Executive Summary
This report is based on Brexit witnessed in mid-2016 when the UK announced its plan to separate from the European Union (EU). As explained in the report, during this time, the UK engaged in a direct vote where the majority of the country’s citizens voted in favor of abandoning the Union, which they had signed to be part of since 1973.
Based on the reasons summarised in this report, the UK regarded the move of being part of the EU as costly since it had resulted in excessive immigration into the country in line with the European Union’s legal requirements of embracing the free movement of individuals within the bloc. However, the report finds that the United Kingdom was paving the way for some devastating impacts, which will be discussed herein. The report concludes that the country needs to implement urgent measures to save its economy from collapsing.
Introduction
In 2017, the United Kingdom informed the European Parliament about its plan to call off its membership from the Union. The EU was established to serve as a free commercial base and an international political tool that sought to bring together countries from the European continent, including the United Kingdom. As Krajina and Blanuša reveal, regardless of the above-mentioned benefits of being part of the EU, Liddle observes how the UK engaged in a referendum where over 52% of voters supported the need for the UK to pull out from the EU.
This report presents the Union’s structure with the view of finding out whether it embraces or contravenes the democratic rights of its member states. It also examines the core implications of the UK’s abandonment of the EU, including the possibility of international businesses pulling out from the country, the failure to benefit from trade agreements, and the violation of workers’ rights. Important to note, the UK’s decision triggered a review of Article 50 TEU, which gives all EU member states the liberty to split in line with the respective countries’ constitutional frameworks.
The EU’s Structure
Democracy Standards
In a democratic structure, authority and public accountability have to be upheld by all grown-up individuals. Here, people may enjoy this right directly or via their duly designated envoys. In addition to recognizing the role of majority rule and minority civil liberties, a democratic system encourages the need for an unbiased opinion poll. In the current case of the EU, it is indeed apparent that the Union may be regarded as democratic when gauged from the above parameters, which may be narrowed down to intelligibility, representativeness, and answerability. According to Kyris, although the European Council does not assume office through an election, envoys are held answerable to the European legislative body or the Lower House, which is comprised of officials who are directly elected through an unbiased voting exercise.
The Lower House serves as the law-making body. Another element of democracy in the EU is that member countries are well embodied in the Committee of Ministers. It is crucial to point out that this level of representativeness is higher compared to what is witnessed in the national assemblies of many jurisdictions, including the United Kingdom. Hence, in terms of lawmaking and institutions, the EU may be seen as democratic.
However, the EU’s designated member states deny the public, including the UK’s citizens, the right to access the proceedings of the council, whether via an online portal or a hard copy presentation. As Mutua posits, denying countries or people their liberty to be involved in the decision-making process breaches their democratic privileges. Reuchamps regards this move as depriving countries of their deliberative democracy. Consequently, Rice, Plattner, and Diamond’s claim concerning the current decline in democracy in blocs such as the EU may be founded on this awareness.
The UK’s Sovereignty
According to Loring, the UK is a sovereign state that should exercise substantial legislative control when it comes to sensitive decision-making processes. Article 50 Section 4 bars the withdrawing country from being part of a team that discusses the country’s plan to leave the Union as further stipulated under Article 218 Section 3 TFEU. Hence, regarding the four freedoms, any conclusions made in the absence of the withdrawing country are bound to hold, regardless of their impact on the nation.
As Loring (p. 40) reveals, supporters of the need to pull out from the EU cited the Union’s breaching of the UK’s sovereign powers whereby it was not involved in making crucial decisions. According to Philip, approximately 70% of the European Union’s population comes from the combined numbers of the six largest states. Consequently, interfering with the UK’s sovereignty makes it possible to question the criterion adopted when arriving at key decisions that concern the operations of the EU’s member countries.
The Impact on the Four Freedoms
An Outline of Four-Freedom Concept
According to Hutton, understanding the net impact of the UK’s plan to exit the European Union requires an understanding of the four freedoms that all EU member states enjoy. The Treaty of Rome that was signed in 1957 specified the core agenda of the European Economic Community (EEC) before it was later renamed as the European Union. According to Münchau, the four freedoms revolve around:
- The unrestricted flow of individuals in and outside the EU member countries.
- The unhampered circulation of merchandise.
- The free distribution of services.
- The liberty of exchanging capital within the bloc.
As Münchau reveals, the specific details of the four freedoms entail, “the elimination, as between member states, of customs duties and of quantitative restrictions on the import and export of goods, the abolition, as between member states, of obstacles to freedom of movement for persons, services, and capital”. Hence, the overall outcome of any country exiting the EU is a function of how the four freedoms will be affected. This study narrows the impacts down to several areas, namely:
- Trade agreements.
- The cost of the EU membership.
- The free movement of people.
- Workers’ rights.
Impact on Trade Agreements
In the case of the United Kingdom, the country risked being excluded from enjoying trade pacts stipulated under the European Union law, particularly Article 50 Section 3 TEU. For instance, immediately after exiting the Union, all European Union-led monetary programs implemented in the United Kingdom were stopped. According to Sosnow, since member countries are not subjected to any taxes when importing or exporting their merchandise to the European Union, the UK was now exposed to such tariffs as a non-member, a situation that substantially affected its trade volume.
According to Liddle, in late 2006, David Cameron’s sentiments in a gathering consisting of Conservatives revealed that he was not for the idea of abandoning the EU. In his opinion, the talks about exiting the EU were not as important as addressing the issue of service to the UK’s citizens, including the prevailing need for medical services and education. As Phillipson observes, one may argue that he (Cameron) was aware of the impact that such a move would have on the country’s productivity following the closure of its business deals in the EU as stipulated under Article 50 TEU. According to Reenen, “In 2014, the 27 other EU members accounted for 45 percent of U.K. exports, and 53 percent of imports”.
Hence, in case the United Kingdom opts for a hard exit, all its business operations will be governed by the World Trade Organisation’s policies whereby taxes imposed on the country’s exports and imports will be extremely high. In other words, the cost of doing business in the UK will be significantly high.
The Cost of the EU Membership
Proponents of Brexit cite the cost-saving aspect whereby the UK will not be reimbursing huge sums to the EU as stipulated in the Union’s membership policies. The UK has been raising concerns about the huge cost burden of sustaining its membership in the EU. According to Nicolaides, “it estimated that the cost of EU regulation to the UK for the period 1998-2008 to be £148.2 billion, or about ten percent of the UK’s GDP”.
Although this cost-saving may be viewed as advantageous, it is crucial to assess the corresponding disadvantage brought about by the anticipated decrease in the number of investors who have boosted the UK’s economy, thanks to its EU membership. The UK is expected to record a considerably reduced number of countries or businesspeople seeking to invest in the country. As Whitman reveals, although the UK may seek to gain momentum by enhancing its diplomatic standing, such an outcome may take a long time to be actualized since the country will need to reorganize almost all its sectors and ways of operations.
In addition, renowned automakers such as BMW may substantially cut their production levels or terminate their businesses in the UK, hence ruining the country’s Return on Investment (ROI). In addition, Peers asserts that the free movement of people in and outside the UK will no longer be possible when the UK abandons the EU. This situation implies that investment opportunities will be blocked in the United Kingdom since no businesspeople will be establishing new ventures as stipulated under Article 50 TEU. Overall, it will be expensive for the UK to leave the bloc relative to abiding by the laid down cost of being a member of the EU.
Impact on Free Movement of People
EU Citizenship
However, exiting the EU comes with various advantages for the UK. The United Kingdom has been experiencing an excessive influx of immigrants, a situation that has led to an uncontrollable increased population in the country. According to Peers, although the country enjoys an equivalent benefit of traversing all EU member countries without any restrictions, the number of people who have migrated to live in the UK exceeds that of the country’s citizens who have moved out to other EU states.
According to the EU citizenship guidelines, immigrants are treated as citizens. Being a member of the EU implies that the UK has to abide by the laid down policy that encourages the free movement of people in all EU member countries. According to the European Parliament, since the UK could not contravene this law, it ended up experiencing an uncontrollable influx of immigrants who it could not question, owing to the stipulated EU citizenship regulations.
As Bell observes, currently, “942,000 eastern Europeans, Romanians, and Bulgarians are working in the UK, along with 791,000 western Europeans – and 2.93m workers from outside the EU”. Such huge numbers have been a burden for the UK in terms of financing housing, medical, security, and other basic services. Exiting the EU may restore the United Kingdom’s sovereign power of managing its borders by barring unnecessary immigration. The overall outcome will be characterized by improved living standards and health services for the country’s rightful citizens.
Workers’ Rights
According to Chavkoska, the free movement of people goes hand in hand with employment whereby the majority of those who migrate to the EU member countries are pushed by the need for job opportunities. According to Anderson, since the EU policy under Article 48 EEC and Article 45 TFEU grants workers the right to secure employment anywhere within the bloc, such privileges will be provoked, despite the awareness that many of the employees will be holding quite sensitive professional positions, owing to their skills and experiences in various fields. In other words, workers’ rights will be violated upon bearing in mind that some of them will not have completed their contracts, which they had signed to last for a particular period. In line with Douglas-Scott’s analysis, many of them will end up losing jobs immediately Article 50 TEU will be enforced.
Moreover, barring the UK citizens from seeking employment outside the country but within the EU will contravene their privileges of being hired anywhere around the globe based on their professional background. However, migrant people who successfully secure job positions within the bloc will not benefit from Regulation 1408/71/EEC, which grants workers the right for fair treatment, regardless of their nationality in line with Ruhs’ revelation. Non-UK citizens who will decide to relocate to other EU countries will also create a vacuum in terms of skills. The absence of highly sought professionals, for instance, medical practitioners, will hurt the productivity and quality of various sectors in the country. Overall, insufficient expertise in the UK will significantly reduce the country’s rate of growth.
It is crucial to point out that the EU policy embraces the issue of pay equality whereby male workers get an amount that is equivalent to what their female counterparts receive as reimbursement. However, this policy holds that each job group should be comprised of people who possess comparable skills and experience, regardless of their gender. According to Anderson, Article 157 TFEU establishes the grounds under which female and male employees should receive analogous salaries.
In other words, the United Kingdom has been enjoying the Equal Pay Order that was implemented in 1975. Women have not been discriminated in terms of salaries, provided they possess the required skills in the job market.
Nonetheless, the UK will find itself in a crisis, especially when women will be denied such rights, which they have held dear for the last more than four decades. It will be subjected to legal battles where cases similar to Defrenne v Sabena will need to be addressed. Female workers will not only resist the issue of pay disparities but will also fight to have retirement ages harmonized. Despite the implementation of the Equality Act of 2010 in the UK, female workers in the country continue to struggle in the fight against the prevailing gender pay gap. According to Simonds, “the average pay for full-time female employees is still 9.4% lower than for full-time male employees”.
Hence, after the UK exits from the EU, female workers who have been enjoying the benefits of equal pay, thanks to the EU policies, will now be subjected to the reality on the ground. Here, their hard-earned experience will not be a factor to persuade the government to pay them salaries that match what their male colleagues get for similar jobs.
Conclusion and Recommendations
The mid-2016 vote by the United Kingdom’s citizens demanding the country to pull out from the European Union caught the world by surprise. The UK adopted the least expected option of leaving the EU citing issues such as the increased immigration and the need to cut the huge cost of maintaining its membership in the bloc. Although the EU policy, especially Article 50 TEU, listed the consequences that any member country would be subjected to in case it opted to leave the bloc, the UK was determined to face these conditions.
Although it may have won the war against uncontrolled immigration, the move to leave the EU has been characterized by many devastating impacts, including the withdrawal of investors from the country, decreasing trade volumes, and the violation of workers’ rights. In other words, the move has cost the country to the extent that if urgent measures are not taken, the economy may be ruined for decades. This report recommends the need for the UK to reconsider its decision if it wishes to restore its crumbling economy. However, even if it does not consider this option, it is crucial for it not to bar foreign investors from establishing businesses in the country since they contribute considerably towards the country’s job creation and consequently its productivity.
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