Decisive Brexit Referendum: What Happens Next? Part 2: The Disunited Kingdom

[See Part 1 Here]

Besides handing down the vote to Leave the EU, the June 23rd Brexit referendum also demonstrated that the UK is a house divided. The vote itself was fairly narrow: 52% vs. 48%. Northern Ireland (NI), Scotland and London had clear majorities for Remain, but much of the rest of England were strongly for Leave. There was also a notable generational gap, with younger people broadly in favor of Remain and older people broadly in favor of Leave.

It is interesting too that the Leave vote was strong in much of the North of England, which is a traditional Labour heartland.[1] The strength of the Leave vote in such staunch Labour areas illustrates how much senior Labourites were out of touch with their own people. The same can be said to a lesser extent about many senior Conservatives too: they too misjudged the strength of anti-EU sentiment in their own ranks. Political leaders were so busy lecturing their supporters that they failed to listen to them. This theme of an out-of-touch political elite will, I believe, be the key factor across the continent as movements gather pace to follow the Brits and the EU now unravels. One thing though is for sure: it will not be pleasant.

The financial fallout was shattering. The day after the referendum, sterling fell by over 10%, the FTSE by 7.2%, the DAX by 7%, the CAC by 10% and the Nikkei 225 by 7.9%. It was reported that the 400 richest investors (who had all bet on Remain, including George Soros) lost over $127 billion, and that total market losses were almost $4 trillion. European bank stocks were positively hammered: they fell by over 15%. The VIX, the Chicago Board Options Exchange Volatility Index—usually known as the “Fear Index”—jumped by 49%. The next trading day, Monday 27 June, the S&P rating agency downgraded the UK’s credit rating by two notches from “AAA” to “AA”.[2]

The political fallout was also spectacular. On the Friday immediately after the vote, the Prime Minister announced that he would be stepping down, thereby triggering a leadership election campaign that will paralyze the government until a new leader is elected. That same day, Sinn Fein announced that the pro-Remain result in Northern Ireland meant that Ireland now had to be reunited. For her part, Scottish First Minister Nicola Sturgeon was demanding another Scottish independence referendum so that Scotland could stay in the EU and was darkly threatening to veto the EU referendum result herself. The pixies were out in full play. There were calls for a new referendum and within a week, more than four million people had signed an online petition for one. There were calls for MPs—75% of whom had campaigned for Remain—to refuse to ratify the referendum result, and there were calls for a general election if they failed to do so. Brexiteers were being attacked in the media and there were angry demonstrations—many of the young in particular feeling that the result would rob them of their rights, e.g., as regards their working rights[3] and their pensions,[4] but who had also been wound up by Project Fear, i.e., the unscrupulous campaign to persuade them that they would have no future worth having under Leave. The Labour Party went into meltdown as the daggers came out for Labour Leader Jeremy Corbyn, who was accused of having lost the referendum by not having campaigned enthusiastically enough for Remain.[5] Within days, most of his shadow cabinet had resigned, his Parliamentary party had passed an unprecedented 172 to 40 vote of no confidence in his leadership and a formal campaign was announced to replace him as leader.[6] UKIP also fell apart: its leader Nigel Farage has just resigned and the obvious replacements—such as UKIP MP Douglas Carswell—have ruled themselves out as leadership candidates. There had been no contingency planning for a Leave vote because no-one in authority in the UK or the EU had ever thought it would happen, and there was pressure from Brussels to start formal separation talks immediately, which would then set in motion a two-year deadline for which no-one was remotely ready. The political class is in disarray.

But the question that ultimately matters is whether the referendum result will be honored. I believe that it will be and, indeed, that it must be. In this posting, I would like to explain why.

The key is the constitution. The British constitution is a subject that causes some bemusement in the United States, not least because it is not written down. It is now causing a certain amount of bemusement in the UK too. It is nonetheless every bit as real as the Constitution of the United States.

The British constitution is quite clear, however. The Queen reigns but she does not rule: the Sovereign is not sovereign. Sovereign power resides in the Westminster Parliament alone, but there is a sliver of royal power, a vestige of the days when British monarchs really did rule. Yet this vestigial power would never be used to promote royal authority but rather that of the people, and its last significant use was in the constitutional crisis of 1910.[7] Everyone goes through a polite pretense that they serve the Queen—everything is done in Her Majesty’s name—but the Queen herself serves her people. Everyone knows the ground rules, which evolve over time in response to the great issues of the day. To quote the person who understands it best, the Queen herself: “The British constitution has always been puzzling and always will be.” It has no design, no plan and no inventor; it simply evolved. It is a living contradiction that works surprisingly well.

The first point to appreciate is that under the UK constitution, Parliament is required to respect the result of the referendum. David Cameron acknowledged this point gracefully in his acceptance speech immediately after the vote. The people have spoken, he said, and their voice must be respected.

The referendum is not some consultation exercise that the Government or Parliament or anyone else is free to reject if they do not like the result. The exercise was put to the people as their decision and everyone involved accepted this point before the vote: after all, we are a democracy and the point of democracy is that the people decide. I should not have to spell this out. But now that the voters have had the effrontery to vote to Leave, some of the Remainders are saying that the result itself should be invalidated, because the people made a decision that they do not like.

And so the mask slips and we see what these people are really about. The Leftist/EU coalition goes on about much they are committed to “democracy,” but what they really mean is that the people are only free to decide whatever it is that their betters allow them to decide. They are free to agree, but they are not free to disagree. The EU has form on this issue too, when it refused to accept the rejection of the Maastricht Treaty by the Danish electorate in 1992 and the rejection of the Lisbon Treaty by the Irish electorate in 2001.[8]

Such a version of “democracy” is something that Lenin would have approved of. Indeed, he practiced it himself. I want nothing to do with some ghastly “People’s Democracy” or even with the watered down fake democracy that the EU embodies: I want the real thing, warts and all. Either the people decide or they don’t.

If I had to give one single reason why I want the UK out of the EU, it is precisely this attitude on the part of its supporters: at their very heart, the EU and many of its supporters are fundamentally anti-democratic—but few of them will openly admit it. At least Jean-Claude Juncker has the decency to be open about his contempt for democracy. They do not.

At a deeper level, the fundamental reason for supporting Brexit is that the best way forward for Europe (and for much of the rest of the world) is with smaller, more loosely associated political entities that have greater freedom to pursue their own different “models” and help discover those that work best; the processes of competition, co-operation and imitation then raise everyone’s game. There is no good future with centralized behemothic superstates led by corrupt elites who have no time for the views of their subject peoples.

I would go further: barring some catastrophe like a major war or financial crisis that derails everything—and these can never be ruled out, especially in the current world environment—I am confident that the Brexit vote will come to be seen as the beginning of the end of the big state. From here on in, it will be decentralization all the way: small is good, big is bad. Thus, the Brexit vote is truly historic and will have major beneficial repercussions across the entire globe.

Going back to the referendum, the result is binding: the UK electorate have spoken and that’s it, period.

We should also bear in mind that from a constitutional perspective, the only result that matters is the majority vote cast across the United Kingdom as a whole. Consequently, the fact that the electorates in Northern Ireland and Scotland had majorities for Remain has no constitutional significance. Northern Ireland and Scotland are merely subcomponents of the United Kingdom, not separate sovereign states in their own right. They have had their say, but only as part of the UK, not as entities separate from it.

There are several caveats, however.

The first is that the UK Government has an obligation to consult the regional governments, which in practice boils down to an obligation to consult their First Ministers. This obligation to consult does not however give the latter any form of veto; it merely gives them a right to be formally heard. To allow them any veto would be absurd and for an obvious reason: it would create a situation where some truculent First Minister—yes, you Nicola—would be able to block the will of the UK people expressed in the clarity of a single-issue referendum. Such a prospect does not bear thinking about.

Which consideration takes me to the second caveat. The referendum requires the government to present the enabling Brexit legislation to Parliament and it requires that Parliament pass that legislation. However, there is no mechanism to force the government to present the Bill to Parliament and there is no mechanism to force MPs to approve it. There is thus the potential for slippage between cup and lip and this is where the fun begins.

In theory, one of two things could then go horribly wrong. The first is that the government may not present the enabling legislation to Parliament: although Mr. Cameron has promised to do so, it is conceivable that the government might fall before it could deliver on that promise and that a successor government may refuse to honor his promise. The second is that Parliament itself might reject the legislation.

Consider the position that would then face the Queen. The constitutional convention (i.e., requirement) is that she always take the advice of her Prime Minister and it has been this way since Queen Victoria sat on the throne. Now the very last task of any outgoing PM is to advise the Queen about whom she should ask to form the next government. But imagine that she was advised to appoint as Prime Minister someone who refused to honor the referendum result? She would then be put in the invidious position of being asked to implicitly veto the referendum result herself, which would fly in the face of the other convention that she endorse and support the clearly expressed majority view of the people. She would be damned either way: the non-political British monarchy would be caught at the center of a political maelstrom that was not of its own making. Nor would her sense of duty allow her to duck the issue by abdicating. She would be acutely aware that the last thing the country would need at such a time was the further instability of an abdication crisis—and it would be pointless anyway as that would merely pass the buck to Prince Charles and she would never do that either.

We would then have a crisis that would make 1910 look like a tea party, the constitutional equivalent of a Hammer horror movie.

Fortunately, any such outcome is about as likely as Dracula turning up again on the Whitby coast and for one reason only. Any MP who dared to vote against the enabling legislation would be open to the charge that they were voting against the democratically expressed wishes of the majority of the electorate: they would be disrespecting the people, they were undemocratic hypocrites, etc., and these accusations would follow them around for the rest of their careers, in many cases destroying them. Whatever noises they might make now, once they have had a chance to reflect I believe the majority of MPs will feel honor-bound like the PM to respect those wishes even in many cases where they would have preferred a different result. I am therefore confident that the legislation will go through, whatever they are saying now in the heat of the moment.

Having set out the constitutional position, let’s consider some of these negative reactions and where they might lead.

The easiest case is that of Mr. Juncker. Well, he is just an unelected bureaucrat who has no status under the UK constitution and no authority under EU law to dictate to any member government when that government should be allowed to invoke Article 50 of the Lisbon Treaty, which is the device by which the UK would formally inform its EU partners that it would be leaving. He can demand all he likes that the UK invoke Article 50 at the next available opportunity and so set the timer running to mess up the negotiations for everyone concerned. However, there is no need to formally inform our EU partners any time soon that the UK will be leaving: they already know. What Juncker says does not matter and the UK government can ignore him.

His demands merely demonstrate that he is unfit to hold office but we knew that already. The man openly admits he has no respect for democracy—his philosophy is that the peoples of the EU are free to agree but not to disagree with the EU establishment. Had he had any awareness, Juncker would have realized how badly his deluded power fantasies were going down in the UK, but he appeared neither to know nor care: that is why Cameron to his credit did his best to block his appointment until he was overruled by his continental counterparts. He was a veritable gift to the Brexiteers and doubtless helped to swing the vote their way. Juncker will now disappear into the sunset[9] and go down in history as the archetypal illustration of all that was wrong with the EU.

The only requirement is that the UK must at some point invoke Article 50 but it can do so at any time it chooses. Given the complexities involved, the fact that everyone was caught unprepared and that there appear to be no contingency plans for Brexit, then the only sensible approach is to open the discussions as soon as possible and invoke Article 50 only when that process is complete, whenever that might be. We are talking here of years and not just a couple. The formal notice of intent via Article 50 should wait till after all the hard work has been done and the divorce can then go through quickly and smoothly. Such an approach would free everyone involved from the constraints of the two-year time frame.

The case of Ireland is also straightforward. The only fact on the ground that counts is that the majority of the population are Unionist: they want to stay within the United Kingdom. Now Sinn Fein prefers a united Ireland and so do I—my unionism stops at the Irish Sea—but we are not going to get it until a sizeable proportion of the Unionist population can be persuaded to accept such an arrangement and that isn’t going to happen any time soon. Of course, if the Remain sentiment in Northern Ireland was sufficiently strong, it is conceivable that NI Remain might try to agitate for independence so they can stay in the EU. However, any such thinking is fantasy. Anyone who knows anything about Northern Ireland knows that the strongest sentiment by far amongst the majority is to remain in the UK. This sentiment greatly outweighs any desire to Remain in the EU—as is evidenced by the reaction of Northern Ireland First Minister Arlene Foster, who said that leaving the EU offered new opportunities and criticised Remain supporters as prophets of doom. In any case, even if Northern Ireland did become independent, which it won’t because no-one supports it, Northern Ireland would no longer be in the EU. As a newly sovereign state, it would have to apply to join and that process would take years.

Scotland presents a more interesting situation. First Minister Sturgeon quickly reacted by pronouncing that “Scotland” would veto it, there must be a second referendum on Scottish independence and so forth. However, the simple reality is that Ms. Sturgeon is just grandstanding again.

Think it through. The worst-case scenario is that she pushes it to the limit and still gets nowhere: she screams and shouts and still does not get the new referendum she demands. Imagine then that she ups the ante by organizing her own referendum and even gets the result she wants, which is by no means a foregone conclusion. The referendum would not be a legal one, however, as it would have no authorization from the Electoral Commission or the UK Parliament. She might ignore all these legal niceties and raise the stakes again by issuing a Unilateral Declaration of Independence like Ian Smith did in what was then Rhodesia in 1965. It would still be illegal.

If it ever came to that, I would advise the UK government to do pretty much nothing: the PM should tell her she is making a fool out of herself and otherwise ignore it. Above all, keep cool and don’t overreact.[10] Scotland would still be part of the UK and the Scottish First Minister’s fake referendum would never be recognised in the UK or internationally or even in the EU. Short of an armed rebellion she would run out of cards to play. Ms. Sturgeon may huff and puff all she likes, but she hasn’t got the puff to blow the house down.

I cannot however resist pointing out the absurdity of her position. She often tells us that she is a principled democratic pro-EU politician. But consider her record:

She and her party lobbied tirelessly, tiresomely and very vocally for a referendum on Scottish independence. They got their referendum and lost by a clear margin. Five minutes later she was demanding another one because she didn’t like the result, and she has been demanding another one ever since like a broken record.

She gleefully instructs her Party in Parliament to vote on English matters (such as Sunday shop opening hours in England), the equivalent of which have been devolved: so Scottish MPs have a say on English affairs that English MPs do not have on Scottish ones. While this might look like hypocrisy to you and me, she assures us that it is not, because it is in Scotland’s interest.

She opposes discrimination, but her party has openly campaigned on an anti-English platform and her party’s policy on students’ tuition fees is that they are waived for Scottish and EU nationals, except for those whose prior residence was England, a policy that the EU itself quietly tolerates despite its illegality under EU law.

We should respect the law, she says, but she brazenly presumes powers that she does not have. She says she will veto the Brexit vote, again in Scotland’s interest, but even her predecessor says that she does not have any such power and she knows that full well.

She respects the “will” of the Scottish people on the Remain referendum, but not on the Scottish one. She respects democracy, but only when it gives her the answers she wants.

She wants Scotland to stay in the EU, but a newly independent Scotland would not be in the EU: it would have to apply. She is passionately pro-EU, but if Scotland did become independent, its independence would trigger a new wave of break-up fever across the EU – the Basque Country, Catalonia, Galicia, Northern Italy, Venice, Flanders, Bavaria, Sardinia, Corsica, the Faroe Islands and so forth—that would accelerate its break-up.

She wants Scottish independence, but she also says that she doesn’t want independence on the back of the Leave vote: in other words, the would-be leader of an independent Scotland presumes the right to veto the English on their decision to leave the EU.

I don’t need to point out some inconsistencies here.

So the Scots would be up in arms over one set of issues and the rest of the island of Great Britain would be agitated over others. The last time we saw these twin turmoils was in the early 1640s when Scots Covenanters and English Parliamentarians were (literally) up in arms against the tyrannical Charles I. Do I think we are heading for civil war again? Nah. It will blow over. As for Ms. Sturgeon and Scots Nats, the Government will call their bluff and their posturing will all look rather ridiculous afterwards. And as for rejecting the EU referendum result, whatever the current high emotions and whatever they themselves think of the result, most MPs will soon appreciate that to refuse to honor that result would be unthinkable because it would strike directly at the heart of the democracy they represent.

The referendum result will stand.

In my next posting, I will examine the broader geopolitical ramifications of the Brexit vote.


[1] To illustrate, Sheffield where I live voted Leave, and so did Durham where I work and Middlesbrough where I was born, the latter by 60% to 40%. And yet you could put a donkey with a red rosette into many of these constituencies and it would get elected.

[2] Markets are now stabilizing as we always knew they would once they got over the shock of an event that few people anticipated would actually happen and it became clear that fears about Brexit had been greatly exaggerated. The FTSE100 is now at a 10-month high, for example.

[3] During the referendum campaign a key theme pushed by the Remainders was that Leave would destroy hard-fought-for workers’ rights. Reality check 1: any such rights exist on paper and have long since ceased to exist in the real economy where it matters. Illegal immigrants do not enjoy such rights. Laws governing minimum wages, working conditions and maximum permissible hours of work are being widely flouted, workers are losing their pension entitlements, and there are widespread zero-hour contracts and unpaid internships. As the recent case of Sports Direct illustrates, many UK workers are already working under modern-day Dickensian conditions. Reality check 2: we don’t yet know what a post-Brexit UK government will do on this issue, but it would be difficult to make the situation much worse.

[4] Young people in the UK can look forward to low pensions (see here) that will be much worse than the gold-plated pensions enjoyed by their grandparents, and had been reassured by Remainders that Leaving the EU would reduce their pensions further. However, the opposite is the case: see here. Their anger against Leave on this issue is misdirected.

[5] For the last 30 years, Corbyn had made his opposition to the EU clear. He then chose to support Remain—the reason being that, as an unreconstructed ‘60s Trot, he hated the prospect of a post-Brexit Tory government even more than he hated the EU. During the campaign he then tied himself up in convoluted knots trying to argue that he supported Remain as the better of two evils. But rather than take the Remain message to the anti-EU Labour heartlands in the North, where he would have faced considerable hostility in working mens’ clubs and so on, he preferred to stick to his usual love-ins within his Corbynista comfort zone.

[6] As a lifelong student of the Labour Party, I have never known a case where so many of the comrades put so many daggers into their leaders’ back quite so quickly. I don’t expect him to last more than days at this point: Corbyn is toast.

[7] In the late nineteenth and early twentieth centuries there was repeated conflict between the Lords and the Commons and accusations that the Lords were breaching conventions about the limits of their powers. This conflict came to a head with the Lords’ rejection of Lloyd George’s 1909 “People’s Budget,” and was eventually only passed by the Lords after the Commons’ democratic mandate was confirmed by elections in January 1910. The Commons then sought to establish its formal dominance over the Lords by proposing a Parliament Act to rein them in, but this too was widely opposed in the Lords. After cross-party discussions failed, there was a second general election in December that confirmed popular support for the Government. There was now an impasse that was broken by the King, George V, threatening to create enough new Liberal peers to overcome the Conservative majority in the Lords. The Lords then caved in and the Act was passed in 1911. Naturally, this “system” is dependent on the monarch acting sensibly, but with the possible (and controversial) exception of Edward VIII, the UK has been fortunate in having had a succession of able and conscientious monarchs going all the way back to William IV.

[8] In the Danish case, the vote to reject was overwhelming at 82.1% of the vote. But instead of respecting that result as it stood, the EU elite browbeat the Danes into another referendum and bribed them with comparatively minor opt-outs. The combination of threats and bribes worked and the Danes approved the Maastricht Treaty the next year. The EU responded in a similar way in the Irish case too, refusing to accept the first vote and offering much the same combination of opt-out bribes and threats to push the Irish to approve the Lisbon Treaty in a second referendum in 2002. However, the EU ruling elite has always regarded these opt-outs as no more than temporary inducements to be reversed when the opportunity arose. For example, Denmark was allowed to retain its currency and Ireland was allowed to retain its military neutrality, but it is an open secret that had the UK voted to Remain, these “privileges” would soon have been revoked: the Danes would have been forced to join the euro, the Irish to participate in the planned EU army and so on.

[9] And he will go sooner than expected too. Two days after the referendum, the Czech foreign minister was blaming Juncker for provoking the Brexit result and calling on him to resign. The Leave vote leaves him irreparably tainted and he will have to go soon, both because someone must carry the can (and who better?) and because the EU will want to be able to persuade other would-be Exiteers that it has learned its lessons from the Brexit debacle. Good luck on that one.

[10] Irish history provides some good warnings here. After a long history of blocked attempts to achieve Irish Home Rule, on Easter Monday 1916 a small group of Irish patriots took matters into their own hands: they led an armed rebellion and declared a Republic. While most Irish people wanted Home Rule, they also felt that the rebels had gone too far: some Dubliners even emptied chamber pots on their heads as they were marched off into captivity afterwards. Had the British authorities kept their heads the whole thing would have blown over. Instead, 16 rebel leaders were executed. The brutality of the British response made them martyrs and sympathy for them led to a war that culminated in Irish independence, at least in the south. The UK government made another blunder in 1971 when it introduced internment without trial in response to the growing threat posed by the IRA. This needlessly aggressive response also backfired: the internment camps turned into IRA recruitment camps and the Troubles intensified. Of course, I am not suggesting that the Scots Nats would resort to violence: I am merely suggesting that the UK government should always deal with secessionist groups in the most low-key manner as the alternative is likely to be counterproductive.

Kevin Dowd is a Research Fellow at the Independent Institute and Professor of Finance and Economics at Durham University. He is co-editor of the Independent Institute book Money and the Nation State.
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