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EU Membership Referendum’s Eve: uncertainty, panic and misunderstanding

It is a matter of hours before the final results of the British Referendum on European Union Membership will be declared by Chief Counting Officer Jenny Watson in Manchester. Differently from general elections, there will be no exit poll; provisional results would be ready on Friday 24 June around 1 am, while official results will wait until 7 am the same day. Political scientists specialised on electoral dynamics in UK claim that the city of Lancaster will be the litmus test of British electorate’s choice. The last poll released by consultant agency Populus, carried out online and before voting opened, showed remain on 55 % and leave on 45 %. Among the uncertainty, residents have started standing in long queues in front of ATMs. As seen last years in Greece, cash withdrawal can be interpreted as one of the main signs that signals the eve of a financial catastrophe. If that will not be the reality tomorrow, nevertheless the degree of panic and uncertainty reached around the issue today will mark the fate of relationship between UK and the rest of the member States on one side and political balance within the UK itself. Notably, panic and fear, as signalled in one previous article, are not positive in political dynamics (while a electoral booster in time of campaigning). The truth is, even if Brexit will not concretise, the society tomorrow will be divided. If Brexit will gain the majority, the economic and financial world will need to hold their breath for a long time.

One of the first dark horses is the fate of the government, as Cameron cabinet is based on a fragile majority and his party will be furthermore divided. As highlighted by consultant Tom White of Global Counsel agency, the first after-referendum day will see Tories obliged to face the quest for a new party leader. At the same time, in the event of a majority for the Leave choice, the distribution of favour in geographical terms will pose another issue, this time at constitutional level. If Cameron will remain Prime Minister, he will be seriously challenged in terms of legitimacy when opting for or against the starting procedure of an exit based on a formal request to European Institutions based on article 50 of the European Union Treaty. Until now, Scotland and Northern Ireland have appeared pro-Remain in the conducted polls. As mentioned in a previous article, Scotland nationals are generally pro-European, with their Scottish National Party voting against the European Union Referendum Bill during its second reading at the House of Commons on 9 June 2015 (when the Bill actually passed with 544 votes against 53). Remote villages in Scotland and Wales have particularly benefited in the past of European Structural Funds, which constitutes the bulk of their point of view: Remain is not only a political question, but a matter of convenience. Several surveys shows that sixty to seventy-five percent of Scottish voters are in favour of remaining inside the EU, with the very heart of Scotland, the Highlands, depending largely today from trade and tourism, two sectors that will be severely damaged by the detachment from the EU. While in northern England social housing and lack of contribution from national budget have been the main topic concentrating critiques towards the EU, in Glasgow the inhabitants of social housing blocks financed by EU funds (with parameters of modernity and suitability for human living annexed) have interiorised the positive evolution of national social housing policy as a consequence of belonging to European Union. As stated journalist Hans Von der Brelie in the Insiders: “Many Scots are convinced: Europe bears ordinary working class people in mind; Europe shares, and Europe practices solidarity”. 1,3 billion euros have been promised as future investment in social housing by the European Investment Bank, a budget that can fund nearly 20.000 new homes. The cost of a Brexit will not only be economical, but political: one direct consequence of Britain concretely starting negotiation to leave the EU will be that of offering the occasion for another referendum over Scottish Independence. And the actual uncertainty does not offer answers of a potential domino effect that this search of independence will trigger on Welsh and Northern Irish voters.

If the real prospect of a member State leaving the Union has positively conveyed the attention of European policy makers on the absence of a clear procedure according with article 50 of the European Union Treaty, the uncertainty of the procedure and the unpredictability of the length of negotiations is doubling the worries of politicians, economists and entrepreneurs. Economic disadvantages that would be caused by Brexit on both the continent and on British soil have been well portrayed by a rich contribution of reports published by international organisations as the International Monetary Fund (IMF), the World Trade Organisation (WTO), the Organisation for Economic Co-operation and Development (OECD), and by national institutions as the Ministry of Treasure and the Bank of England. If the projections differ in terms of short and long-term scenarios, the main result points at years of recession following an initial shock and then a GDP loss, around – 9% in 2030 in the worst scenario.

The problem of this stream of reports has been reflected in several studies that show how more educated people have demonstrated a pro-european stance probably because capable of processing the information provided by the press during the campaign. On the contrary, poorly educated people have been more sensible to populist’ and eurosceptical’ claim to the myth of “regaining sovereignty and a full control on UK budget”. Only one economic study has been published supporting this last position, a report by “Economist for Brexit” that claimed the dishonesty of other experts. Their study, which even stated that leaving the EU would lead to gaining 4% of GDP in ten years, has promptly demolished by London School of Economics. Interviewed by SkyNews at the beginning of this month, Brexiter Secretary of Justice Michael Gove has not been capable of indicate any economist that had explicitly supported the Leave option.

The problem is that today a large part of voters will express themselves unaware of the detailed implication of their choice on their economy. Not only because the narrative during the campaign has not been truly explicative, bur also because of the technicality of certain topics. One example is the debate over tech sector, which had a minor echo in English economical press. It shows the paradox of the effect of Brexit on this sector in terms of juridical consequences on business development. Tech sector is one of the business fields that should be more opened as possible, in terms of financial and human capital. Valuable and innovative projects capable of attracting investors and contributions in terms of skills and ideas can be developed only if people are naturally drawn to a certain market. And the UK market outside EU would not be more attractive neither more opened. Nearly 90% of respondents in a poll conducted by among stakeholders in tech industry in the UK have opposed Brexit. According to a range of CEOs and lawyers surveyed by Business Insider (The Guardian), abandoning EU will harden recruit and maintenance of international “best talents” and certainly start-ups will find new obstacles in raising capital. If we consider the “operational” side of human capital management at international level, tech industry in Britain will face the lack of capability in managing (attracting) significant contributors. Firstly, last years Britain did not provide a successful record in issuing tech sector visas. As proved by official data, between 2014 and 2015, government organisation Tech City UK managed to issue seven visas on a objective of 200. Secondly, very few start-ups can become large enough in the UK alone, has it has been chosen until now as “bridge” between Europe, the US and Asia.

Here comes the problem of an unaware or misinformed electorate. One of the flags of the Leave campaign has been “getting rid of the EU red tape”, that is to say to release British business from the burden of EU regulation. But, in reality, leaving the EU would paradoxically imply a double burden to keep running tech business at European level. The reason lays in the fact that this industry sector is based on data sharing and nowadays data are treated in Britain in accordance with the European system. This last is disciplined by the GDPR (General Data Protection Regulation), a new EU-wide regulatory regime that will come into force in 2018. If Britain will actually leave the EU starting in 2016, considering that negotiations will last at least two years, UK tech companies will go through hard time as the specific regulatory regime they will have to adapt will not be defined, while the new system will entry into force and other European competitors will have the advantage of time to adapt. Not knowing the exact amount of time negotiations will take, a post-Brexit Britain will need a data regulatory framework in accordance with the GDPR, either one scheme that mirrors the European system, either a radical new one. The easier option will be to adopt the GDPR, in the sense that businesses looking to operate in both Britain and the EU would operate with a solely system, while nothing will change for their consumers, following Switzerland’s example. An adequacy decision by the Commission will then be needed, in order to ensure the transfer of personal data from EU to UK. But if the eurosceptic wave will still dominate the debate (and push the government), mirroring EU without being part of it will be a no-go. Then a radical new framework to handle data will be created, financially burdening businesses that will have to switch between two different schemes, an obstacle to both European investors willing to operate in the UK and UK companies willing to operate on the Continent. If the GDPR will remain stricter in comparison with the new UK framework, companies will opt for the stricter system in order to adapt once and for all their activities and save money and time. For most start-ups and tech businesses, which aim is to open offices in major markets in which they operate, this just wouldn’t be an option. On the continent, EU-based businesses with limited resources, facing a separate regulatory regime, will probably abandon Britain in favour of other European markets, at the expense of British consumers. Last but not least, Europe-wide registries uphold currently the rights to trademarks and designs, while the creation of a similar registry for patents is now under construction (European Unitary Patent), i.e. a European hardware start-up will needs to register its design as its intellectual property in one Member State to gain protection across the others.

It is true that under the question of Leaving or Remain there is an ocean of implicit, hidden, un-debated, overly-debated, hardly comprehensible questions. The choice the British electorate will launch tomorrow a newer debate, no matter what the direction will be, on how European politicians and policy makers have underestimated the event, how political and juridical belonging to European Union need to be reshaped and, hopefully, how to put breaks on this eurosceptical drift.

Francesca Sanna

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Adeline Silva Pereira

Après avoir effectué la deuxième année du master Sécurité Globale analyste politique trilingue à l'Université de Bordeaux, j'effectue un stage au sein d'EU Logos afin de pouvoir mettre en pratique mes compétences d'analyste concernant l'actualité européenne sur la défense, la sécurité et plus largement la coopération judiciaire et policière.

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