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Britain and the EU

Jun 30, 2016, 12:18 PM

Countries band together to promote trade, defend human rights, protect the environment and repel threats.

They sign treaties and join international groups, and each time they do, they give up a bit of independence.

That happened in a big way with the creation of the European Union, a free-trade zone and global political force forged from the fractious states of Europe.

The question always was, could this extraordinary experiment hold together? Faced with the choice in a June 23 in-or-out referendum, the U.K. voted to leave the bloc it joined in 1973. The way many Brits saw it, the trade-offs they’d made to be part of the EU — notably control over immigration — no longer served their interests.

They chose what’s become known as Brexit.

Voters supported the split by a margin of 52 percent to 48 percent after a rancorous 10-week campaign that divided the nation. The result prompted Prime Minister David Cameron, who had pushed for the U.K. to remain in the 28-nation bloc, to say he’ll resign by October.

The vote jolted financial markets, sending the U.K. currency tumbling to its lowest level since 1985. The political turmoil included Scotland’s devolved government paving the way for a new referendum on breaking away from the U.K. so it can remain part of the EU. The U.K. will have two years to negotiate the mechanics and terms of an exit once it takes the legal steps to leave the block, with talks to unwind agreements in areas as diverse as fishing quotas, financial-services legislation and health and safety standards.

Cameron had warned that a withdrawal would trigger a recession and a decade of uncertainty for jobs, trade and the broader economy.

Advocates of a split, including the country’s leading tabloid newspapers and Boris Johnson, the popular former mayor of London, argued for Britain to leave the EU to regain control of its laws and slow a larger-than-expected influx of immigrants.

Because the free movement of citizens is a basic tenet of EU law, leaving the bloc is the only sure way to stem the flow.

Cameron pledged to hold the ballot after rising euroskepticism fed support for the anti-EU U.K. Independence Party, which won 13 percent of the vote in the 2015 general election.

The U.K. waited 16 years to join the European Economic Community after it was formed in 1957, and some people immediately argued that it should pull out.

The last U.K. referendum on the question was held in 1975 and passed by a margin of 2-to-1. Prime Minister John Major’s government almost fell in 1993 when some of his party’s lawmakers voted against him over the signing of the Maastricht Treaty, which expanded cooperation and created the European Union.

The same euroskepticism kept Britain from adopting the single currency when it was launched in 1999. The bloc added eight eastern European countries in 2004, triggering a wave of immigration that strained public services. In England and Wales, the share of foreign-born residents swelled to 13.4 percent of the population by 2011, roughly double the level in 1991.

In recent years, people have been lured from other EU states by Britain’s economy, which had been growing at twice the pace of the euro zone. The U.K. is the second-biggest EU country by economic output and the third-largest by population, after Germany and France. There’s still a queue of countries waiting to join the bloc.

Brexit campaigners capitalized on mounting worries about migration to the U.K., which overshadowed fears of the economic fallout of leaving the bloc. The EU is the country’s largest export market, and global companies may cut investment or leave the U.K. because it’s unclear whether they will still be able to sell into the single market without tariffs.

Any trade deal — which might resemble those struck by Norway and Switzerland, two countries that aren’t part of the EU — will likely require some concessions on the free movement of people.

The euroskeptics argue that the EU wants to grow into a super-state that impinges more on national sovereignty.

They say that the U.K. has global clout without the bloc, and can negotiate better trade treaties without being held back by EU protectionists.

Source: www.bloomberg.com

“There’s still a queue of countries waiting to join the EU bloc.”

Robert Hutton