Brexit as a revolt against neoliberalism? The Lexit and Rexit arguments

Anti-migrant sentiment: blaming the ‘other’

The ‘winning’^{Footnote 4} of the 2014 European Parliament elections by the UKIP in the UK demonstrated how politically engaged potential Leavers and anti-EU voters could be. This created an exceptional circumstance, since UKIP Members of the European Parliament (MEPs) were working in an institution that they advocate to leave. Having MEPs who campaign to leave the EU is very significant in itself, but the UK is not the only country that has voted for political parties that are critical to some extent of the EU as the recent elections of May 2019 demonstrate. The Europe of Nations and Freedom (EFN), in particular, a European Parliament group created in 2015 representing ideas linked to Euroscepticism and Anti-migration discourses, achieved 58 MEPs (see Table 1 for trends). In June 2019, EFN was renamed as Identity and Democracy and included political parties from almost a third of the EU countries, while the new Brexit Party created by Nigel Farage is part of the Non-Inscrits group.

Table 1. EU-wide vote shares before and after 2019 European Parliament elections.

Source: BBC (2019).

GUE/NGL: Confederal Group of the European United Left/Nordic Green Left; EFA: European Free Alliance; ALDE: Alliance of Liberals and Democrats for Europe; NI: Non-Inscrits; EPP: European People’s Party; ECR: European Conservatives and Reformists; EFD: Europe of Freedom and Democracy; ENF: Europe of Nations and Freedom; MEPs: Members of the European Parliament.

A year before the British general elections took place in 2015, the outcome of the EU elections and the success of UKIP increased the discussions around migration and the EU in the British political parties. The then Prime Minister, David Cameron, decided to include a proposal for a referendum on the future of the UK in the EU in his manifesto for the 2015 elections. He also attempted to discuss issues around EU migration with the German Chancellor, Angela Merkel, before launching the referendum.

The serving President of the European Council, Donald Tusk, revealed how Cameron explained to him that the idea of including a commitment to an in–out referendum in his party’s manifesto was linked to his expectations to need again a coalition after the elections (Reference BoffeyBoffey, 2019). The expectation of another coalition with the Liberal Democrats, for the 2015–2020 Parliament, would have resulted in the Conservative’s coalition partners rejecting any such referendum (Reference BoffeyBoffey, 2019). However, the unexpected outright majority for the Conservative Party eliminated the need to work with the Liberal Democrats altogether.

In relation to the second matter, Angela Merkel denied the possibility of changing freedom of movement of labour (Reference Mason and OltermannMason and Oltermann, 2014). The EU Single Market is characterised by four so-called ‘fundamental freedoms’ – freedom of movement of goods, services, capital and labour. It was this last stricture that was so objectionable to UKIP supporters and latterly to the Conservative Party, reacting against perceived high levels of EU migration to the UK. When the UK ‘opened its doors’ to migrants from Central and Eastern EU states in 2004, there was a threefold increase in the number of EU migrants per year to the UK relative to expectations that in themselves were based on a misinterpretation of estimates provided in the report undertaken by Professor Christian Dustmann for the then Blair Labour Government in 2003 (Reference LowtherLowther, 2013). It is important to understand that to change this right to freedom of labour mobility would have required a change to the Single Market, a move which would have required the agreement of all EU countries, not just the German Chancellor. The Essex Continuous Monitoring Surveys (ECMS) show how migration was already affecting UK attitudes towards the EU (Reference Clarke, Goodwin and WhiteleyClarke et al., 2017). The different types of migration – of EU citizen-migrants and of refugees – became mixed together (Reference Gietel-BastenGietel-Basten, 2016) adding more confusion. Brexiteers claimed that migration from the EU had placed undue pressure on public service provision in areas such as healthcare and education (Reference Clarke and WhittakerClarke and Whittaker, 2016). Leave campaigners also blamed migrants for low wages earned by workers with low qualifications (Reference Dustmann and FrattiniDustmann and Frattini, 2014; Reference Nickell and SaleheenNickell and Saleheen, 2015). Cameron moved from using the term ‘tourist benefits’ (The Telegraph, 2013) to discussions on migration a couple of years with Theresa May and Boris Johnson asking in 2015 to develop a tougher line on EU freedom of movement (The Guardian, 2015).

Understanding the discussion over sovereignty in the UK

A discussion on public funds available for the National Health Service (NHS) if the UK left the EU was publicly linked to the pro-Brexit campaign. In the lead-up to the referendum, the claim by the Vote Leave Campaign, that the UK sent GBP350 million a week to the EU, money that would otherwise be available to be spent on the NHS, was believed by nearly half of those surveyed in a King’s College London Survey (Reference StoneStone, 2018). This amount of GBP350 million referred to a part of the EU budget. It is used to develop the EU institutions, as well as to develop several EU policies such as the Common Agricultural Policy. This policy directly benefits British farmers. Therefore, if the UK left the EU, British farmers would lose these funds and the prices of British produced food would likely increase. The effect would clearly be felt by those with lower incomes more than by the upper classes. To sum up, the idea that there would automatically be GBP350 million more a week for the NHS if Britain left the EU would be possible only if the UK was willing to avoid replacing at British level all the work done by the EU on behalf of the UK and in favour of the UK. Therefore, this claim was not realistic. Farage admitted the day after the referendum that he could not guarantee those funds to the NHS (Reference StoneStone, 2016).

At the same time, it was suggested that if the UK left the EU, a trade agreement with US would be developed. The visit in June 2019 from US President Donald Trump to the UK saw discussions around a potential UK–US trade agreement. These discussions reignited fears that the publicly funded NHS would be ‘on the table’ for trade negotiations and potential marketisation (Reference NevilleNeville, 2019). The GBP350 million a week claim, and the wish to support the NHS that it mobilised, appears to have reflected a strong public sentiment that, ideologically speaking, was inconsistent with support for UK–US trade negotiations, given the threat of a US demand to negotiate the future of the free provision of healthcare in the UK. The same supporters of the NHS, by voting Leave and creating the option of negotiating agreements with relatively more economically powerful countries such as the US, actually made the NHS more vulnerable to external negative influences. Thus, the creation of a misleading contest between support for the EU and the NHS among an electorate whose fears of NHS marketisation would more likely be realised if Britain left the EU indicates a mismatch in the discussion around economic sovereignty, public services and the real chances of protecting the public sector.

Discussion around sovereignty includes discussions of the real trade power that a mid-size economy such as the UK can have when developing agreements with countries such as the US, China or India. In today’s globalised world, economic ‘sovereignty’ for the individual nation-state can only ever be partial, as all trade agreements involve a trade-off of sovereignty (even more so for smaller and mid-sized open economies). The mottos relating to ‘take back control’ as well as ‘we want our control back’ were significant in the discussion over perceptions of British sovereignty and how to in theory achieve them (Reference TaylorTaylor, 2017: 73). Overall, these different mottos were used with the same purpose.

The then Prime Minister, Theresa May, enacted the 2-year Article 50^{Footnote 5} withdrawal process on 29 March 2017. The initial stance of the UK government was to argue for selective access to a Single Market for goods, but to exclude freedom of movement of labour. The logic here was that workers who had voted Leave as a protest against the erosion of wages and working conditions could expect that the consequent restriction on labour supply from the EU would increase their relative bargaining power. However, it is difficult to see how this expectation would be realised in practice, given the greater strength of EU regulatory support for employment rights and the greater strength of trade unions in other EU countries compared with the UK. Also, as increases in the British minimum wage are based on decisions taken at national level, without any EU involvement, workers’ hopes of higher wages outside the EU seem ill-founded. In any case, EU negotiators made it very clear that this approach of seeking to negotiate only parts of the Single Market was unacceptable.

The withdrawal agreement that was eventually concluded with the EU (but not ratified by the UK’s Parliament at the time of writing) contained three key elements: first, to safeguard the rights of EU citizens in the UK (and vice versa); second, to ensure that UK financial commitments to the EU budget for the period 2014–2020 were upheld (the so-called ‘divorce bill’); and third, to ensure that there would be no return to a ‘hard border’ in Northern Ireland (so as to uphold the 1994 peace agreement and maintain a unified market across Northern and Southern Ireland). The last provision was referred to as a ‘backstop’. To achieve this, the proposal in the withdrawal agreement was to keep the whole of the UK in the EU Customs Union for a ‘temporary’ period until a point was reached where other (technological) solutions to the problem of a hard border in Northern Ireland become viable (Reference Roberts and BoffeyRoberts and Boffey, 2017). For the EU, this so-called ‘backstop’ is vital, as the EU regards its role as a promoter of peace in Northern Ireland and the lack of a hard border as integral to peace. But it is also vital because the Republic of Ireland (a member of the EU) is against a hard border with the UK. Until the existing deal is ratified, or an alternative deal is agreed by the EU and the UK and then ratified by Parliament, circular debates regarding the backstop will continue indefinitely.

Early negotiations, which centred on a Norway-style trade agreement, incorporating membership of the European Free Trade Association (EFTA) and the European Economic Area (EEA), rather than a more limited arrangement, led to a backlash from pro-Brexit MPs such as the group of pro-Brexit Conservative MPs that denote themselves as the ‘European Research Group’ (ERG), chaired by Jacob Rees-Mogg (Reference RobertsRoberts, 2018). Theresa May tried on three occasions to get her withdrawal agreement through Parliament, without success, as these MPs voted with the Opposition to deny her a majority; at the time of writing, no agreement had been ratified by the British Parliament.

The government’s articulated stance led to the Cabinet resignations of prominent Leave referendum campaigners Boris Johnson and David Davis. As such, for ERG, the government’s proposals risk the UK being kept in a customs union with the EU indefinitely, which would undermine the ‘clean’ (hard) Brexit they were seeking, whereby the UK would only enter into negotiating a free trade agreement with the EU, plus a number of ad hoc additions. This, in essence, would be similar to the arrangements that Canada has with the EU, but with additional special measures. Equally, for the Northern Ireland Democratic Unionist Party (DUP; with whose support the Conservative Government needs to command a majority in the House of Commons), the proposals added to their fears that Northern Ireland in effect would diverge from the rest of the UK.

The subsequent failure to exit the EU on 29 March 2019 and granting of an extension of the Article 50 countdown period to 31 October 2019 by the EU unleashed turmoil in the governing Conservative Party. Hence, Theresa May resigned on 7 June 2019, to be replaced by a new leader who would be elected via a postal ballot of Party members results of which would revealed on 22 July 2019. May resigned under pressure by her own MPs after they threatened a leadership challenge, after a disastrous showing in EU Parliament elections on 23 May 2019 that the UK was obliged to take part in as a result of the Article 50 extension period. These elections were notable for the subsequent polarisation of the UK vote, with both main parties gaining only a combined 21% of the vote. In contrast, the ‘Brexit Party’ – the latest political vehicle of Nigel Farage (former leader of the UKIP) – gained the largest individual party vote share at 31%, while the ‘Remainer’ parties (Liberal Democrats, Greens, Welsh and Scottish nationalists, etc.) gained a combined 40% of the vote (Reference JenningsJennings, 2019). In the end, Boris Johnson became the Prime Minister – elected by Conservative Party members to deliver Brexit – ‘come what may’ by 31 October 2019, to use Johnson’s words. The resultant stand-off and standing down (‘prorogation’) of Parliament by Johnson (at the time of writing) means that there is a continuing high degree of uncertainty over when (if) the UK would exit the EU.

Brexit: where do we go from here?

As such, going forward, at the time of writing (September 2019), the current parliamentary impasse over the ratification of a withdrawal agreement raises the somewhat problematic issue of trying to offer insights as to what the likely outcome of Brexit will be – assuming of course, that Brexit is carried out and that some circumstance preventing this, such as a ‘Remain’ vote in another referendum, does not come to pass. Such an outcome is not improbable at the time of writing, although it would not be without its difficulties. Referenda are usually binary, because those which give multiple choices are potentially subject to the Condorcet paradox.^{Footnote 6}

In all probability, therefore, another referendum could be faced with a difficult situation in which a majority of voters still wish to leave the EU, as per the 2016 referendum, but does not generate a clear majority in terms of what kind of Brexit they want. Whereas, a second referendum with the same question may be seen, by some in the electorate, as an attempt to reverse the decision of the identical first referendum. As such, the prospect of ‘no deal’ at the time of publication also remains a possibility, given the professed stance of Prime Minister Johnson to effect departure from the EU by 31 October 2019.

In any event, a sudden ‘no deal’ exit would trigger a significant economic shock and would greatly increase the risk of a recession. Key industries such as the automotive sector heavily dependent on supply chain linkages into the rest of the EU have seen falls in production due to ongoing Brexit uncertainty, and new investments in plant and equipment have stalled. One carmaker, Honda, has announced its intention to cease production in the UK after 2021, with the attendant loss of some 7000 jobs (Reference Davies, Kollewe and JollyDavies et al., 2019). Others such as BMW and Jaguar Land Rover (and also Airbus) are also reviewing operations with the threat of relocation from the UK ever-present, should they face any disruptions to their supply chains in the event of a hard Brexit.

As such, leaked impact assessments produced by The Treasury suggested that in the case of a ‘soft’ Brexit, in the long-run, annual gross domestic products (GDP) would be between 0.6% and 2.6% below what it would have been in a status quo scenario (House of Commons, 2018). In contrast, a ‘no-deal’ Brexit would lead to a reduction in annual GDP of between 5% and 10.3% (House of Commons, 2018). These estimates are in the range of estimates also produced by academics.

The resignation of Theresa May, and her replacement with a hard Brexit–supporting PM in the guise of Boris Johnson, has served to increase the prospect of a ‘no deal’ exit. However, Boris Johnson is, at the time of writing this article, in a difficult position. He has lost his majority through the resignation of several MPs (including his own brother) after deciding to request and achieve Royal consent to prorogue Parliament until 14 October (leaving only 3 days before an EU Summit takes place in Brussels, when a potential extension will be approved or not by other EU members). The bill avoiding a no-deal scenario achieved Royal consent on 9 September 2019. By 1 November, Johnson would have to choose between implementing the mandate from Parliament asking the EU for an extension (probably until January 2020), or revoking Article 50, or face the consequences of having a no deal which goes against British law (since 14 October).

For Johnson, the passing of this legislation and the defeat in the Commons on 9 September of a second government attempt to force an October election have severely narrowed the range of options open to him to try and force an early election. Given Johnson’s proroguing of Parliament, the earliest point at which MPs may vote on an election (requiring a two-thirds majority under the UK’s Fixed Term Parliament Act) is 14 October, making an election unlikely before December (when ostensibly EU assent to requesting an extension of Article 50 will have been attained).

Johnson could yet try to rescue Theresa May’s failed withdrawal agreement under some token rewording, but as Brexit Party leader Nigel Farage is now claiming that Johnson risks ‘selling the country down the river’, he appears to be running out of wriggle room with Brexiteers. Hence, any perceived softening on his Brexit ‘do or die by October 31’ stance would in all likelihood mean Tories competing with Brexit Party candidates in a subsequent election – and the prospect of splitting the Leave vote and thereby ushering in a Corbyn Labour Government.

Ultimately, however, the political situation in the UK remains febrile and thus the outcome of the Brexit process is extremely difficult to predict. Post-referendum, in addition to the impasse over the status of the Northern Ireland border, there is Scottish (and Welsh) government dissatisfaction over perceived lack of consultation by the UK government: that is, of the ‘uncertainty surrounding … constitutional voice for the devolved institutions in Scotland and elsewhere’ (Reference McHarg and MitchellMcHarg and Mitchell, 2017). This uncertainty in turn adds further impetus to the argument of reunification on the island of Ireland, or of Scottish independence (which came close to success in 2014). Hence, should Brexit happen, the future of the UK in surviving as a political entity looks bleak. Such predictions are not new, with Tom Nairn having first penned The Break-up of Britain over 40 years ago (Reference NairnNairn, 1977). However, Brexit, with the seemingly intractable constitutional issues generated in its wake, has given them renewed vigour and validity.

Depending on the type of Brexit the UK implements, the country will either remain within the European regulatory orbit, or otherwise drift into the American one. If the UK government wishes to retain access to the EU Single Market for goods and services, then it will also have to accept EU regulatory standards and retain freedom of movement of labour. If it chooses to remain in a customs union with the EU, then it cannot conduct an independent trade policy. If it chooses to exit the EU Customs Union so as to pursue trade deals with other countries, then the US is the most obvious country to pursue a trade agreement with, given that it is the UK’s largest export market.

In both cases, the UK would end up being heavily influenced by the regulations, norms and processes, of either the EU or the US. Such an outcome goes against the idea of taking back control. Indeed – somewhat ironically, given our earlier conjecture that for some voters Brexit is a rejection of neoliberalism – should the UK drift into the American orbit as a result of a hard Brexit and embrace a ‘trade deal’ with the US, it is likely that it will be exposed to further neoliberal market-oriented measures. Realignment towards American regulatory standards would occur with pressure from the US to loosen environmental and food standards, and, as noted earlier with regard to the NHS, to open up its public services to US corporate interests.

In neither of these cases, will the expectations of those who voted to leave the EU be upheld, and it will be important to evaluate the impact of these disappointments on British society, whether Remainers, Leavers or indifferent, in the post-Brexit landscape. Reference Salh, Nyfoudi, De Ruyter, Bailey and BuddSalh et al. (2017) suggest that businesses could equally lobby government to relax any stringent migration conditions and this may yet occur should Brexit proceed. In terms of the labour regulatory framework, the need to secure Brexit through a hostile Parliament limits any Conservative Government manoeuvre to entertain further dilution of employment regulation for the foreseeable future.

However, to conclude, if it may reasonably be asserted that Brexit is an attempt to impose more market-led regulation on the UK under the attempt to restore what is perceived by some as ‘sovereignty’, then the labour market implications would suggest that the scope for further departures from EU strictures in this regard would occur in the event of a hard Brexit, resulting in realignment with US labour regulation conventions. It remains to be seen how these conflicting dynamics play out.