Economy & Markets

2020-01-10 Gianmarco Ottaviano

Brexit 2.0: The Chickens Come Home to Roost

With Boris Johnson’s clear victory in the recent British elections, has clarity finally been reached on the will of the people, on who’s in charge in a democracy, and on what type of Brexit we should expect? Probably not.

Has something really changed for Brexit after Boris Johnson’s triumph in the recent British parliamentary elections? It certainly seems that way, but not for the reasons many people believe, that is, that clarity has finally been reached on the will of the people, who’s in charge in a democracy, and what type of Brexit we can expect.

Boris Johnson’s Conservatives won the elections, with an 80-seat majority (their largest majority since 1987) thanks to 43.6 percent of the vote (the highest percentage of any party since 1979). With that majority Johnson will no longer have to duel with a largely hostile parliament as in the past, and a pure version of Brexit can get done. The problem is that “Johnson’s version” of Brexit remains shrouded in the mystery of the common Conservative refrain “Brexit means Brexit”: the same questions remain open, and concrete solutions are still lacking.

In particular, the old question of Northern Ireland’s political and trade status remains. The Irish do not want a return to a physical border between the two Irelands, because they fear it will jeopardize the Good Friday Agreement. That deal, for which the United States is a guarantor, put an end in 1998 to decades of civil war between the supporters of the annexation of the territories of Northern Ireland to the Republic of Ireland, and the loyalists to the United Kingdom. For this reason, the EU has always seconded the request of the Irish for no hard border between the Republic of Ireland and Northern Ireland even after Brexit. The short circuit is that if granted, this request would de facto prevent the United Kingdom from independently pursuing international trade agreements, essentially remaining a “vassal state” of the European Union in regards to trade policy, against the true spirit of Brexit.

A simple example can clarify the issue. Consider the proposed free trade agreement between the United Kingdom and the United States. Without a border for effective customs controls between the two Irelands, that agreement would allow American goods to enter Northern Ireland without paying tariffs, and from there to go to the Republic of Ireland and thus the European Common Market. This could also take place in the absence of a parallel free trade agreement between the United States, the origin of the goods, and the European Union, their destination. In addition, another aspect ignored by the Johnson government is that the same thing could happen in the opposite direction, as European goods could enter the American market without tariffs through Northern Ireland, in spite of Johnson’s friend Donald Trump.

Johnson’s optimistic idea is that the Irish question represents only a temporary problem because an ingenious technological solution will soon be found (but doesn’t exist yet), that will allow for virtual customs controls without the need for a physical border. While awaiting the relevant technology, the customs stations could be placed between the two islands of Ireland and Great Britain, provided that the loyalists in Belfast do not protest too much about being abandoned by their sovereign in “enemy territory.” So much for reaching clarity on Brexit.

Beyond this technical aspect, at least the vote has finally clarified the will of the people and who’s in charge in a democracy, right? Well, not exactly. These elections have laid bare the institutional weakness of what is considered the oldest democracy in the world. As observed by the British philosopher Anthony Grayling, in the recent elections candidates in favor of remaining in the EU received 16.5 million votes, while candidates in favor of Brexit got 14.8 million votes. In other words, the British majority electoral system produced the paradoxical result in which despite getting almost two million fewer votes, there is an overwhelming majority of seats in favor of Brexit. There are three political implications. The first is that the electoral system of the oldest democracy in the world does not seem to be so democratic. The second is that there is no popular majority in the United Kingdom in favor of Brexit. The third is that the first implication has made the second irrelevant. For example, for each seat won, the pro-Brexit conservatives had to obtain a little less than 40,000 votes, while the pro-EU Liberal Democrats (LibDem) had to get almost ten times as many.

The reason for this paradox is that with the British majority system, parliamentary seats are assigned to the candidates who get the highest number of votes in their own electoral districts (rather than as a proportion of the national total) and the pro-Brexit districts of the small towns tend to be less populated than the pro-EU areas of large cities. A strong driver came from the northern regions of England and the Midlands, regions with long mining and industrial traditions, that for decades prior to the last elections had never voted for the Conservative Party. The combination of pro-Brexit sentiment and the perception of an absence of credible leadership in the Labour camp allowed Johnson to do what no Conservative candidate had done in those regions in living memory.

However, not all of these territories went to the Conservatives. The majority of the vote for Johnson was in fact concentrated in the small towns on the margins of the larger cities with greater success. This is a new type of Conservative voter: the blue-collar workers who live in areas poorer than those from which Johnson’s party usually draws its support. Before these elections, the average hourly pay in an area represented by a Conservative Member of Parliament was approximately 18 euros, and only 17 Conservative seats came from the poorest one-fourth of England. In the new Parliament, the average hourly pay of a Conservative district dropped to about 16 euros, and now 35 seats come from the poorest one-fourth of England. In addition to the geographic dimension, there is also a demographic one: the Conservative Party obtained 57 percent and 67 percent of the votes among voters more than sixty and seventy years old, respectively. But the demographic dimension does not perfectly overlap with the geographical aspect. The Conservative voter has become a bit younger, since the age at which a voter ceases to be more likely to vote for Labour and becomes more likely to support the Conservatives, went from 47 years old in 2017 to 39 years old in 2019. The political division between small and large cities is increasingly sharp, combined with the fact that the Conservatives must also respond to a new type of voter who is different than the ones they are used to addressing. How they will succeed in simultaneously satisfying both new and old voters is an unprecedented element of uncertainty.

Just as unprecedented, lastly, is the Scottish question. In December, the pro-independence and pro-EU Scottish National Party (SNP) received the largest number of votes, almost double those of the Conservatives and Labour, reaching 45 percent, an increase of approximately 8 percent over the previous elections in 2017. Thanks to the majority system, the SNP took 48 out of 59 Scottish seats, 13 more than in 2017. In addition, about 10 percent of the votes and 4 seats went to the other pro-EU party, the LibDems. The result is that approximately 80 percent of the Scottish parliamentarians are pro-independence and almost 90 percent are in favor of staying in the European Union. Unlike what is true for the United Kingdom as a whole, the outcome of the majority system in Scotland amplified the popular vote, rather than contradicting it. The next move by the Scottish parliamentarians could thus be to request a referendum for Scotland’s independence from the United Kingdom, in view of then potentially joining the EU; yet another factor of uncertainty.

The saga of Brexit is not over; it’s just entering a new phase.      

Gianmarco Ottaviano is Professor of Political Economy at the Bocconi University, where he holds the Achille and Giulia Boroli Chair in European Studies. This article expands on the analysis presented in a recent article of his in il Sole 24 Ore.