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Brexit: Risks and Implications

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Expert analysis from Philippe Legrain, Visiting Fellow at the European Institute of the London School of Economics and a former adviser to European Commission President, José Manuel Barroso.

The chances of Britain voting to leave the European Union are much higher than many people think. Betting markets put the odds at 35% – already a high probability, considering how significant a British exit (or Brexit) would be for Britain, Ireland, the EU and the world. But in my view, the odds are – alarmingly – nearer 50:50.

Most polls put Remain and Leave neck and neck, with a sizeable minority undecided. The complacent assumption is that undecided voters will in the end mostly decide to stick with the “safe” status-quo option advocated by Prime Minister David Cameron, ensuring victory for Remain. But as Ireland’s experience shows all too well, referendums are unpredictable. Undecided voters may simply not cast a ballot – or go against the establishment and opt for Leave. While there is a strong rational case for Britons to remain in the EU, here are three big reasons why the chances of Brexit are so high.

First, referendums tend to be decided by emotions as much as by reasoned arguments. Britain currently enjoys the best of both worlds: full membership of the EU single market, with an important say in setting its rules, along with permanent opt-outs from the mismanaged eurozone and the collapsing Schengen Area. None of the realistic alternatives – an economic relationship with the EU along the lines of Norway, Switzerland, Turkey or Canada – would be better. The idea that Britain could cherry-pick a deal involving full access to the single market without contributing to the EU budget or agreeing to two-way freedom of movement is fanciful. And the notion that on its own it could secure better trade deals with the United States or China than it could as part of the EU is delusional. But these are complex, technical arguments that leave many voters cold.

Set against that is the Leave camp's powerful emotional appeal to voters’ hearts: regain freedom, take control, keep out unwanted immigrants. As I’ve experienced first-hand speaking about Brexit to many different audiences, even sober, cool-headed types often project their personal fantasy of an ideal country on to a post-Brexit world, be it a free-market, foreigner-free or socialist Utopia. Meanwhile, the Remain camp has to defend the reality of the EU, warts and all. 

Second, the Remain camp’s strongest emotional card – that leaving the EU would be a leap in the dark – is less compelling at a time when the EU is beset by crisis after crisis and there is a natural urge to want to distance yourself from it. Anti-EU campaigners could scarcely have chosen a more auspicious backdrop for the referendum. Ireland’s recovery notwithstanding, the eurozone economy remains a basket case. EU leaders are at each other’s throats over the fate of Greece, unwanted refugees and much else. Many Britons feel overrun by EU migrants, besieged by asylum-seekers in Calais and threatened by the refugee chaos across the Continent. And fears about immigration now overlap with worries about terrorism. Leaving has seldom seemed more seductive.

Of course, leaving the EU wouldn’t set Britain adrift from the Continent geographically, nor would it insulate Britain from an economic and financial crisis in the eurozone. On the contrary, it could cause the EU to unravel further, with a big blowback for Britain. But the fact remains that the status quo doesn’t feel particularly safe or attractive.

Third, the Leave camp's weakest point, their lack of heavyweight high-profile advocates, is less of a disadvantage in an age of anti-establishment rage. Who do Britons trust more with their country’s future: David Cameron or Boris Johnson and Nigel Farage? Compared with the Mayor of London and the UKIP leader, it ought to be game-set-and-match to the Prime Minister. Yet while Cameron remains the Remain camp’s most persuasive advocate, he is now somewhat tarnished, however unfairly, by the recent offshore investment fund revelations.

Cameron also leaves Labour voters cold. And while most of the Labour Party is pro-EU, its new hard-left leader Jeremy Corbyn, who has long been anti-EU, is largely silent in the debate. The most pro-EU party, the Liberal Democrats, are a shadow of their former selves. And while business people are mostly in favour of Remain, some judge it best to keep quiet, while those who do speak out are often viewed sceptically. What’s good for business bosses, voters reason, isn’t necessary good for us. In short, the credibility gap between Remain and Leave is much smaller than it ought to be.

Don’t get me wrong: the chances that Britons will vote to Remain in the EU are still slightly better than 50:50. But further political scandals, a flare-up of the refugee crisis, another terrorist attack or some other unfortunate event could easily tip the balance towards Brexit.

Philippe Legrain is Visiting Fellow at the European Institute of the London School of Economics and a former adviser to European Commission President, José Manuel Barroso. He will be speaking on the risks and implications of Brexit at the IoD Thought Leadership Series event on Thursday, 19th May 2016. 

The views expressed in the posts and comments of this blog do not necessarily reflect the views of the Institute of Directors in Ireland. They should be understood as the personal opinions of the author. The content of this blog is for information purposes only and the Institute of Directors in Ireland is not responsible for the accuracy of any of the information supplied.