In light of the Britain’s recent vote to leave the European Union, Duke political and economic experts have weighed in on what led to the referendum result and what the potential consequences could be.
In a historic decision last month, 52 percent of British voters elected for the United Kingdom to withdraw from the EU—an event with ramifications that are continuing to unfold. U.K. and European stock markets have fallen, with the pound recently hitting a 31-year low. Tim Buthe, associate professor of political science and public policy, and Craig Burnside, chair of the economics department, discussed the widespread uncertainty surrounding the economic and political fallout of "Brexit."
“It is quite unclear what the timeline is going to be, it’s quite unclear what the political fallout will be, particularly because Scotland and Ireland voted in majority to stay in the EU,” Buthe said. “I can see this possibly leading to the dissolution of the United Kingdom.”
Contributing factors
Buthe noted that recent political campaigns in the U.K., both advocating to leave the EU and to stay, were “extremely poorly conducted, with poor information.” Fearmongering played a role in those campaigns which ultimately factored into the referendum’s result, he said.
“The picture of an incredibly powerful bureaucratic apparatus in Brussels is a hoax in a way,” Buthe explained. “But on the other hand, those who wanted to stay in the EU completely failed to make a positive case for it, but instead were painting exaggerated pictures of severe economic decline.”
Generational differences in attitudes toward the EU also factored into the outcome of the referendum, Buthe noted.
Exit poll data showed young people under the age of 35 mostly voting in favor of staying in the EU, and people age 55 and older voting to leave the EU. Those older populations, he explained, are the ones who originally voted for the U.K. to join the EU in 1973, and no longer seem to be comfortable with it.
In the 1970s, the U.K. was in clear economic decline and the glory of the British empire had crumbled, Buthe said.
“Many people then saw that they had no choice, and so they elected to join up with Europe to be a part of something larger than the U.K., now that the empire was technically over,” he explained.
Many young voters today, however, were born after the U.K. joined the EU and thus have a fundamentally different attitude towards the EU, Buthe noted.
“For them, Britain being a part of the EU has always been part of the reality they grew up in. Yes, there may been contestation over some aspect or another, but it’s a part of the normality of life,” he said.
But he added that students today, in particular, have experienced the EU as a fundamental part of their growing up through participation in region-wide exchange programs.
Economic factors have also been critical drivers in the events that led to Brexit, Burnside added.
The 2008 financial crisis has been an “ongoing issue” that has placed pressure on countries throughout Europe, but Burnside pointed out that Britain has not been as severely affected as other parts of the region. Not being a part of the euro system has allowed Britain to be more flexible in their policies, he noted.
The recent influx of refugees and immigrants, however, has placed pressure on specific communities, he said.
“If you look at the geographic distribution of how people voted, the more disadvantaged areas in England are some of the ones that voted most strongly for exit,” Burnside said. “So there’s element or segment of the U.K. that feels like they’re neglected and that their local economy’s not doing well.”
Burnside added, however, that the political background and economic factors that led to Brexit are both critical when considering why it happened.
“The amount of tension in European politics, including a lot of the opposition to EU membership in the U.K., was essentially a consequence of the sense of the politics of economic affairs—that the benefits had been unequally shared, many had not gotten a fair share of the gains in recent years… The Brexit campaign promised to address those issues,” Burnside said.
Buthe noted, however, that those who advocated in favor of Brexit did not anticipate actually winning, and “so had no plans for what to do thereafter and are completely unprepared because they haven’t thought through what the world will be like.”
The fallout
The consequences of Brexit have been much speculated about, but Buthe said he believes the dominant theme in the short term is of uncertainty.
Burnside added that the uncertainty will affect people’s decisions about investments and taking jobs in the U.K. or EU, potentially causing them to make more conservative economic choices in the short term.
He noted that there was high volatility in financial markets after the news of the referendum, but that much of it has settled down.
“In 10 years, should this still be having negative effects? It all depends how they negotiate their way out of it,” Burnside said. “It’s not obvious that this should dramatically affect Britain in the long run. Short term it certainly will.”
Buthe pointed out the potential consequences for the U.S. in the long term if this decision leads to the U.K. breaking apart.
“It’s hard to see how, if England and Wales were all that is going to be left of the U.K. in time [because Scotland and Northern Ireland vote to stay in the EU], how it would continue to maintain the sizable military force that would be useful for the U.S. as a global partner,” he explained. “In that sense, the dissolution of the U.K. would be devastating to the U.S. in terms of global strategies.”
Burnside, however, added that beyond the financial fallout for U.S. companies that operate in the U.K., economically the U.S. should not suffer huge consequences due to the UK’s decision.
“It’s not enormously important,” he said. “There’s a sense in which it’s important politically, because Britain’s a strong ally with the U.S… All of our trade with U.K. in the end isn’t absolutely huge or anything, so to that extent the U.S. shouldn’t been too dramatically affected.”
From economists’ viewpoints, Burnside said that there is fairly broad consensus that Brexit is a net negative for the U.K. because the U.K. will no longer have the same level of access to free trade.
Buthe also noted a general consensus among outsiders of the U.K. in their attitudes towards Brexit.
“I think both on the economic front and on the political front, most neutral observers seem to quite clearly agree that this is bad economically, and particularly politically, for both the U.K. and the EU,” Buthe said. “It will most certainly not benefit either of them. The main question maybe is who will experience more damage from it.”
Get The Chronicle straight to your inbox
Signup for our weekly newsletter. Cancel at any time.