The House of Common’s Select Committee on Foreign Affairs has recently published a report into the possible effects of Brexit. There are five members of the committee declared for 'Leave' and five for 'Remain'. The Chair’s position is currently undeclared. However, all the members of the Committee have been struck by the desire from the public for an unbiased analysis. By producing a unanimous report, the Committee is able to meet this need. The objective of the report, is to inform the public before their decision on June 23rd.
The full report can be read here.
A summary of the report suggests the following.
Voters should think about the short term consequences of remaining in or leaving the EU, but—because the decision is for the long term—they should primarily be thinking about the long term consequences. Admittedly, it is not easy to make long term predictions about what the UK, the EU and the wider world will look like twenty or thirty years from now. But there are possible risks and opportunities for either decision.
The Government should recognise the probability of no mutual interest deal being concluded within the two-year notice period. If no deal could be concluded within the two-year notice period following an ‘out’ vote the UK would move to standard WTO relationship terms and would then need to decide which of the 6,987 directly-applicable EU Regulations would need to be replaced by UK law.
The report outlines the choice between staying in the EU, which, as the world’s largest single market, has clout in trade negotiations with other countries (the EU can offer access to a market of 500 million relatively wealthy consumers, in return for gaining access to other countries’ markets); or leaving the EU, which would increase the UK’s flexibility (the UK would decide its own negotiating position and not need to accommodate the disparate views and interests of other EU countries when negotiating). In other words, the EU has more leverage in securing favourable terms in bilateral and multilateral trade deals and in shaping globally-accepted standards, but it may be slower and less focused on purely UK interests, whilst the UK alone would have less leverage but could be more nimble and focused, for example on its services industries.
The report does acknowledges that all key UK allies support the UK remaining in the EU, partly because for some allies, such as the USA, the UK is seen as a positive influence on the direction of EU foreign and defence policy.
There is no doubt that Europe faces increasing instability in its neighbourhood, from Libya to Syria to Ukraine. There is a debate about whether “Brexit” would destabilise the rest of the EU at a time when it is struggling to cope with currency and migration crises, or whether it would spur the remainder of the EU to act more coherently.
The evolution of the eurozone matters. Currently the euro currency is used by 19 of the 28 Member States; all non-euro states except the UK and Denmark are committed to joining in the future. An effective, high-performing and sustainable eurozone would likely benefit the UK economically, as more prosperous trading partners would buy more of our goods and services. However, to become sustainable, the eurozone will need to reform in ways which entail greater economic, financial and fiscal co-ordination and integration for participating states. This could leave the UK on the outside of an ever-tighter decision-making majority, with eurozone countries banding together in ways which could damage UK interests, particularly in the financial sector. This was recognised as an issue in the Government’s renegotiation, leading to future changes aimed at protecting the UK as a non-euro state.
The decision boils down to an assessment of the benefits of more direct, narrow, national control versus indirect and diffuse, wider international influence, and the interaction between the two. Voters will attach different weight to different factors and different probability to the risks and opportunities outlined in this report.