At the heart of the British referendum on whether to stay in the European Union or leave (Brexit) is the question of sovereignty. Many in the UK think that EU decision-making has weakened British parliamentary democracy, and that leaving the EU is the way to fully restore it. In reality, the main detonator is the growing anxieties of public opinion in the face of the migratory phenomenon, which in common perception threatens jobs, access to welfare and also cultural and social identities at the local level. This position seems to ignore that the transfers of sovereignty have been decided freely by the United Kingdom in the light of its own interests. It is no coincidence that the single currency, the Schengen system of free movement and many specific rules of the internal market are excluded - for example in matters of employment - in which the United Kingdom has maintained the national system. Health, education, pensions and welfare systems and defense remain under strict national control, given the Union's limited powers in this area. The public budget and economic policy remain in the hands of the British government.
The recent negotiations between the British government and the European Union have granted the United Kingdom further exemptions, among which those of greater political significance are the exclusion from the commitment to proceed towards an "ever closer" Union and the possibility of temporarily suspend the extension of "on the job" welfare benefits to migrants, including from the rest of the Union. There is also no doubt that the United Kingdom has enjoyed considerable advantages for participation in the internal market, having emerged as one of the most dynamic economies of the Union in recent decades. This is precisely the reason why foreign direct investment in the European Union has chosen the United Kingdom as its market of choice, as it is able to offer a flexible system, excellent market institutions and full access to continental markets. Participation in the internal market is probably a crucial issue in determining the cost of exit. Among other things, in the event of an exit, the United Kingdom would be excluded from all trade agreements signed as a member of the Union, therefore also from those signed with the United States.
In reality, no one can say how the exit could take place: in this regard, article 50 of the TEU applies, which merely indicates the procedures for negotiation and a two-year limit (moreover extendable with the agreement of the Union and the country outgoing member) for the complete exclusion of the requesting country from all Union mechanisms. There is little doubt, however, that the UK would like to retain access to the internal market. The only viable formula would probably be that of the association agreements in force today with Switzerland and some Nordic countries: which implies not only full compliance with the common rules, without however being able to contribute to their drafting, but also participation in the budget community (at least for certain expenses).
Another crucial question is that of the consequences of the exit on the London financial center – the City – which to all intents and purposes operates as the market of choice for a very significant part of the financial transactions of the countries of continental Europe. For example, it cannot be excluded that the United Kingdom's exit could be exploited by continental market organizations to ask for the exclusion of British institutions from certain components of the intermediation process - for example the clearing of transactions in euro.
There is another consequence, this politically significant one, which could result from the UK leaving the Union, i.e. the renewed push for Scotland to itself seek to leave the UK to stay in, or return to, the Union . Overall, it may be that many forecasts overestimate the economic consequences of the exit, for which a new 'settlement' would probably not be impossible. But certainly a long period of great uncertainty would open up for the United Kingdom, probably harmful to investment and growth; just as a long phase of political isolation could ensue, not exactly a harbinger of better protection of British interests in the world.
A separate issue concerns the effects of the UK's exit on the European Union. These may above all concern the effects of political contagion, in a phase of great unpopularity of the Union in public opinion. A successful referendum could become the detonator for other referendums, especially in countries where xenophobic and anti-European movements are strongest. In the scenario, the exit of the United Kingdom from the Union could become the beginning of an avalanche capable of jeopardizing the very survival of the Union.
Probably the other member countries, especially those with more significant invested political capital, such as Germany, France, Italy, would react, perhaps with a leap forward in integration at the political and institutional level. Moreover, this development is already made increasingly necessary also by the refusal of the countries that joined the Union in the last decade to collaborate within the institutional framework of the Union in order to adequately address the migration crisis. Which is already producing, by necessity, a strengthening of institutions and common policies - for border control, asylum procedures, the fight against terrorism, the development of the areas from which the migrants come.
Adverse economic effects for the Union may also result from the strengthening of dirigiste and protectionist tendencies among the remaining countries, tendencies against which the United Kingdom has been an important antidote. Damage would also come from the loss, within European institutions and decision-making, of the formidable British administrative culture, a continuous source in past years of useful stimuli for policies to simplify and improve management in the public sectors.
In short, it seems to me that the exit of the United Kingdom would be bad for everyone. I cannot understand those who rejoice, thinking that now it will be easier to do what we have not done before to strengthen common institutions. The Treaty of Lisbon allows us to move forward without the UK on the front of political unity, if we have not done so we have only ourselves to blame.
