Deal or No Deal

British Prime Minister Theresa May triggered Article 50 of the European Union (EU) Constitution on March 29, 2017, based on the results of an earlier referendum, whereby the UK would formally leave the EU within two years. Just a few weeks ago, she struck a Brexit deal with the EU Parliament outlining the UK’s conditions for leaving the EU. It addresses several important issues, including legal protections for UK citizens living in the EU and EU citizens living in the UK and along the shared border with Ireland.

Being a member of the EU allows people from all member nations to travel between countries and gain the right to live and work therein. After Britain leaves, the status of four million people will be thrown into question.

The deal also stipulates that Britain will temporarily stay inside of the EU customs union (free trade zone) to avoid a “hard border” between Northern Ireland and the rest of Ireland (Northern Ireland is politically a part of Britain). This is important because the economies of Ireland and North Ireland are integrated, and the border has historically been a point of tension; for decades, Britain has fought against a terrorist insurgency operating within Northern Ireland, whose goal was for Northern Ireland to defect to Ireland. This part of the deal ensures that violence will not flare up in the region again. Finally, the UK agrees to pay $39 billion to the EU to satisfy contracts—which were made prior to voting—and leave the EU. This includes agreeing to pay into the budget and various other programs.

The bill does have its flaws, mainly in its vagueness about the future trade relationship between Britain and the EU. Leaders from both the Labour (Liberal) Party and May’s Conservative Party attacked the bill fiercely. Labour’s head, Jeremy Corbyn, attacked the deal as being “failed and miserable” and “the worst of all worlds.” Corbyn, who has long favored a closer relationship with the EU after Brexit, accused May of surrendering the country’s sovereignty to the EU without gaining the trade and other benefits that come with being a member nation. Eurosceptic “brexiteers” expressed similar sentiments, with pro-Brexit leader Nigel Farage describing it as “the worst deal in history.” The present outrage at May’s deal really stems from a gross overestimation of the kind of deal that Britain would be able to get with the EU when leaving.

The EU always had more bargaining power than the UK in negotiations because of its greater economic power. Over half of Britain’s import and export trade is with EU nations, but under 10 percent of EU imports and exports are with Britain. Despite claims that the EU relies on the UK’s $11 billion net contributions to its $100 billion budget, Britain’s contribution only represents 0.07 percent of the remaining 27 members’ GDP, and the shortfall could likely be made up without significant changes.

In spite of this, May’s bill is very unlikely to pass in the British Parliament. And with only 18 weeks left in the 104-week transition period, there is no time to negotiate a new deal (even if there were, it likely would not get better for Britain).

That leaves many pro-Brexit ministers now suggesting a “no-deal” exit: leaving the EU without negotiating any deal. However, this would have detrimental long-term and catastrophic short-term consequences. A study by a UK-based think tank claimed that air travel could grind to a halt, manufacturers could run out of parts, and there could even be food shortages in the short term. In the Long-term consequences would also be dire: a report released by the Bank of England stated that under a no-deal Brexit, the economy would shrink by eight percent, unemployment would increase by about 3.5 percent, and house prices would tumble by 30 percent—a worse economic crisis than the Great Recession.

Some eurosceptics have claimed that since economic predictions were wrong before, they will be wrong again, but this is unlikely. Prior predictions of economic contraction were based on how economists thought business leaders would react to the onset of a smooth Brexit in two years. In comparison, these predictions are based on disruptions of trade and an integrated pan-European economy. And that’s not to mention the fact that all of the extremely important things that May’s deal resolved—the status of EU nationals and the border between Ireland and Northern Ireland—would be left unresolved with potentially devastating consequences.

Considering the unlikeliness of the passage of May’s deal and the devastating impact of a no-deal Brexit, some politicians have begun suggesting a new alternative: a second referendum on Brexit. Considering the undesirability of other options, this is the best choice for the UK right now and is supported by a narrow majority of UK citizens. In the original referendum, most UK voters thought they were voting between staying in the EU and leaving with a deal, not between staying in and leaving without a deal. Both before and shortly after the vote, many pro-Brexit politicians expressed sentiments that a Brexit deal would be quick and painless, which has not turned out to be the case.

Those advocating for a second referendum point to the fact that Britain’s current status within the EU is the most advantageous of any member nation: in its original accession agreement, the country negotiated four “opt-outs” from EU regulations. These include not having to adopt the euro as currency (and therefore being able to set their own monetary policy) and not being a member of the Schengen agreement, meaning it does not have an open border with the EU. The country is also not bound by the Fundamental Charter of Human Rights or by EU legislation concerning justice and home affairs, all of which give the EU less control over Britain’s internal laws.

However, there still is the issue of time constraints, as only 18 weeks remain in the transition period. This is likely not enough time to organize a second referendum, considering that the first referendum took 60 weeks. The best course of action now would be to extend the transition period long enough for a second referendum. Though this has its own issues, it is the only realistic way for Britain to avoid a no-deal Brexit.