Brexit The Future of Two Unions Daniel Kenealy, John Peterson, and Richard Corbett 1 00-Kenealy-FM.indd 1 22/06/17 10:34 AM 1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Oxford University Press 2017 The moral rights of the authors have been asserted All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Printed in Great Britain by Ashford Colour Press Ltd, Gosport, Hampshire Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work. 00-Kenealy-FM.indd 2 22/06/17 10:34 AM Summary In June 2016, the United Kingdom (UK) held a referendum on continuing its European Union (EU) membership. The UK voted to leave the EU by a narrow margin, but one still large enough for its new Prime Minister (after David Cameron, who called the referendum, resigned), Theresa May, to call ‘Brexit’ (the process of Britain exiting the EU) ‘the settled will of the British people’. The result sent shock waves across Europe. This supplement seeks to explain how and why the Brexit vote occurred and what might happen—both to the UK and to the EU—as a result. Negotiations on Brexit between the UK and EU and their possible outcome are con- sidered from the points of view of the UK, the EU, and the future of European integration.1 Introduction On 23rd June 2016, the UK held a referendum asking the question ‘Should the United Kingdom remain a member of the European Union or leave the European Union?’ With 72.2 per cent of eligible voters turning out, the UK voted to leave the EU by a margin of 51.9 per cent to 48.1 per cent. The result sent shock waves through the UK political establishment and across Europe. It wiped more than $3 trillion off the value of financial markets within two days. The pound fell on currency markets by nearly 20 per cent. In its immediate aftermath, concerns arose about a contagion effect: that other EU member states might stage similar referendums. Eurosceptic parties in several EU member states made such calls that continued into 2017, with elections in the Netherlands, France, and Germany (and possibly Italy). Within the UK, the fact that Scotland and Northern Ireland voted to remain in the EU (by significant margins), created thorny constitutional dilemmas. The referendum also brought David Cameron’s six years as UK Prime Minister to a sudden, crashing halt. Cameron had stunned political pundits by winning an unex- pected majority in the 2015 UK general election. But he abruptly resigned the day after the referendum on grounds that he was unable to be a head of a government whose primary task would be delivering ‘Brexit’. The subsequent UK Conservative party leadership election at times felt like something out of House of Cards. The former Edu- cation and Justice Secretary under Cameron, Michael Gove, sabotaged his erstwhile partner in the cause of Brexit, Boris Johnson (former Mayor of London), by repudiat- ing Johnson’s candidacy despite having initially managed the latter’s bid to become 1 Given the evolving nature of the Brexit situation, every effort has been made to ensure that the contents of this supplement are as up to date as our production schedule allows. The details provided herein were accurate as of 16th June 2017. 01-Kenealy-Chap01.indd 1 22/06/17 10:33 AM 2 Brexit Prime Minister.2 Andrea Leadsom, who at first emerged as the most popular pro-Brexit leadership candidate, withdrew after a disastrous interview in which she suggested that being a mother meant she had a larger stake in society than her one remaining (childless) opponent: Theresa May. The result was that May, the UK’s longest-serving Home Secretary since 1892, was crowned as Cameron’s successor. The only thing that was certain about May’s premiership was that Brexit would dominate it. The purpose of this supplement is to understand how and why Brexit happened and what might happen—both to the UK and to the EU—as a result. We proceed in four sections. First, we consider the road to the referendum, exploring why Cameron de- cided to call it, how the campaign was fought, and why a majority of UK voters opted to leave the EU. Second, the process of exiting the EU—commonly known as ‘the Ar- ticle 50 process’ after the relevant article in the Treaty—is discussed. We also explain the negotiation process that began to take place between the UK and the EU following the triggering of Article 50 on 29 March 2017. Our third section identifies the major issues in the Brexit negotiations and considers a range of possible future relationships between the UK and the EU. The fourth section considers the potential impact of Brexit on the UK as well as the EU, whose leaders must consider a future without the UK that is littered with significant other challenges, from ongoing troubles in the Eu- rozone to the migration crisis, amplified by insecurity in the EU’s near abroad. The Referendum When histories of David Cameron’s premiership are written, it is likely they will dwell on the EU referendum, a gamble he made and ultimately lost.3 Much like the previous cases of Anthony Eden and Suez, and Tony Blair and Iraq, Cameron’s UK premiership is likely to be forever associated with one word: ‘Brexit’. Why did Cameron call the referendum? Why did he lose it? Why have a referendum? This supplement is not the place to recount the history of the UK’s post-war rela- tionship to European integration and subsequent membership from 1973 (see Milward 2002; Wall 2012; Grob-Fitzgibbon 2016). The UK has often been termed 2 At virtually the last moment in the initial stages of the leadership campaign, Gove with- drew from Johnson’s campaign and announced his own candidacy to be party leader (and thus Prime Minister). The move effectively destroyed both of their chances, as Johnson stood down and Gove was eliminated in a second ballot of Tory members of parliament. 3 The contrast between what future historians are likely to conclude about Cameron’s politi- cal judgment and party management skills may well be stark compared to one of his closest advisor’s (C. Oliver 2016), whose Brexit memoir is useful and gripping if also hagiographic about Cameron’s premiership. 01-Kenealy-Chap01.indd 2 22/06/17 10:33 AM Brexit 3 an ‘awkward partner’ in European integration (George 1998). Successive UK governments opted not to sign up to the first efforts at integration in the 1950s: the European Coal and Steel Community (ECSC) and the European Economic Com- munity (EEC). After joining what was then the EEC in 1973, UK governments secured opt-outs from a rich variety of policies and projects including the euro and the border-free Schengen area (see Peterson et al 2015: 242). Perhaps as balm to the political shock of having a member state—for the first time ever—choose to leave the EU, some Brussels insiders were heard to say that ‘the UK was never a full mem- ber anyway’. Yet, in some areas, such as the single market and research programmes, the UK took a leading role in the EU. To understand why the choice was made to hold the UK referendum in 2016, it is important to understand how Europe came to shape domestic politics, and in par- ticular the internal politics of the Conservative party. As a 2016 BBC documentary on Brexit put it, ‘it was really a family row, one raging in the Conservative party’ (BBC 2016a). Divisions within the Conservative party about the UK’s relationship with the EU were a powerful contributing factor in the downfall of Margaret Thatcher in 1990. They posed a serious challenge to John Major’s government, with a slim parliamen- tary majority making the party’s Eurosceptic MPs disproportionately influential, dur- ing the 1992-97 parliament (see Young 1998: 412–71). In opposition during the years of the Labour premierships of Tony Blair and Gordon Brown, it was still a highly divisive issue amongst Tories.4 Blair’s ardent pro-Europeanism contributed to a shift by some Conservative MPs towards a firmer Euroscepticism. But it was not a priority of many voters. In fact, after being elected leader of the Conservative party in Decem- ber 2005, David Cameron told his party to stop ‘banging on’ about Europe (D’Ancona 2013: 241). Nevertheless, the number of Eurosceptic MPs in the Conservative parlia- mentary party rose following the 2010 general election (Heppell 2013). As Conservative leader and later Prime Minister, Cameron repeatedly tried to ap- pease Eurosceptics within his party.