We are now past speculating on the Brexit referendum. With the possible exception of those few thousands who demonstrated in London yesterday, the referendum result holds and must be accepted as the sovereign will of the people.
Whether they were tricked or lied to, whether they now regret it, that is what they, the people, decided and honourably neither the EU, nor the possible future leaders of Britain show any inclination to try and change that decision.
From here onwards, what happens to the UK is a matter for the British themselves and only the British. The same applies to how they get out of the mess in which the Conservative Party finds itself, after the rather comic palace coup that tripped up Boris Johnson when he was about to announce his candidature. Or what happens in the internal civil war that is ripping the Labour Party to shreds.
At the European Council this week, the EU leaders insisted that the UK presses the Clause 50 button immediately. But it does not seem that this will be happening any time soon. David Cameron said only his successor can do it, and he/she will not be elected until the autumn at the earliest. Other British leaders have said the button will not be pressed this year.
The EU leaders have argued that this uncertainty will affect not just Britain but Europe as a whole. But there does not seem to be any way of speeding up the process in Britain.
The UK has already been affected by the Brexit fallout: it is almost as if all the dire threats made by the Remain side before the referendum are becoming a reality. While the stock market has recouped its recent losses, the same cannot be said of the Sterling’s exchange rate, which has taken a beating the likes of which was last seen in the 1970s.
Attention is now being focused on the future negotiations with the EU. The Leave campaign insisted that the UK would want to remain part of the single market but the EU has always said that the free movement of people is non-negotiable. If the UK wants to remain in the single market, it must accept that EU nationals enjoy free movement. This is what other European but non-EU members such as Norway have done. Those Brexit supporters who said that one could have the single market without free movement of people were lying.
One cannot see today how the Brexit referendum result can be turned around, although such U-turns have happened before in the EU. The negotiations, such as they are, will assume the referendum result as a given. Once it is clear that the UK has decided to leave, then it loses its access to EU packages, including and above all the single market. To regain this access it must accept freedom of movement, as Norway has done. There are different possible combinations but none that reopen the single market without the thorny freedom of movement clause.
In other words, what happens now involves the British themselves and only the British.
But the ripple effects of the Brexit referendum can go on for a long time and have incalculable impacts not just on the UK, nor on the EU but on the world at large. This is not a particularly good time for the world, even before the US presidential elections. Trade has decreased, the prices of oil and other commodities is at an all-time low and many countries, even, one could say, the EU itself could be sliding into another recession. The conclusion of the Brexit negotiations could accelerate this process.
One issue fascinates me: the Brexit referendum was not about the euro. The UK, as all know, did not accept the euro and in a way its success was precisely because in the years of euro crisis, the UK kept going. Being free of ECB shackles and euro-area restrictions, the British economy soared.
But the referendum was not about the euro. We do not know what will happen in the future but so far, for all the drama of Grexit, the PIIGs, etc., no country in the Eurozone has seceded or returned to its national currency.
The referendum was about immigration and about taking back control, not about the euro.
David Cameron told the other EU leaders that he lost the referendum because they did not give him more leeway on immigration but the EU leaders were too well-educated to reply to this. And anyway, who would argue with a condemned man? On the contrary, Brexit won because Cameron did not introduce, for instance, a more than 50 per cent clause for a win (the bare majority of voters, not of potential voters, sufficed). And he could not very well spend the last four years and more to run down the EU before switching in the last month or so. Even on immigration, he did not flesh out his alternatives, such as the use of the safeguard clause that introduces a pause in the event of an invasion by migrants (such as we have on some aspects of agriculture).
So Brexit can indeed have an impact on the Maltese economy in the event of a renewed bout of recession. A lower pound will make a holiday in Malta dearer for British tourists (and a holiday in the UK cheaper for the Maltese).
A British economy running into trouble, and losing A status among the rating agencies will increase the risk of tax increases and austerity measures in Britain.
In all this, our ever-optimist Prime Minister keeps looking for the silver lining and, just as he did at the beginning of the Libyan crisis when he saw only opportunities for Malta, so too he now sees opportunities for Malta in the Brexit situation.
He is followed by people like the IFS (Institute of Financial Services) president in The Times: Malta can be the home away from home for British companies who still want a presence in the EU.
Last week the Financial Times examined the pros and cons of alternative sites – from Frankfurt to Paris to Luxembourg to Ireland. Malta was not mentioned, even though it is a cheaper location and well-connected to London. Maybe the authors could not examine each and every alternative location including Malta.
But maybe, too, Malta has acquired a sort of dodgy reputation – with a minister with a company in Panama, with all the controversy surrounding the government’s first choice as Central Bank Governor and with a minister firing away at the head of the Financial Services Authority, among other things.
British companies trying to escape from Brexit Britain will want nothing to do with a dodgy jurisdiction after all the costs of relocation. Easy Jet has said it wants to relocate outside the UK, and HSBC has said it wants to shift part of its work to an EU jurisdiction. Let’s see if we can get a decent name or two. My suspicion is that the easier we made it to get a Maltese passport, the more we diluted our attractiveness. People escaping from the UK want peace and security and to have nothing to do with shady characters.
How we handle the complexity of the Brexit issue as President of the European Union will make or break our reputation in Europe. The omens are not favourable, so far.
[email protected]