Interel were delighted to welcome Lord Lansley CBE, former Secretary of State for Health and Leader of the House of Commons, for a Brexit Breakfast yesterday morning. Following last Thursday’s shock result, Lord Lansley provided his insight into the consequences of Brexit. Here are the top 10 things you need to know:
1. The UK economy has a very tough period ahead. The pound and FTSE index have both experienced turbulence since Thursday, and more long term indicators like the current account deficit are also suffering. The Government will need to raise revenues with tax receipts stalling. The autumn budget bears the prospect of more bitter austerity.
2. Divisions within the Conservative Party will not be healed soon. The race for leadership throws out two unpalatable choices: either a Brexiteer, most likely Boris Johnson, leads the Party and alienates the majority of his MPs who backed Remain; or a Remainer, most likely Theresa May or Stephen Crabb, takes the reigns and frustrates the pro-Brexit party membership and voters. Both options would lead to intense conflict and infighting at a time when stable leadership is needed.
3. Labour are also feeling the aftershock of the surprise result. It is unsurprising that MPs have lost confidence in Corbyn, when he refuses responsibility for the defeat and is currently heading for heavy defeat at any forthcoming General Election. Angela Eagle will likely emerge as the challenger today or tomorrow, though Corbyn has a very good chance of winning if he is on that ticket, given his grassroots party support.
4. Brexit presents opportunities and threats for the smaller parties as well. UKIP have fulfilled their raison d’être and must now decide whether to renew as a wider populist force, or continue as a ‘’one-man ego trip’’. The Liberal Democrats have spotted a niche as the party fully committed to the EU, and could possibly absorb support from the centrist wings of the main parties. It is, however, highly unlikely that any party will split.
5. It is almost impossible to envisage a situation where Scotland does not hold a second independence referendum, and it is highly likely that Scotland would vote Yes to independence. An emboldened Nicola Sturgeon is currently holding meetings with top EU officials, pressing to maintain Scotland’s current status in the EU, following Scotland’s firm endorsement of Remain.
6. Negotiations cannot take place until the country decides what it wants from Brexit, and what our future relationship with the EU should be. This will be a key issue in the upcoming Conservative leadership election, which could shape the future of the country for decades to come. Terms of trade and controls on immigration with be key issues.
7. Once Article 50 is implemented, there is no precedent for the negotiations which follow. The new treaty which will be produced will be sui generis - a totally new, bespoke document that isn’t bound by existing EU rules - in which the UK can press hard for a good deal.
8. It is highly unlikely that a second Referendum will happen. In throwing his hat into the ring for Tory leader, Jeremy Hunt has argued that another referendum should be held on the renegotiated settlement. However, all other main leaders have strongly dismissed another vote, arguing that the will of the people must now be implemented, anything less would be a betrayal. In fact, the only legitimate way to overturn this would be through seeking a fresh mandate from a new general election, though this is unlikely to happen.
9. The future of the European project is too at a crossroads. Contrary to much British opinion, the EU is not one homogeneous monolith intent on integration. Some member states like France will see Brexit as an opportunity, with the British obstacle to further integration removed. However others, the likes of Sweden and the Netherlands, will view Brexit as a wakeup call, that the EU needs to enact meaningful reforms and make the Union work for its people if it is to avoid further national exits.
10. There is a wave of elections across Europe taking place in the next two years, which could shape the context of British negotiations. There could well be new leaders of France and Germany by 2017, with these countries and many others fighting to ward off the rise of populist leaders of the left and the right. If the EU can produce reforms to keep populist sentiment at bay, including sensible controls in immigration, it may create political manoeuvering room for much needed further EU integration.
British Politics is going through a historically turbulent period. Events are moving at high speed and it is increasingly difficult to predict what will happen next. You can stay on top of all developments at interelinsight.com and by following @interelUK.