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Understanding Brexit

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Simon Kay

Senior Non- Resident Fellow - Global Affairs

Tag: Foreign Policy Brexit Global Affairs International Relations Policy Analysis
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In 1950 a French political economist called Jean Monnet prepared a declaration for the French government that recommended joint control under a High Authority of the French and German coal and steel industries that would be open to the other countries of Europe. The declaration, supported by Chancellor Adenauer of Germany, included the statement –

"Through the consolidation of basic production and the institution of a new High Authority, whose decisions will bind France, Germany and the other countries that join, this proposal represents the first concrete step towards a European federation, imperative for the preservation of peace." (Monnet’s knowledge of history had clearly deserted him, as federal systems do not guarantee peace – e.g. the US civil war in the 1860s.)

Monnet clearly realised that a swift move towards a federation would be unacceptable to the European electorates, so he recommended a gradual approach. The European Economic Community (EEC) (1958) (commonly known as the "Common Market") emerged first in 1958, followed by the European Community in 1967, the European Council in1974, the European Monetary System (1979) and the European Parliament (1979). 

In 1973, Prime Minister Heath signed the documents that took Britain into the EEC, but the disquiet in the UK that followed that decision pushed Wilson, the next Prime Minister into launching a referendum on our membership. The question put to the people was “Do you think that the United Kingdom should stay in the European Community (the Common Market)?” Believing that we were being asked if we wanted to stay in what was simply a trading group, 67% of us enthusiastically said ‘yes.’


But our politicians had lied to us. Asked later on TV about the 1975 referendum, Heath, with a guilty look on his face, said “It was always about union.”  If the British people had been asked in 1975 if we wanted to join a European Union, the result would have been a resounding ‘no’ – and our politicians knew that.


The Treaty of Rome in 1957 had agreed the ‘free movement of labour’ between its six members – Germany, France, Italy, the Netherlands, Belgium and Luxemburg. This clause had few implications at the time, as the economies of the six were more or less the same, so there was no incentive for mass economic migration. But in 2004 the EU allowed many eastern European countries, with lower standards of living than the original group, to join, accompanied in 2007 by Rumania and Bulgaria.


Being presumably intelligent people, the EU decision makers must have forecast and been happy with the effect that this expansion would have on migration, as human nature inevitably took its course – many people in the poorer countries migrated to the richer ones, as they always do if they are allowed to.


Before these countries joined the EU, Prime Minister Blair and his ministers said that only 13,000 migrants from Eastern Europe would come to the UK each year. Now we have one million from Poland alone and the Eastern European total is reported to be nearer 3 million. Even Blair’s favourite think tank, the Institute for Public Policy Research (IPPR), said recently: ‘It is no exaggeration to say that immigration under New Labour has changed the face of the country.’ As one Blair supporter admitted in a recent book – ‘The ten years of Blair and Brown has seen more immigration into the UK than the previous 50 years combined.’ The rationale behind Labour’s decision apparently lay in the immigrants’ voting intentions, as research carried out in 2005 suggested that 80% of the total of three million immigrants would vote Labour.


But Blair & Co miscalculated, as a number of people living in towns most affected by recent immigration told the media in 2016 ‘This town isn’t England anymore – it’s Eastern Europe. And I’m fed up with it.’ The number of Labour voters in favour of Brexit in the referendum was reported as substantial.


On the question of sovereignty, Brexit will enable the UK’s Parliament to re-establish itself as Britain’s only parliament. In the past few decades, the EU has ruled that its laws are ‘sovereign’ and ‘take primacy’ over UK laws, with the result that much of our sovereignty has been transferred to Brussels. As the BBC recently reported, on 58 occasions over the past few years the UK government appealed to the European Court of Justice (ECJ) against laws passed by the EU – and we lost all 58 appeals.


The ECJ is declared ‘sovereign’ over all national courts in the EU countries, but only as far as EU laws are concerned. So, if a national law, passed by a national parliament, contradicts an EU law, the ECJ can (and does) overrule the national court, claiming ‘primacy of the EU law.’ As the number of EU laws affecting the UK has grown steadily and become ever more invasive, so the ‘sovereignty’ of the ECJ has also grown, reducing the UK’s sovereignty over its own laws still further. Brexit should change this state of affairs and should return the UK’s sovereignty to the UK.


Before the 2016 referendum, the Prime Minister (Cameron) and his Chancellor of the Exchequer tried to scare the British electorate into voting Remain, with dire predictions of an economic nightmare. (Cameron even suggested “Europe risks sliding back into conflict and genocide if Britain votes to leave the EU.”) Well, it is early days, but the UK stock markets are higher now [1 July] than they were before the 2016 referendum. The FTSE (Financial Times Stock Exchange) 100 index is higher than at any point since August 2015 and the FTSE 250 – usually a better way of measuring UK stocks – is higher than it was on 17 June, one week before the referendum.


My belief is that the world of business controls our economy, not the politicians, who simply react to what is going on. As the UK politicians squabble amongst themselves, post-Brexit, the businessmen on both sides of the English Channel are busily calculating how to make their businesses prosper after the referendum.


One good decision that Blair and Brown made was not to join the Euro. This was part of Jean Monnet’s original dream, but in the past few years, the politicians have admitted that the single currency was launched for political and not economic reasons. Ever since, the Euro has lurched from crisis to crisis, as countries with weak economies fail to obey the Euro’s rules and wait to be bailed out by the stronger economies – especially the Germans.

Not long ago on a business trip, I sat in a French hotel near three German businessmen. “I have an idea,” I suggested, “why don’t we create a new, northern Common Market, not a Union – Britain, Germany…” “Yes, yes,” the Germans jumped in, “and the Netherlands and Scandinavia. None of the Mediterranean rubbish. Excellent!”


There is little doubt that Cameron made a political misjudgment of epic proportions, when he agreed to hold an ‘In/Out’ referendum on the EU. The result appears to have cost him his political career and it has shown just how out of touch many of the UK’s politicians are with the views of the people they govern. One of the fears of the EU’s remaining 27 members is whether or not the idea of ‘an exit referendum’ will spread.

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