Gaining Much-Needed Perspectives on Brexit
As the third anniversary of the United Kingdom’s stunning Brexit vote to leave the European Union nears, the nation has not only made no progress toward deciding how to actually depart the EU. It appears to be further from a solution than ever.
After more than two years of unsuccessfully trying to negotiate a withdrawal plan from the EU that Parliament would approve, Prime Minister Theresa May has announced her resignation. The original March 29, 2019 deadline for Britain to negotiate and approve a deal to leave was pushed back first to April 12, and then to the current Oct. 31 cutoff date. I suppose ancient, Celtic-rooted Halloween is a fitting wrap date for this torturous process.
Unless the political dysfunction and vituperation that have engulfed Britain’s politics since the bitterly divisive campaign leading up to the Brexit referendum dramatically changes by then, the country will face the truly scary prospect of departing the EU without any deal. Once considered virtually unpalatable, the so-called “hard” no-deal Brexit option now appears increasingly likely.
If you find yourself baffled by the daily headlines, wondering how Britain got itself into this mess, I recommend that you spend some time this summer reading The United Kingdom on the Brink of Brexit, the latest volume of our Perspectives on Business and Economics journal authored by some of Lehigh’s top students in the Martindale Center for the Study of Private Enterprise.
Ripped from the Headlines
Although students in our Martindale Student Associates Honors Program visited Britain two years ago to begin their yearlong research process and early interviews for the journal, I find it remarkable how relevant and insightful the articles published in 2018 remain today.
Many of the key issues they identified — from the rise of populism and nationalism, to the difficulties of resolving questions regarding the border between Ireland (a member of the EU) and Northern Ireland (which would leave with the rest of the United Kingdom), to the impact of severely limiting immigration, to the economic and employment risks of the flight of financial services firms and automobile manufacturers — could be ripped from the headlines in recent weeks.
For example, as Nadine Elsayed ’18 noted in her article, “Make Great Britain Great Again: Populism and Nationalism in Brexit:” “Although [the United Kingdom Independence Party] and other right-wing parties often caricaturized complex realities, they essentially sold a romantic and exclusive Downton Abbey age of economic prosperity and traditional values. The problem that May must face now, however, is how to take those anxieties and channel them into a successful Brexit negotiation.
“UKIP promised a UK that would benefit from a populist’s pull upward economically and a nationalist’s pull to the right culturally. May will most certainly struggle to keep that promise, especially if it means fundamentally restructuring her government to aid the electorate economically while also alienating the EU from those benefits,” wrote Elsayed, who graduated with high honors from Lehigh University in 2018 with a B.A. in global studies and journalism.
May did indeed struggle to keep the promises made during the Brexit campaign. And those struggles ultimately cost her the prime minister’s post.
Perceptive and Prescient Analysis
As the Brexit negotiations have dragged on, one of the most intractable obstacles that emerged was how to ensure there would be no return to a hard border separating Northern Ireland from Ireland. Logan Herr ’18, in his article “Cross-Border Trade On The Island Of Ireland In The Wake Of Brexit,” proved particularly perceptive in analyzing the thorny issues that have so far derailed efforts to achieve the “difficult balance” needed to keep cross-border trade open.
“Every parameter of the UK’s strategy for border solutions poses a difficult balance between sovereignty and all-island economic stability,” wrote Herr, who graduated as a President’s Scholar with highest honors, earning a B.S. in industrial and systems engineering and a B.S. in the Integrated Business and Engineering honors program with a concentration in finance. “For Brexit negotiators, there is no perfect design. Simply following the models of non-member countries currently in partnership with the EU is not a cut-and-dried option, due to the especially intertwined social, political, cultural, and economic ties on the island of Ireland. Rather, an innovative approach is necessary, which creatively amalgamates components from successful border models tailored to the unique needs of the UK, [Northern Ireland, the EU, and the [Republic of Ireland] altogether.”
Similarly prescient, Tristan Heffler ’18, who received her B.S. in accounting, explored the likely destinations of financial services firms that she expected would begin leaving London in order to maintain their unfettered access to continental European markets.
In her article “Mapping the Financial Services Sector After Brexit,” she concludes: “Frankfurt has emerged as the leader in the race to become Europe’s next largest financial center, with Dublin and Luxembourg close behind. … The resulting competition will create a more geographically diversified multinational financial services industry throughout the UK and the EU.”
In a related piece, “How Will the UK Financial Services Sector Adapt to Changes as a Result of Brexit?”, Lindsay Wilson ’18, a political science and global studies graduate, focused on the byzantine regulatory challenges of negotiating full-scale financial services market access from scratch. Her dire take appears increasingly inevitable:
“The Brexit deal that PM May and those who voted to leave the EU hoped for is largely impossible, especially with regard to a special deal for the UK financial services sector….[I]t is abundantly clear that the UK financial services sector will be negatively impacted by the departure from the EU.”
With loss of free access, thousands of high-paid banking and investment jobs in “The City,” Europe’s equivalent of Wall Street, are at serious risk in a hard Brexit.
Thorough and Thoughtful Research
These are just a few examples of the thorough and thoughtful research you’ll find throughout The United Kingdom on the Brink of Brexit. The other articles analyzing critical business and economics issues in the post-Brexit era are just as compelling and provocative, and I heartily recommend adding them to your summer reading list:
Affordable Housing in London, Ian Davis
National Health Service England: An Overview and Analysis of Challenges, David Ebhomielen
Room for Growth in a Time of Uncertainty: The UK Luxury Automotive Industry and Brexit, Gustavo Grinsteins
Consequences of Lax Media Ownership Regulation on Freedom and Plurality of the UK’s Fourth Estate, Mina Khan
Closing the Carbon Gap: The UK’s Progress in Climate Change Mitigation and Increasing Need for Strategic Policy, Courtney Lenzo
The Changing of UK STEM Higher Education in the Wake of Brexit, Veronica McKinny
Regulatory Implications of Cryptocurrency on The Bank of England, David S. Morency
Economic Consequences of UK Immigration Reform Following Brexit, Katherine Wu
I’m enormously proud of the level of scholarship our Martindale students demonstrate, and this volume of Perspectives on Business and Economics sheds much-needed light on a complex and chaotic issue that has profound global implications.
By: Todd A. Watkins, Professor of Economics, Lehigh University College of Business
To view more, please visit us at https://cbe.lehigh.edu/blog.
