The biggest misconception about next monthâ€™s referendum on Britainâ€™s membership of the European Union is that it will put the issue to rest. Thatâ€™s unlikely. Whichever way the vote goes, Brexit isnâ€™t going away.
The referendum on Scottish independence is a good guide to whatâ€™s coming. Scots in 2014 voted with their heads not their hearts to stay in the U.K. â€” then at the following general election gave the Scottish National Party, dedicated to Scottish independence, a crushing victory north of the border. The thinking seemed to be: The safe choice is to stick with the U.K., but please understand we arenâ€™t happy and might change our minds at short notice.
The U.K.â€™s calculation on Europe is similar. Quitting the EU is a big economic risk, so prudence says stay. But British (that is English) resentment at rule from Brussels wonâ€™t be assuaged by being offered the choice to go. Doing the prudent thing will only make Britain more resentful. The U.K. will be more euro-skeptic and the careers of anti-EU politicians such as Boris Johnson will be far from over.
Will Britain Leave the EU?
The case for prudence is gaining strength thanks to reports from the Treasury and the Organization of Economic Cooperation and Development (a club of high-income countries). They predict long-term losses of around 5 percent of gross domestic product a year, equivalent to several thousand pounds per household. Other studies say much the same. A recent rejoinder from a group of euro-skeptic economists, arguing that Britainâ€™sâ€™ economy would get a boost from exit, doesnâ€™t carry the same weight.
Actually, that dissent makes some good points. It notes that neither of the two big official reports that warn against leaving consider the option of unilateral free trade, which would likely be the best-case scenario post-Brexit. Instead, they dwell on the costs and protracted delays involved in negotiating new preferential trade agreements with the EU and Britainâ€™s other trading partners.
On the other hand, neither the official reports nor the euro-skepticsâ€™ dissent consider the risk of outright retaliation by the EU, should Britain leave. (Tariffs are capped by the World Trade Organization, but thereâ€™s plenty of scope for behind-the-border protectionism aimed at services, where the WTOâ€™s writ does not run.) Thatâ€™s the biggest risk: If it happened, the official worst-case estimates might be too small.
In any event, Brexit is fraught with risk, and voters are likely to make the safer choice. But because theyâ€™ll do so reluctantly, Britainâ€™s EU partners should expect the U.K. to be an even bigger nuisance in future.
In the longer term, Britain retains its blocking power over treaty changes: It canâ€™t steer the broader project, but it can stop anybody else steering it. Other EU governments arenâ€™t interested in revising the treaties just now anyway, because the union is unpopular elsewhere too, which would make it hard to get the changes ratified by national parliaments. Still, a point will come when treaty changes are needed to fix whatâ€™s broken in the EU economy. The reformers will have to deal with Britain.
In the meantime, the U.K. could be more deliberate about dragging its feet. It could follow the example of many other EU governments, which regard a commitment (such as a fiscal target) as binding only if they feel like being bound. Brits are a bit priggish about seeing promises to other governments as undertakings rather than aspirations.
Having refused to adopt the euro, the U.K. is already semi-detached from the EUâ€™s main economic project. It has opt-outs in other areas of policy too. This distance is going to widen under the pressure of heightened euro-skeptic sentiment following a vote to stay. Over time, as the euro area pursues closer integration in fiscal and financial policy, Britain will become even more of an anomaly â€” and demands for Brexit wonâ€™t subside.
Eventually, the EU might come to agree that Brexit makes sense. Iâ€™ve argued before that Britainâ€™s best bet in Europe is to be exasperating. Sure, itâ€™s been pretty exasperating already, but it can do better. Remember, the biggest risk in Brexit is that the EU will punish Britain for leaving. The answer is obvious. Vote to stay â€” then bring the EU to the point where it will pay Britain to go.
Clive Crook is a Bloomberg View columnist and a member of the Bloomberg View editorial board. A former chief Washington commentator of the Financial Times, he previously worked at the Economist and as a senior editor at the Atlantic