July 8, 2016 : Craig Wilson

Brexit: where are we now?*

*Disclaimer: No one knows!

Since the decision to leave the European Union, many of us have been scratching our head as to what this all might mean in practical terms.

Having met with a number of third sector organisations in the past fortnight, there is huge concern for the future. Many health charities are warning that medical research will be jeopardised, with the UK losing out on billions in research funding. Housing charities fear that the flight of investment capital will make building targets unachievable. International development agencies have grave concerns about leaving the world’s largest provider of aid. Equalities charities fear for the fate of the European Convention on Human Rights (ECHR), and environmental organisation are concerned about the ratification of the Paris Climate Agreement, and withdrawal from the auspices of strict environmental legislation.

Each and every organisation was concerned about two things: the impact on the economy and what this will mean for donations and public spending; and the political leanings of the future Prime Minister.

I’d like to take a look at what we do know and offer some thoughts on what might happen in the months ahead.

The Prime Minister

May and Leadsom make the Iron Lady look like a bit of a moderate

Following the resignation of David Cameron and a mêlée of backstabbing that made Kill Bill look like a PG-13, two contenders remain for leadership of the Conservative party and the keys to 10 Downing Street. With those two candidates being Theresa May and Andrea Leadsom, the UK will soon have its first female Prime Minister since Margaret Thatcher. From what I can gather, both of them make the Iron Lady look like a bit of a moderate.

Theresa May, the longest serving Home Secretary since World War Two, backed remain during the referendum, albeit with little gusto. She has drawn fire for failing to guarantee the residency of EU citizens living in the UK, choosing instead to use them as a bargaining chip in UK/EU negotiations. She is a hard liner on immigration and has called for the UK to withdraw from the ECHR.

Whilst clearly popular amongst the members, ardent Brexiteer, Ms Leadsom, is an unknown quantity. With a history in the City, Ms Leadsom has expressed a desire to abolish the minimum wage and maternity rights. She also voted against same sex marriage and called for rioters to be sprayed with indelible dye. In a hand of Reactionary Top Trumps, she’d certainly be a game changer.

Currently, Tory Party membership divides evenly when asked for their preference. Interestingly, this is the first time that a Prime Minister will have been chosen by the membership of one political party.

The Economy

Standard & Poor’s rating agency has downgraded five of the UK’s biggest banks from ‘stable’ to ‘negative’. Some commentators believe this will lead to less lending and another recession, with predictable impacts upon public spending.

In a bid to shore things up, George Osborne announced plans to cut corporation tax to 15% – the lowest of any major economy. Critics have pointed to the fact that businesses are more interested in access to the EU single market, meaning tax receipts would plummet, with little to show for the move in terms of higher employment. For context, Corporation Tax was 28% in 2010.

In a sign of dwindling confidence, jobs advertised online have fallen by 650,000 in a single week, from 1.42 million to 820,000.

The IFS has predicted UK GDP will fall 1.5% by 2019 – or 4.5% if the UK remains out with the single market. This poses a massive problem for the next Prime Minister, as access to the single market involves a membership fee and the acceptance of free movement of people – two key arguments the ‘Leave’ side used against continued EU membership.

Scotland

Having voted overwhelmingly against Brexit, there are inevitable calls for Scotland to become independent and join the EU. With formerly hostile sections of the press urging the First Minister to call indyref2, prominent ‘No’ voters suggesting they’d now vote ‘Yes’, and polls showing support for independence as high as 59%, one has to imagine a referendum in the next year is inevitable.

The First Minister has been mandated by parliament to explore ‘every option’ to maintain Scotland’s relationship with the EU. However, despite positive overtures from EU leaders, it is likely that only independence will allow Scotland to remain within the EU.

It may be the case that the EU – keen to make an example of the UK – will sketch out what sort of deal Scotland could expect in the event of independence. This level of certainty would be a huge asset to the First Minister’s case and may prove to be an irresistible lure for many desperate to secure Scotland’s place in Europe.

Important: Opinions expressed by bloggers are their own and don't represent those of the Scottish Council for Voluntary Organisations.

by Craig Wilson