The UK’s decision to leave the EU is a momentous one for the UK, Europe and the world. It shows that populist politics can triumph over rational economic thinking in countries where large parts of the electorate feel left out politically and left behind economically.
It should send out a clear warning. It means Donald Trump can become the next president of the US and Marine Le Pen can become the next president of France unless the political forces in the centre ground can seize back the impetus.
At present they are doing a lousy job of this and the EU has been the slowest of institutions to respond. If Brexit did provide a wake-up call in Brussels for long-overdue reform, it would be a positive but unlikely outcome.
For UK-based banks and businesses there are now years of uncertainty ahead. A failure to retain passporting rights to the single market would be a major setback, and euro-related business in London is likely to migrate elsewhere. In the longer term there could be gains from being offshore to a more restrictive EU, but there is no certainty of this.
The worst result would be for Brussels to start playing hardball to deter other countries from leaving. This is a sure way to make the club even less attractive to eurosceptic voters across the continent than it is already.
The best approach would be for Brussels to create more positive blueprints for economic and trade relationships between the EU and non-EU countries as well as between different EU members that have varying interests. The present one-size-fits-all policy is failing miserably. The flawed EU idea that access to the single market is conditional on being EU-compliant needs to be rethought. Free trade should be seen as a common good rather than a bargaining chip for political power.
It requires a massive victory for common sense to make any of this work but maybe, just maybe, Brexit could be the spur.
