Wednesday, January 23, 2013

"Brixit"-Probably Good For Britain But Bad For The Rest Of The EU

So now David Cameron has decided that if the Conservatives win the next election, there will be a referendum on "Brixit"-whether Britain should exit the EU. .

The first thing that could be noted about this is that it is very clever politics for the Conservatives. By linking a referendum to his re-election, he will, especially given Britain's "winner takes it all" system, probably be able to convince the vast majority of supporters of the increasingly popular U.K. Independence Party to vote for Tory candidates instead of UKIP candidates.

The second thing that could be noted is that the case is very strong for people to vote for a British exit. Britain is today a large net contributor to the EU budget and would save that money if they exited. Furthermore, they would then no longer have to obey some irrational EU regulations (though the EU might be willing to give Britain exceptions anyway to prevent a British exit).

The only real possible downside for ordinary Britons would be that it might mean more restrictions on trade and free movements with EU countries. However, given that the rest of the EU would lose from such restrictions too, they probably won't be particularly burdensome.

For British politicians another downside would be reduced international influence (which is why Cameron is likely to argue against exit if there is a referendum) but I doubt ordinary Britons really care about that.

However, for the rest of the EU, a British exit would be bad. In part because the absence of the British net contribution is likely to increase the burden for remaining net contributors like Holland, Germany and Sweden and in part because without Britain, the balance of power would shift towards those who want a bigger EU budget, more regulations and more protectionism. This would of course strengthen the case for the politicians in for example Holland, Finland and Sweden who wants their country to exit as well.

Thus, a British exit would kind of be like the possible exit (secession) of Catalonia from Spain. It would be good for those who exit, but bad for those who remain. By contrast, in many other possible cases of exits/secession, such as with Scotland from Britain and Quebec from Canada, it would benefit the parts that remained more than the part that exits.