victoria, Canada – and have watched from afar, and in the new family home, recognized how the political conversation has changed. The #Brexit vote is simply the most recent manifestation of an anti-establishment outcry: in the EU with the rise of both right wing and hard left (France and Greece as examples), in South America, and in the US with the theatrical rise of Trump – interestingly THE Trump was in Scotland opening a re-vamped golf course on the day of the UK/EU referendum. His comments supporting the Leave vote magnifies how the misinformation, the dog-whistle on immigration, the simply idiotic messaging on the economy, has set the UK on a path to irrelevance. The vote itself also clearly shows the general electoral are fed up: In The UK, in the US, in Europe – we had it clearly in Canada provincially with Alberta going NDP after decades of a conservative government, then a sweep with the Federal Liberals in a general election. In the US Bernie Sanders is still not entirely done, and has pushed the Democratic Party and Hillary Clinton far more progressive than her comfort zone, while Trump has turned the Republican Party into a denial of itself.
Brexit means the UK will have to eventually invoke Article 50 of the EU Treaty: a painful leave process with no precedent. It means negotiating with not only the EU council in terms of overall treaties, but each of the 27 countries individually in terms of residency, taxation, pension and health care rights; airline landings, visas… should I continue? There are 1.3 million UK citizens living, working, owning property and/or retired on the continent – and about 2 million EU citizens in the UK who are doing the same only by right of EU provisions. As part of the common market the UK saw economic growth, one of the lowest unemployment rates, a higher education outcome, and huge inward investment. In that time London reaffirmed itself as a global financial capital, manufacturers like Nissan opened plants creating thousands of jobs and UK businesses small and large enjoyed the benefits of importing and exporting tariff free. That is not at risk – that is gone.
Politicians and Pollsters Lost the Plot
Skepticism over Europe is not new. It has been around since 1972 when the UK joined the common market but came to a head in the last general election when the Prime Minister and leader of the Conservative Party had to shore up a vocal split in his own front and back benches by promising a referendum. At the time it seemed ridiculous to even imagine the voters actually following through with a Leave vote – the likes of Nigel Farage, leader of the UK Independence Party, and Boris Johnson, the bumbling Mayor of London were seen as representing a minority view. Surely the Labour Party supporters, Unions, Liberal Democrats and sober minds within the Conservative Party would come out on mass for Remain? What seemed an easy if cynical ploy to unite the incumbent Conservative Party in the face of a general election has turned into a nightmare.
The pollsters and media are equally to blame. In the lead up to the campaign received wisdom, lack luster polling and an insular media were more about spouting rhetoric on ‘why go through an expensive, even stupid, exercise in direct democracy when everybody knows the outcome’. As every election is about the economy, and everyone KNOWS the economic future of the UK is within a united Europe, then the result is obvious. True enough if your focus group is based in London, a failure to thoroughly investigate the general mood assuming middle Britain would vote the same was their downfall. In the end, the majority voted against their economic interests clearly illustrating the referendum was about something else – immigration. Enter UKIP and The Boris whose blatantly racist rhetoric and miss-truths on EU regulations was amplified by right wing tabloids reveling in the ideal of a country-garden England which has never existed. Blame also resides with Jeremy Corbyn, leader of the Labour Party who came late and reluctantly to the Remain campaign. The campaign was so divisive it led to the violent death of Labour MP Jo Cox, killed by a man yelling Britain First.
Signs of worry should have started early in the campaign when the Leave vote started gaining steam – in some polls nearly 10 points ahead of Remain. It should have been obvious something far deeper than economic self-interest was driving voters. In fact, beyond the anti-immigration sentiment far stronger than insulated and isolated politicians imagined, was an equally vigorous anti-establishment protest. The referendum was as much an anti-status quo vote as much as anything else. If this sounds familiar it is – just look at the US presidential race.
Right up to voting day the pollsters had it wrong. A YouGov exit poll on the day, released just as polls closed had 52% to 48% for remain, the exact opposite of the actual result. Other polls had the expected result close, within a margin of error, but generally leaning remain. Comments from government officials and financial houses who conducted their own private polling in the final days had Remain as high as 57%, which explains the market shock (no one had factored in a #Leave vote) and the waking-into-a-nightmare look on the face of Mark Carney, head of the Bank of England, as he addressed the cameras in a failed attempt to reassure currency and stock markets.
The future is highly uncertain but the consequences have begun. The Prime Minister David Cameron had no choice but to resign, leaving the door open for Boris Johnson to take the lead of an even more divided Conservative Party. The Labour Party is equally fraught with at least one high level MP fired for questioning Jeremy Corbyn’s leadership, and many others resigning in disgust. Nicola Sturgeon, leader of the Scottish National Party and First Minister of the Scottish Parliament, is adamant on calling a new independence referendum (one that is likely to pass now) and has announced direct talks with the EU will start in the next few weeks, an initiative welcomed by Angela Merkel. Politicians in Northern Ireland are calling for a break with the UK, an unlikely scenario, but it places the UK influence in jeopardy.
Economically the signs are also ominous in the immediate term. Financial houses and banks in London have already announced lay-offs or moving positions to Europe. Morgan Stanley announced on the day 2000 job losses in London, HSBC announced 4000 positions moving by the fall from London to Paris. Even the most conservative estimates see over 70,000 jobs in financial services alone going in the next few months.
Manufacturing will also take a hit – a sad irony for bell-weather city Sunderland who voted overwhelmingly for Leave, and whose local economy is deeply reliant on thousands of jobs with car and appliance companies. 80% of products produced by large manufacturers in the UK are shipped to EU markets, it is highly unlikely they can or will stay in the face of import tariffs and export regulations. Germany, Belgium and France will benefit as the investment exodus begins.
Other consequences notably not voiced during the campaign. The National Health Service is in desperate shape already and will be hard hit as many doctors, specialists, nurses and technicians come from the EU. Every single UK passport will have to be re-issued. Research grants from Anthropology to Zoology, of which the EU pumps in $100s of millions will not be renewed, or even pulled. Over the next few months the list will get longer, and more dire.
The EU itself is not in a mood to play nice. The referendum has empowered far right movements especially in France and The Netherlands calling for their own vote. EU leaders and officials have already demanded the quick implementation of Article 50, and will be brutal and unforgiving in negotiations. They need to demonstrate to exit movements across the continent the dire consequences of leaving. There will be no middle ground on freedom of movement and being partly in or out of the common market. You are either in or out – a reality echoed by the current UK Finance Minister who reluctantly admitted just that in the media. A blow to Leave voters who somehow believed they could ‘choose’ the best of the EU opportunities, and block what they believed were the worse.
A Generation Lost
Tragically it is the younger generation who have been betrayed by their elders. 75% of voters under 24 voted for remain. They viscerally know their future lies in open borders, freedom of movement and the opportunities of a common market. That is suddenly now lost to current and future generations. The UK will diminish: economically and actually. Scotland will leave, the financial powerhouse that is London will decline, inward investment will never match the outflow. The UK will never have the leverage as it is forced to re-write international trade deals as it did with the backing of a connected market topping 400 million. The best and brightest from outside the UK will no longer see Britain as a top destination, and the best and brightest educated in the UK will grab opportunities elsewhere. No wonder web searches for emigrating to Canada and Australia spiked in the hours following the referendum results.
The EU will survive, it might even become more united, politically and economically powerful, with a UK exit.
The lesson for liberal democracies everywhere is that politicians and parties driven by donors and insiders are at the mercy of an increasingly angry, disenfranchised and motivated citizenry. Voters who feel their immediate issues are not addressed by the political class respond to the dog whistle, fact free, messages of xenophobic, power hungry, wing nuts like UKIP’s Nigel Farage and Donald Trump. Rational self interest goes out the window, the result is a country on the road to irrelevance.
Emotionally I have moved from incredulity, to anger to simple sadness. The country of my parents, the country of my heritage is no longer.