Firsthand Witness To Brexit
Reactions Ranged From Shock To Baffled
Ciamar a tha sibh, an-diugh? How are you today?
In Gaelic or English, when asked how they are, many residents of Scotland might say, “Not very well,” following the June vote by the United Kingdom to leave the European Union.
Scottish and Northern Irish voters chose overwhelmingly to stay in the E.U., but the national referendum to leave was approved by a razor thin margin in England and Wales.
On the morning after the balloting, I was traveling and happened to be with some voters and a German group at a guesthouse in the town of Thurso, on the northern coast of Scotland. Everyone intently watched the television news and wondered out loud what had happened.
For Scots, the results were surprising, baffling, and even traumatizing.
Throughout the day, people spoke frequently about the results of the referendum, known as Brexit. Some government workers had to cancel vacation plans to return to work. A few wept over the results. Because of population density, one government worker pointed out that London voters alone could easily outnumber all Scottish voters.
The U.K.’s withdrawal from the E.U. was approved 51-49 percent, with a 74 percent turnout. In the United States, a national referendum such as this would not be possible. A vote that close would likely have prompted an immediate demand for recount or a hasty appeal to the Supreme Court. In the U.K., however, just about everyone is trying to sort out what will really happen.
A bump in the road?
Since returning stateside, more people than expected have asked me about Brexit. There seems to be a fascination with the notion that voters can be directly involved in telling government leaders what to do on an immediate and significant level.
In the U.S., someone might get appointed to a local commission or board, but there’s little accountability and decisions are non-binding. Many elected officials are capable of totally ignoring voters except at election time. Even voter participation continues to be much lower in the U.S. than most other countries.
Stock market volatility after the Brexit vote should not cause alarm, says David Peterson of Peak Capital Investments in Denver.
“This is just a bump in the road, and these things work themselves out,” Peterson said “Markets are showing a knee-jerk reaction because nothing like this has ever happened before. Britain always had one foot out of the E.U. by not converting to Euro currency.”
According to Peterson, the U.K. might have to change some trade practices, but the impact is unlikely to be a major shock.
Denver economist Kishore Kulkarni sees a positive message for Americans in the British referendum. “The decision is the result of overwhelming nationalism and a desire for sovereignty,” says Kulkarni. “The people of the E.U. countries still do not think in unison as Americans generally do. National pride and autonomy, based on thousands of years of tradition, are just too heavy to overcome.”
Kulkarni noted that the challenges of immigration, legal or illegal, are minor in the U.S., compared to the forces driving immigration in Europe and the Middle East. Kulkarni, a specialist in international affairs, is a distinguished professor of economics at Metropolitan State University of Denver. (For more on his work, check out City Matters in last month’s Greater Park Hill News, at greaterparkhill.org.)
“I agree with David (Peterson) that once the immediate storm settles, everyone will get back to business as usual,” says Kulkarni. “Too much nationalism is non-productive and can hurt the economy. The key is managing the changing forces over the long run.”
Kulkarni says the UK’s independent trade policies will tell more in about two years, rather than right now, because Denver and Colorado are only moderately active in international trade.
The UK: open for business
Erin Kuhn, the British Consul in Denver, stressed to the Greater Park Hill News that, “It’s important for our friends in Colorado to know that the U.K. is – and always will be – open for business. We have one of the largest advanced economies in the world and an economy that is fundamentally strong and competitive.”
“British companies employ more Coloradans than any other foreign investor in the state,” Kuhn says. “Our companies are helping to strengthen Colorado’s economy, contributing to projects – such as the new ‘Train to the Plane’ – that will have a lasting impact.
“Many Colorado companies have invested in the U.K. and we stand ready to assist them as well as new investors in these endeavours,” Kuhn adds. “While the nature of our relationship with the E.U. is still to be determined, we will seek the strongest possible economic links with our neighbours and friends, including our close partners in Colorado.”
The Aftermath
In the aftermath of the vote, scores of veteran journalists and hundreds of politicians are still scrambling to figure out what’s next.
Tory (conservative) Prime Minister David Cameron resigned, setting up a party leadership struggle. Labour (liberal) party leadership was in doubt. Even the “leave” party – U.K. Independence – couldn’t really claim victory and its leader stepped down. Scottish First Minister Nicola Sturgeon said a second vote for independence is possible.
Members of the Conservative majority party in Parliament selected Brexit supporter Theresa May as party leader and new Prime Minister. May has been in Parliament since 1997. Upon becoming Prime Minister, she set up a new government agency to deal specifically with Brexit matters.
Some financial institutions have suggested moving to Paris from London. National Bank of England leaders promised to do everything necessary to maintain economic stability. Britain’s currency fell to the lowest level in recent memory. German leaders quickly called for renegotiated trade agreements.
It seems unlikely that large multi-national corporations in North America, Asia, and Europe will make much change in the way they do business in the U.K. Germany has a big stake in the auto industry, for example. Half of the new cars sold in the U.K. last year – more than 800,000 vehicles – were German-made. Volkswagen owns the Bentley brand, and MINI is a division of BMW. French automakers also have a huge stake in the British market.
Resurgence in nationalism
Most observers suggest that the referendum results reflect a resurgence in a desire for national autonomy, not just in the U.K., but in countries such as France, Denmark, Hungary, and even Greece where resistance to E.U. dictates has been strong. Britain’s departure could create problems for E.U. supporters like Italy, Spain, and the Netherlands.
At least one Scottish National Party Member of Parliament said the vote was based on the Scottish independence movement.
In 1999, Economist Milton Friedman was highly skeptical of E.U. success when a unified currency and central bank was established, giving the union 10 years before falling apart. Kulkarni says he now thinks the union will break down completely within the next 10 years.
Larger banks in Denver did a brisk business in selling British pound (GBP) currency. Someone able to plan ahead could save several hundred dollars by paying travel costs while the pound is at a low exchange rate.
On a final note, there could also be a slight reduction in the cost of single malt whisky, one of Scotland’s most lucrative exports.
Dave Felice is an At-Large Board Member of Greater Park Hill Community Inc. He is a member of National Writers Union, Local 1981, and recipient of awards in 2015 and 2016 from the Society of Professional Journalists for news column writing. He can be contacted at gelato321@aol.com.