574: Brexit - What a Mess – How to Get Out of It
07-06-2016
The EU Referendum was advisory. It was fairly evenly split at 48% stay to 52% leave. The UK has 60 million people. Only 17 million voted to leave.
The new Prime Minister is likely to be Teresa May, who wanted to remain in the EU. 75% of MPs want to remain. Meanwhile the economy is sinking rapidly into recession, Sterling has crashed and it’s hard to see any positive economic outcome to a Brexit over a 2-4 year time frame.
Interestingly we understand no Parliamentary vote is required before issuing the Article 50 Brex
it letter to the EU. We also understand that during the two-year period, another letter can be issued stating the UK would like to reverse course and stay within the EU.
We have given this mess quite some thought, and a way out of the mess is as follows:
· Send Article 50 – triggering Exit talks (a 2-year term)
· Negotiate the best deal possible (not likely to be very good regrettably, since the EU will want to make the UK look like a “bad boy”)
· Have a parliamentary vote on whether a second referendum is required to sanction the actual “deal” that is negotiated
· Have a second referendum – is the deal acceptable (Brexit) or not (Stay)
· If the UK population then votes that the deal is unacceptable – we stay in the EU. If they vote that it is acceptable, we leave.
The rational for this is that firstly, the EU referendum was advisory, to start the Bre
xit process. But surely the more important decisio and question is – “is the final Brexit deal good enough or not”. Of course the outcome is dependent on a reversal being possible after Article 50 is issued – something the French EU lawyers are advising is the case.
Another aspect is that - how can the country agree to a deal that we really don't know what it is yet. It could be a disastrous deal - we need another vote on whether it is acceptable or not.
The other thing to remember is that Boris Johnson – who lead the Brexit campaign – has stepped down. So has Nigel Farage. Michael Gove is unlikely to become the next Prime Minister after stabbing Johnson in the back. Johnson proclaimed “Project Fear is Over” then rapidly stepped down into the shadows – not wanting to take any responsibility. We maintain “Project Fear” has just begun – e.g. the massive negative economic ramifications of the Brexit and years of uncertainty. Without doubt, house prices will come crashing down, people will lose their jobs, GDP will turn negative – and meanwhile the people that did the damage and promised so much – Boris Johnson and Nigel Farage - are no-where to be seen – and everyone else has to clean up the mess.
The above process is the way the UK people will finally decide whether the “deal” is good enough or not.