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The quadrennial excitement of the Euro soccer competition, the green lawns of Wimbledon, and the racetrack at Silverstone provided three weeks of distraction from the consequences of the United Kingdom’s June 23 referendum. Prime Minister David Cameron was resigning, yes, but nothing would happen until his successor was in place, and it would take months for the country’s political parties, all in crisis, to select new leaders. Some supporters of staying in the European Union fancied using the lull to hold a second referendum to confirm the first, which was not binding. Demoralizing threats kept coming—from George Soros, from the IMF, from others—about the cost of withdrawal. Even the pro-Brexit camp seemed suddenly confused about the economic benefits of leaving the EU. Many started to imagine a withdrawal from the union pushed to such a distant future that it would never actually happen.
Time accelerated on July 12, though, when Tory Home Secretary Theresa May surged to the position of prime minister and declared unreservedly that she would implement Brexit. Her instincts may have been against it, but she promised that she would honor the vote and that she would be able to turn Brexit into a favorable arrangement for Britain. It was a stroke of political genius, first because the United Kingdom is a democracy and the vote ought to be acknowledged, and second because negotiations with the EU could be relatively easy and mutually beneficial.
The results of the Brexit referendum have opened the doors of power to May, an unsentimental politician with a career that reminds one of a Supreme Court judge—a role in which one displays competency without giving offense. In the campaign leading to the referendum, for example, she notoriously favored the United Kingdom’s remaining in the EU but declined to burn political capital by defending her position. She is now similarly poised to give Britons their “exit” cake and allow them to eat the “remain” too.
Here, it is worth looking to two other European countries that passed on EU membership: Norway, with a GDP per capita close to $70,000; and Switzerland, with a GDP of $60,000. Not all economies are comparable—Norway lives off oil and fish—but the GDP per capita of the United Kingdom just exceeds $40,000. In other words, there is no absolute link between membership in the EU and national wealth. Furthermore, although they are non-members, Norway and Switzerland are deeply integrated in the regulatory framework of the EU, which facilitates their commerce with the region.
The new British prime minister should rush to invoke Article 50 of the Treaty on European Union.The two cases offer a template for a post-Brexit United Kingdom, one that is still integrated economically with the continent. As for the cost of the divorce, a loss can simultaneously be a gain. Rewriting rules and regulations, and renegotiating deals will add up to thousands of billable hours for lawyers and accountants. European economies will absorb the costs and find new areas of growth, and May will come across as the champion of popular will.
For such a rosy outcome, though, time is of the essence. The new British prime minister should rush to invoke Article 50 of the Treaty on European Union, which starts the process of secession. Rapid agreement on a framework between London and Brussels will soothe Britons and allow European public opinion to move on to other topics. The sooner the United Kingdom is out of European minds, and the EU is out of British minds, the sooner the noxious politics of Brexit can be laid to rest. By defusing the political question, a rapid framework agreement will leave bureaucrats and lawyers months, maybe years, to finesse behind closed doors the commercial and regulatory details. In the end, when it comes to economic integration, the EU-UK relationship may not look very different pre- and post-Brexit. And no one will care.
After all, whether Brexit costs a quarter or half of a percentage point of GDP—or nets it—it is not consequential to most voters. The vote was more about the apparent end of a treasured way of life, about alien products in the supermarket, and about ethnic food where the fish and chips used to be. The Brexit result was aspirational, a nostalgic appeal to a past that can never be reclaimed, because the United Kingdom is already far more open and cosmopolitan than its voters wish it to be.
British parochialism finds echoes on the other side of the Channel, where European leaders, as a group, failed to sell the European way of life to their people. The union is now paying the price, but Brexit opens a window for those who remain to remedy political disaffection and reinvigorate the European project. Already, Emmanuel Valls, the French prime minister, and Matteo Renzi, his Italian counterpart, have declared their intention to push for further integration. Many more should join to emphasize the shared political and cultural destiny, and to convince the public that Europe is an identity, not just a fractional point of GDP growth.
In the same way that Europe is struggling to come to terms with what it is, politically and culturally and ethnically, May’s more insular United Kingdom will have to find its own voice and self-image post-Brexit. The political task of reconciling an insular United Kingdom with itself, diverse as it is, will be far more arduous than negotiating the terms of future economic integration with the European Union. It remains to be seen whether that is a challenge that the new prime minister—or anyone else in her shoes—will be able to meet.