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Brexit: Stay or Go?

by Madeline Ojakovoh

Eight things to bear in mind when you cast your vote in June.

Few political debates have run as long or been surrounded by as much controversy as Britain’s membership of the European Union. The upcoming vote on a so-called Brexit, was one of the Conservative party’s major manifesto promises ahead of the May 2015 General Election. The build up around the issue has been absolutely huge.

With under 60 days left until the 23rd June referendum date, we have seen the launch of the official Remain and Leave campaigns and, naturally, the alternatives and spoofs. As the only group in the running, Britain Stronger In Europe won the nomination from the Electoral Commission to act as the official Remain campaign in a victory that surprised no one. The Leave nomination was clinched by partially Tory-backed Vote Leave, who narrowly edged out Grassroots Out, much to the dismay of Nigel Farage’s UKIP.

Political pundits from all over the country have taken eagerly to their soapboxes to shout their opinions on whether the UK is better off remaining within the EU or parting ways. World leaders, prominent businessmen and businesswomen, and the general public have all joined the conversation with the resulting clamour of competing voices masking the actual debate.

It is important not to underestimate the importance of this ongoing debate. A Brexit has the potential to create a paradigm shift in the way the country, continent, and even the world, functions. With the issue being so crucial, yet divisive, it is skewed by deep-seated prejudices, such that it is almost impossible to find an impartial authority on Brexit.

We would like to attempt to remedy this lack of impartiality by presenting you with the key factors surrounding the Brexit debate, the main arguments from each side, and the possible repercussions of the vote.

The aim is not to make your decision for you– personally, we think both sides have their merits and flaws. We simply want to present you with facts and pitfalls to watch out for to enable you to make up your own mind when you go to the polls.

1. Cut through the hysteria and apocalyptic prophecies.

Over the past few months, there have been countless predictions about the UK’s post-referendum relationship with Europe.

A vast number of projections from either side have been more than a little gloomy. The latest analysis conducted by the Treasury has suggested that the UK economy could be worse off by as much as 7.5% by 2030, if the UK leaves the EU. Vote Leave have accused Britain Stronger in Europe of running ‘Project Fear‘, suggesting that if we remain, Britain will lose more control of its own affairs, eventually being conducted into a ‘United States of Europe’.

Assuredly, both campaigns are playing to the country’s emotions. There is an element of fear surrounding this referendum, which is firmly based in the uncertainty of the UK’s future. No matter which choice the country collectively makes, there is no way of knowing the eventual outcome.

The almost threatening tone adopted by both sides, trying to persuade the electorate against supporting their opponents, certainly does not help potential voters. The issue of our EU membership is important, but the result is highly unlikely to be world-ending, as some commentators seem to suggest.

2. What will the EU look like in 5, 10, or 20 years?

The European Union has become far more than its creators originally conceived. The EU can trace its origins back to the 1957 Treaty of Rome, which created the European Economic Community, which was ostensibly a geographic area with beneficial trading agreements.

Britain only joined this union in 1973, under Edward Heath, and swiftly held a referendum on membership of the area in 1975, in which 67% of a 65% turnout voted to remain in. In the following years, this trade area gradually evolved, until 1993 when the EU was officially formed by the Maastricht Treaty.

Still greater changes followed, with the introduction of the Euro single currency in 2002, and the Lisbon Treaty of 2007, which signed away yet more aspects of member states’ sovereignty and individuality.

Today, the EU is highly bureaucratic, operating under the guidance of Angela Merkel and François Hollande. Britain is repeatedly out-voted on major issues and subject to the laws made in Brussels.

It is clear that the organisation will continue to evolve and there is no guarantee that we will recognise the EU even in a few years time if we vote to remain a part of it. The EU could dissolve under the stress of any number of threats – not just a Brexit – or could form an even closer union, resulting in the ‘United States of Europe’ scenario that Vote Leave are so worried about.

The reality is, as the majority of us are not clairvoyants, there is no assurance of which future we would be signing up to or rejecting.

3. This debate does not just affect the UK.

There is a reason that the EU debate has attracted a global audience – it has global repercussions. Make no mistake, this referendum has a far wider impact than just on the UK.

For a start, it impacts all EU nations. A Brexit risks destabilising the entire EU and could potentially lead to a flood of other members running for the exit. Dutch and Czech voters are already voicing their misgivings about the EU and are reportedly keen for their own membership referendums. Greece is eager to ditch the Euro and distance itself from the Eurozone economy, and much of the French and Italian electorates want to return to their previous currencies. A Brexit would open the door to these conversations and see the potential fragmentation of the ‘ever closer union’ of Europe so desired by Brussels.

Figure 1: Obama appeals to the British electorate to remain in the EU.

The Brexit debate also affects the wider world. At the weekend, US President Barack Obama flew into the UK for a three day visit, ostensibly as part of the Queen’s 90th birthday celebrations (Happy belated birthday Lizzie), and spoke on the subject of the EU referendum. In a surprisingly impassioned appeal to British voters, printed in the Telegraph newspaper, the President urged the country to vote to remain in the EU stating:

The United States sees how [Britain’s] powerful voice in Europe ensures that Europe takes a strong stance in the world, and keeps the EU open, outward looking, and closely linked to its allies on the other side of the Atlantic. So the US and the world need your outsized influence to continue – including within Europe”.

Obama’s rare intervention into British politics brings home the seriousness of this decision and highlights the potential for global repercussions.

4. Speculation is causing instability in the global markets.

In our globalised world, what occurs in one corner of the world can have consequences for other places. Already, ripples (not the chocolate kind) can be felt throughout the global markets.

In the event of Brexit, there would be an initial change in the global markets. The Pound is certain to suffer a dip in value, at the very least in the short term, but the Euro could also suffer if the EU begins to break up. With two major currencies suffering, there would be major consequences for global markets which could become destabilised as a result. Regardless of the eventual outcome, even the speculation surrounding the referendum result is already causing a degree of instability in the global markets, with currencies and companies’ values fluctuating as a result.

5. The economic repercussions are uncertain.

In terms of the British economy, there are multiple outcomes from this referendum. Economists at the think tank, Open Europe, have estimated the best and worst case economic eventualities of a Brexit (Figure 2). In the event of a Brexit where the UK does not operate a free trade agenda and fails to strike trade deals with the rest of Europe, they suggest that the country’s economy would be 2.2% smaller in 2030 than if the UK had remained in the EU. Alternatively, the proposed best case Brexit scenario hangs on the UK striking a free trade agreement with the EU, fully opening up trade to the rest of the world and deregulating the economy – all incredibly optimistic. In this scenario, the UK economy would be up by 1.6% by 2030, compared to if the country had stayed in the EU. The reality is that the economic impact of a Brexit would likely fall somewhere within the -0.8% to 0.6% range.

Figure 2: Demonstrating the potential economic impacts of a Brexit

Both the Leave and Remain campaigns are basing their economic arguments on alternative projections most favourable to their respective campaigns produced by a range of economists.

The Chancellor has already claimed that leaving the EU would make the country ‘permanently poorer’, costing every household £4300 a year on average. Additionally, the Treasury have forecast, based on middle projections, that by 2030 the British economy could be 6% smaller if Britain exits the EU, and threats of an 8p income tax increase to fund a ‘£36bn Brexit black hole’ are being debated.

The Leave campaign unsurprisingly disputes these claims. The UK spends £350 million a week on EU membership and falls within the select group of countries which put more money into the EU budget than they get out. Effectively, the country puts £18.2bn a year just to remain part of the EU, money which the Leave campaign say could be better spent within the UK on struggling institutions, such as the NHS.

Ultimately, it is incredibly difficult to know which projections are the most accurate, but there are certainly risks to both staying and going.

6. Beware the biased broadcasting and poor polls.

One thing to be particularly wary of is the media coverage of the referendum. The BBC, our supposedly impartial national news vehicle, have already been heavily criticised for the bias towards the Remain campaign in their reporting. Every national newspaper, magazine, blog and report will have a stance on Brexit which may be undeclared, so it is best to not read them as gospel.

Similarly, polls should be taken with a pinch of salt. After Obama’s intervention, the latest polls place the Remain vote ahead of Leave by seven points. However, as seen in the recent past, polls can get it dramatically wrong. Polling for the General Election in 2015 is one example of this. Pollsters predicted a dead heat between Labour and the Conservatives. With the Conservatives trouncing Labour, many wondered how the poll predictions were so far removed from the actual result. Therefore, it is best to treat polls with a healthy amount of scepticism.

7. No one is saying that the EU is perfect as it is.

Even amongst Remain supporters, there is nobody championing a non-reformed EU. Regardless of affiliation, a large majority of the UK electorate are unhappy with the way the EU is currently run and the vast amount of bureaucracy and waste within the organisation.

In February, David Cameron renegotiated the UK’s deal with the EU, with somewhat limited success. The majority of commentators feel these reforms did not go nearly far enough and that Europe still has too much power over Britain’s affairs. Many advocate a Danish-style straight opt-in/out system for the UK, which Cameron was unable to negotiate in Brussels.

If the country votes to remain within the EU, calls for additional reforms, which go much further in redefining the British relationship with the organisation, may well be amplified. If the UK votes to leave the EU, our relationship with the rest of Europe will change dramatically over the next few years, undoubtedly forcing widespread changes across the rest of the EU.

8. Uncertainty is the only certainty.

Ultimately, no one knows what the UK’s relationship with the EU will look like in the future. However, it is such an important issue, with such wide reaching repercussions, that there is understandably much debate surrounding it.

Arguably, the major problem in the EU membership debate is the lack of tangible, solid facts upon which to base any assertions.

We are all on uncertain ground. The EU has steadily continued to evolve since its inception. There is no guarantee that the organisation will be fundamentally similar or dissimilar to that which exists now. There is no guarantee that it will even continue to exist.

Projections are notoriously unreliable. It is near impossible to predict the future state of the economy, due to the high levels of uncertainty surrounding this referendum. Our geopolitical standing and relations with other nations, even our closest allies, all seem to hinge upon the upcoming referendum.

There are numerous variables at play which will impact upon the UK, regardless of how we vote. We may have a weaker economy irrespective of this referendum, particularly if there is another global recession, which would be very difficult to guard against. The EU may implode anyway due to the stress placed on the organisation by any number of threats such as the immigrant crisis, weak member economies such as Greece and Spain, not to mention the high terrorist threat posed by Daesh.

If you take just one point away from this, it should be that, regardless of your political allegiance, your vote is important. Your vote can help ease this instability currently affecting Britain and the EU. Your vote is your chance to have your say, come June. Your vote will answer the question that The Clash asked best, “Should I stay or should I go now?”