- The stay camp's warning of dire consequences from a Brexit vote look correct
- Predictions of trouble in the banking and real-estate sectors has been borne out
- Some tweeters want a vote on the terms for the UK divorce from the EU
- The next Tory leader may try to postpone the exit or even avoid leaving altogether
We know who won the Brexit vote on June 23: the Leave camp. But if we were to run a contest of whose side's predictions were the most accurate, I think the clear winner would be the stay camp.
First, there is the issue of cost savings, one of the leave camp's main
arguments: the reported £350 million that the UK gives to the EU on a
weekly basis, and which would be transferred to the UK's health system.
Soon after the referendum result was announced, Nigel Farage, leader of
the Independence Party, admitted on Good Morning Britain that it was a
mistake for the leave campaign to make this inaccurate claim.
Farexit ... EU president Jean-Claude Juncker called Nigel Farage, above, an "unpatriotic quitter" for resigning from his role as head of UKIP following the Brexit vote. Photo: CNBC
By contrast, the Stay camp's prediction of trouble in the banking and real-estate sectors largely has been borne out: bank stocks are down by 20% to 30%; and only today we heard that a third UK property fund has halted withdrawals. More generally, the sentiment that uncertainly and volatility are on the rise suggests that the stay camp's dire economic predictions were not too far off the mark.
This is the background against which we should analyze the news of "exit" decisions by prominent leave camp figures Boris Johnson and Nigel Farage. Johnson has decided that he will not throw his hat into the Tory party-leadership ring, whereas Farage resigned as head of the Independence Party.
I wouldn't necessarily agree with EU president Jean-Claude Juncker, who called Johnson and Farage "unpatriotic quitters;" but they are certainly hedging their bets: now that reality is hitting hard, the responsibility of taking Britain through a difficult and highly uncertain process is not something they are attracted to.
Signs of regret
The "Borexit" and "Farexit" announcements also reflect a general sentiment of "second thoughts" among a significant share of the Leave camp. Looking over social networks, we find multiple entries of Brexit voters who thought the referendum was just going to be a sign of protest; or voters who think they voted based on false claims (for exampled, increased National Health Service funding).
Some tweeters are even hoping that a second referendum will take place where they will vote on a precise set of terms for a UK-EU divorce.
Second thoughts ... Don't be surprised if the next Conservative leader tries to find a face-saving way to dodge an exit from the EU and its costly consequences. Photo: iStock
There is no shortage of UK leaders willing to pull the Article 50 trigger and lead their country in the Brexit negotiations. But given the current cold-feet environment and the Johnson and Farage decisions, the negotiating power of whoever steps up is likely to be considerably smaller than expected, both within the UK and with respect to the European Union.
For all of these reasons, I would not be surprised if, in the next few months, the new leader of the Conservative Party were to find a nice face-saving strategy to escape the Brexit process, or at least postpone it sine die. In some way, that might be a win-win outcome: supporters of the Brexit vote would have made their protest loud and clear, whereas the rest of Britain — and the rest of the world — would be saved the disastrous economic consequences of a costly divorce.
– Edited by Robert Ryan
Commentary by Luis Cabral, the Paganelli-Bull Professor of Economics and International Business, and chair of the Department of Economics at New York University's Stern School of Business.
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