17 top economists, foreign policy gurus and historians look five years into the future.
.. Some of them think the Brexit vote is a sign of the sun setting on Europe. “Brexit could be a wake-up call, or it could be 1933 all over again,” says Danielle Pletka of the American Enterprise Institute. Dean Baker, co-director of the Center for Economic and Policy Research, is more optimistic, saying that Brexit would set Europe “back on a path of high employment and healthy growth.”
.. Some of them think the Brexit vote is a sign of the sun setting on Europe. “Brexit could be a wake-up call, or it could be 1933 all over again,” says Danielle Pletka of the American Enterprise Institute. Dean Baker, co-director of the Center for Economic and Policy Research, is more optimistic, saying that Brexit would set Europe “back on a path of high employment and healthy growth.”
.. In Europe, countries such as Poland, the Czech Republic, Hungary and possibly the Netherlands, will be watching to see if the Brits can pull this off; if the damage seems manageable, pressures to take a similar path are likely to build in at least these countries.
.. Russia has been in recession for two years, in part because its biggest market, Europe, has been buying less of its biggest export, energy. Is it going to do better if that market slows further? Almost surely not. Same for China. Losers all around.
.. The vote fortifies him and his supporters in their deepest belief: that hyper-pluralist, overly rule-bound, post-sovereign policymaking is doomed, prone to interest-group capture and stalemate, and unlikely to sustain popular loyalty over the long term. For China, the lesson is roughly the same.
.. If you want to say that the losers from Brexit are the world’s pluralist political orders, you can make a pretty good case.
.. Scotland will probably secede from the UK, which will have major consequences for British defense policy, given the basing there of the nuclear deterrent. Advocates of Trident modernization may get a boost from the isolation that Britain will feel in departing the EU, but they will need to find other basing arrangements (perhaps co-locating on U.S. bases).
.. I expect limited impact outside of the United Kingdom in the next five months. The initial market hysteria will soon be completely reversed, outside of the United Kingdom, and there will likely be a strong rally following Trump’s defeat in November. Within Britain, there could be a substantial impact. It is quite possible that the real estate bubble in London will burst
.. the UK will no longer be viewed as a safe haven for the world’s rich.
.. In five years I expect that the EU will have turned away from austerity and will again be back on a path of high employment and healthy growth. The Brexit vote, along with the growth of populist parties across the continent, both left and right, will have finally convinced enough of the EU elites outside of Britain that they had to take a course other than austerity in order to save the EU.
.. The main difference is that the UK will have a much smaller financial sector, with more of its wealthy being generated from productive sectors of the economy. (Okay, this is some wishful thinking—but it’s not impossible.)
.. The main difference is that the UK will have a much smaller financial sector, with more of its wealthy being generated from productive sectors of the economy. (Okay, this is some wishful thinking—but it’s not impossible.)
.. we may see British young people working on the Continent being sent home because they no longer have a valid work permit
.. In five years’ time, the consequences will be less far-reaching than many are predicting today. Every corporation that does business in the UK and the EU will have an incentive to lobby Brussels to make the “divorce” as amicable as possible.
.. And thus, a major casualty of Brexit will be the U.S. rebalance of its foreign policy toward Asia, a policy that depends on a stronger Europe to take on more responsibility in its neighborhood.
Some Early Signs of ‘Brexit’ Upheaval
Mr. Dimon had said before the vote that up to a quarter of JPMorgan’s 16,000 employees in Britain might need to relocate.
.. And in the meantime, Europe could be in for serious political instability as right-wing parties in France, Finland and other countries try to ride Britain’s coattails out of the union.
.. BMW Mini automobiles and other products manufactured in Britain will be less expensive for people paying in euros and other foreign currencies. That could be good for exports.
.. Britain’s financial services industry, which employs 1.2 million people, is especially vulnerable.
.. Even Deutsche Bank, the symbol of German banking nominally based in Frankfurt, uses London as a base for investment banking and trading. It has often made most of its profit there.
.. Airbus produces wings in Broughton and employs 15,000 people in Britain plus tens of thousands more at suppliers.
.. Google employs roughly 1,000 engineers across Britain
.. German brands like BMW, Mercedes and Volkswagen account for half the cars sold in Britain
.. Probably the most important company in the renaissance of British car manufacturing has been Nissan, which has pumped close to 4 billion pounds since the mid-1980s into a world-class factory in Sunderland in northeast England.
.. Probably the most important company in the renaissance of British car manufacturing has been Nissan, which has pumped close to 4 billion pounds since the mid-1980s into a world-class factory in Sunderland in northeast England.
.. Yet despite the European Union’s importance to local jobs, voters in Sunderland voted overwhelmingly to leave.
Brexit Vote Throws Britain and Europe into Turmoil
Much of what Farage says can’t be trusted. On this occasion, though, the thrust of his remarks was accurate.
.. In a vote that stunned the entire world, an obdurate British public rejected the advice of the Prime Minister, the Chancellor of the Exchequer, the governor of the Bank of England, the Archbishop of Canterbury, the leader of the Labour Party, the leader of the Liberal Democrats, U.S. President Barack Obama, the head of the International Monetary Fund, and a long list of prominent economists and business leaders.
.. The earliest Britain could leave is two years from now.
.. it could be 2019 or 2020 before Britain finally retreats to unsplendid isolation behind the English Channel.
By that point, it’s not inconceivable that other E.U. members could be pushing to follow the British example.
.. without Britain protesting further encroachment from Brussels at every opportunity, it’s conceivable that the six original members—France, Germany, Italy, and the Benelux countries—could come even closer together, creating a two-tiered structure, with a tightly integrated core at its center and a less integrated periphery.
.. It is even possible that the U.K. could break up before the E.U. does
.. Sinn Fein, the Irish nationalist party, which has representatives in the parliaments in both Belfast and Dublin, called for a referendum on a united Ireland.
.. What an irony it would be if the Leave vote led the U.K. to break up before the E.U. does.
Why the Remain Campaign Lost the Brexit Vote
With the exceptions of London, Scotland, and Northern Ireland, every major region of the U.K. voted to exit the E.U.
.. One of the best predictors of how people voted was their education level. Those with college degrees tended to opt for Remain, while people without them tended to opt for Leave.
.. The older and poorer you are, the more likely you were to vote Leave. The younger and richer you are, the more likely you were to vote Remain.
.. The Leave side went up in the polls after it managed to shift the debate away from the likely economic impact of Brexit and onto immigration and issues of national sovereignty. Although much of the immigration into the U.K. comes from outside of the E.U., the Leave forces were able to focus attention on the freedom of movement for workers, which is one of the founding principles of the E.U.
.. economic anxieties and resentments underpinned the political anger that fuelled the Leave vote. Demagogues such as Nigel Farage, the leader of the U.K. Independence Party, were able to exploit these economic worries, directing them against immigrants and other easy targets.
.. the best predictor of voting patterns wasn’t income or education levels but attitudes toward the death penalty, which are a proxy for authoritarian attitudes more generally.
.. “Wealthy people who back capital punishment back Brexit. Poor folk who oppose the death penalty support Remain.”
.. “The legacy of increased national inequality in the 1980s, the heavy concentration of those costs in certain areas, and our collective failure to address it has more to say about what happened last night than shorter term considerations from the financial crisis or changed migration flows.”
.. the Remain vote was consistently stronger in prosperous areas. Economics matters.
.. he pledged to hold a referendum at some point before 2017. At the time, this was an easy promise to make: Cameron believed he couldn’t deliver on it.
.. Rather than accentuating the positive, Cameron and George Osborne, the Chancellor of the Exchequer, sought to scare the electorate into voting their way, arguing that a vote for Leave would plunge the U.K. economy into a recession and cost the average household about sixty-two hundred dollars a year.
.. Almost all economists agree that the E.U. has been good to Britain. But the sixty-two-hundred-a-year figure was so large, and so specific, that many people didn’t believe it.
.. the negative campaign, which was dubbed Project Fear, had backfired.
.. Rather than winning people over, it alienated many voters who had legitimate concerns about the E.U. “People have expressed real anger at being ignored by the system, and I think this is at the heart” of what happened, Hilton said.
.. the fate of the Remain campaign should serve as a reminder of the limits of negative campaigning—a reminder that Hillary Clinton would do well to take note of as she goes up against Donald Trump. In confronting populist demagoguery, it isn’t enough to attack its promulgators. To get people to turn out and vote in your favor, you also have to give them something positive to rally behind.
.. It claimed that liberating Britain from the shackles of the E.U. would enable it to reclaim its former glory. The Remain side argued, in effect, that while the E.U. isn’t great, Britain would be even worse off without it. That turned out to be a losing story.