On Friday night, British Prime Minister David Cameron emerged from a marathon European Council meeting in Brussels with a new settlement between the United Kingdom and the European Union. The negotiations were prompted a pledge that the ruling Conservative Party had made during the 2015 general election to seek such a renegotiation. The new agreement covers key areas including economic governance, immigration, and welfare benefits, and competitiveness.  

But the deal, for which negotiations began last year following May’s Conservative election victory, will not be the end of the matter. Rather, it is only the start of a process that will determine whether the United Kingdom will stay in the 28-member union, with a public referendum on EU membership announced for June 23. 

The poll will probably be the defining issue of the current British parliament, and it will help decide the future political and economic character of the United Kingdom and the European Union. In the shorter term, it will also set the political weather in the United Kingdom in 2016 and beyond, with the prime minister potentially being forced to resign if pro-Brexit forces win the day. 

British Prime Minister David Cameron (L) and European Council President Donald Tusk attend a bilateral meeting ahead of a European Union leaders summit addressing the talks about the so-called Brexit and the migrants crisis, in Brussels, Belgium, February
British Prime Minister David Cameron (L) and European Council President Donald Tusk attend a bilateral meeting ahead of a European Union leaders summit addressing the talks about the so-called Brexit and the migrants crisis, in Brussels, Belgium, February 18, 2016.
Olivier Hoslet / Reuters

During the long renegotiations, Cameron achieved more than many observers had believed was possible. The government’s wins include recognition that the United Kingdom is not committed to ever closer European political integration; the institution of a seven-year break on new EU migrants claiming work benefits in the United Kingdom; and the acceptance that the United Kingdom, even though it is not a member of the eurozone, can refer contentious eurozone financial regulation to the European Council when it has “reasoned opposition,” forcing delays to implementation until concerns are addressed. This last measure reflects Cameron’s desire to try to safeguard the country’s extensive financial sector from any European rules that could put United Kingdom-based institutions at a disadvantage to eurozone counterparts, thus undermining the integrity of the single market. For its part, EU leaders also promised to work on enhancing European economic competitiveness.

Many critics have nonetheless dismissed the agreement as a sham. In fact, part of the blame lies with the prime minister himself. In a landmark speech in January 2013, he promised a “fundamental, far reaching” renegotiation of Britain’s relationship with the EU and significant reform of EU institutions, including the European Commission, that would result in a “leaner, less bureaucratic union.” This scale of change was never realistic, especially over such a short timeframe, and it makes the new settlement feel more like a retreat to some than a forward charge. And, indeed, he did have to make significant concessions along the way, including that any changes will not apply to EU workers already in the United Kingdom.

Parliamentarians from the opposition, led by Labour, and from other parties such as the Liberal Democrats, largely welcomed the agreement. But Cameron has been weakened by defections from his own Conservative Party ranks to the Brexit cause, including London Mayor Boris Johnson and Justice Minister Michael Grove, a longstanding and trusted confidant to the prime minister. 

London Mayor Boris Johnson speaks to the media in front of his home in London, Britain, February 21, 2016.
London Mayor Boris Johnson speaks to the media in front of his home in London, Britain, February 21, 2016.
Peter Nicholls / Reuters
Polls show that Johnson is a clear second to Cameron among politicians whose opinions are likely to influence the way people will vote in the referendum. His defection is especially significant because he is likely to try to succeed the prime minister when he eventually steps down. Moreover in an increasingly euroskeptic Conservative Party, Johnson is aware that campaigning for a "Leave" vote in the referendum would ingratiate him with many voters, and it would give him a wider national platform to become the charismatic figurehead that the Brexit campaign badly needs if it is to win.

In the face of such opposition from his own party, the prime minister will now double-down on his efforts to sell the settlement and the wider benefits of EU membership to the British electorate. The United Kingdom “will be safer, we will be stronger, and we will be better off inside the EU,” he has argued, and Brexit would only offer the “illusion of sovereignty” and be a huge “leap in the dark.” The conventional wisdom is that the “Remain” side will ultimately win, a result that could have more to do with the fact that the forces arguing for Brexit are still disorganized and fractious. 

For example, some pro-leave groups have merged under the banner of “Grassroots Out,” with the blessing of United Kingdom Independence Party (UKIP) Leader Nigel Farage. However, the largely Conservative-led “Vote Leave,” led by Nigel Lawson who was a longstanding chancellor of the exchequer during Margaret Thatcher’s premiership, has so far refused to join that coalition.

The intra-campaign disagreements are blunting the impact of the Brexit camp’s key messages, including that Cameron’s settlement doesn’t address some major issues of concern. Farage put them best when he asked “Why can't we veto a bad law, why is it costing us over 50 million pounds a day, and why do we have an open door to over 500 million people?” Farage also asserts that the European Union is a “burning bridge” tearing itself apart through a series of overlapping crises from eurozone troubles to the massive migration challenge. 

Paired with the United Kingdom’s current turbulent politics is a volatile public mood; a number of recent polls have even shown the “Leave” vote ahead. Most dramatically, a YouGov/Sunday Times survey earlier this month put support for Brexit at 45 percent, with the “Remain” vote at 36 percent, and around a fifth of the population undecided or not planning to vote. In other words, there is plenty for support for Brexit, and although the final tallies will most likely fall against Brexit, that outcome cannot be taken for granted, particularly if Europe faces another summer of migration crisis and economic drama.

A supporter of the "Grassroots Out" campaign, in favor of Britain leaving the EU, attends an event in London, February 19, 2016.
A supporter of the "Grassroots Out" campaign, in favor of Britain leaving the EU, attends an event in London, February 19, 2016.
Peter Nicholls / Reuters

It might be tempting to dismiss the renegotiation and referendum as parochial British issues with little or no consequence for the rest of the world. In fact, their effects will reverberate in European and wider international politics for years.

Consider the three possible outcomes of the vote. The first is a very narrow win for the “Remain” side. The danger for Cameron in this scenario is that the issue will still not be properly resolved and debate will continue. The situation could be similar to the September 2014 Scottish independence referendum, when supporters of the union won the battle, but the war continues apace with a resurgent Scottish Nationalist Party (SNP). 

It could also be destabilizing if people in England vote for Brexit, while electorates in Scotland, Wales, and Northern Ireland plump to remain. For instance, new constitutional debates in the United Kingdom, prompted by a rising sense of English nationalism, could emerge, and the tensions in the Conservative Party over Europe will continue, potentially stirred by UKIP. British geographic divisions could potentially constrain future governments on European policy too.

A second scenario would be a strong victory for the “Remain” side, in which populations across England, Scotland, Wales, and Northern Ireland all back continued membership, which would mean that the issue would probably be resolved for at least another generation. Such an outcome would recall the last European referendum in the United Kingdom—for the then-European Economic Community in 1975—although the winning margin then of 67 percent is unrealistically high this time around. Such an outcome could drive the United Kingdom to more seriously reconcile itself with the European Union. In that case, future governments could look to reassert themselves as higher influence, strategic actors in Brussels, with the prospect of more British senior EU officials too. But at least as likely, is that, without stronger political leadership, the United Kingdom would remain semi-detached from the union and focused mainly on key issues such trade and the single market

A third scenario, in which pro-Brexit forces prevail, would mean that the United Kingdom could technically leave the European Union within two years of the referendum. However, such an outcome would herald a very complex and potentially time consuming set of negotiations. A withdrawal treaty would be finalized by the European Council and then ratified by the European and British Parliaments in Brussels and Westminster. During this multi-year period, a second EU referendum cannot be completely ruled out, not least since the United Kingdom may face the prospect of leaving the union under sub-optimal, if not downright disadvantageous terms.

If the United Kingdom does leave the union, it would be a multiple body blow. British influence and prosperity are significantly enhanced by membership in the EU. On its own, the United Kingdom accounts for less than one percent of the global population, and roughly three percent of world GDP. But, as former British Foreign Secretary David Miliband has said, “our role in Europe magnifies the power of our ideas, and strengthens our international clout in Washington, Beijing, and Moscow.” 

For example, in trade negotiations, the United Kingdom’s bargaining position is enhanced by being part of the European Union, which is the world’s largest trading bloc and accounts for some 20 percent of global GDP. Currently, the United Kingdom benefits from roughly 50 external trade agreements through its membership, and further deals are potentially on the horizon with countries as disparate as Canada and China, with Brussels not averse to tough negotiating when this is necessary to secure key terms and conditions.

Further, a decision to leave the European Union might push foreign investors away from the United Kingdom, which is the one of the largest recipients of FDI in the world. Some Japanese-headquartered firms have been particularly vocal in threatening to reconsider their investments if the United Kingdom walks. Many of these companies see their British operations as an effective way to access the whole of the EU market, not just England, Scotland, Wales, and Northern Ireland. 

Moreover, Brexit would increase the likelihood of a second Scottish independence vote. The Scottish population is, in general, more favorable toward continued membership in the European Union than the English. And Scottish First Minister Nicola Sturgeon, the leader of the SNP, has previously argued that the United Kingdom should only exit the union if majorities in each of the four constituent countries (England, Scotland, Wales, and Northern Ireland) all vote to leave, which she knows is exceptionally unlikely.

Brexit would also have significant ramifications for the European Union, which widely acknowledges the value of continued British membership. As one of the more influential European states, the United Kingdom been a major source of competing ideas in Brussels, not least in economic policy. It has played a major role in conceiving and pushing forward key pro-free trade initiatives, such as the single market. 

Brexit would thus disrupt the balance of power, inner workings, and policy orientations of the European Union. Moreover, there is some fear of contagion, with other countries potentially looking to leave the union, too. Simply put, the British referendum is not just a key matter for the United Kingdom, but also for much of the rest of the world. A United Kingdom that no longer punches so strongly on the international stage is also less able to bolster international security and economic prosperity. The recent seventieth anniversaries of the end of the Second World War in Europe and Asia are a fitting time to remember the United Kingdom’s traditions as a long-standing promoter of democracy, human rights, and the rule of law. Continuing long into the twenty-first century would be best secured through continued British membership to a reformed European Union, not Brexit. 

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