The U.K. has voted for the “most expensive divorce proceeding in the history of the world,” in the words of U.S. billionaire Wilbur Ross, with BBC projections showing voters backed “Leave” by 52 percent to 48 percent. The challenge facing both Britain and its newly ditched European partners now is to ensure that the separation doesn’t deteriorate into acrimony and revenge.
The EU should regard the referendum result as a wake-up call. Discontent with how the bloc operates isn’t restricted to Britain. A survey of more than 10,000 voters across Europe published by the Pew Research Center earlier this month showed rising dissatisfaction. The proportion of French respondents with a favorable view of the EU, for example, slumped to 38 percent from 69 percent in 2004; in Spain the deterioration was to 47 percent from 80 percent.
The most sensible EU response would be a retreat on at least some of the issues that were at the forefront of the U.K. referendum but are also pressure points across the bloc — immigration, the centralization of decision making and the broader agenda of trying to impose “ever closer union” on a reluctant populace.
An alternative solution, however, might see the EU accept the reality of a two-speed Europe. That is, it could formalize an arrangement by which a core group led by France and Germany commits to fully-fledged union with shared fiscal powers, a central Treasury and common bond issuance and a full banking union — a proper United States of Europe formed from a coalition of the willing. Those countries who don’t want to be part of the core, including Britain — or which cannot meet the requirements — could remain fully-fledged members of the EU trading bloc and single market, without having to accept further integration. Either way, the EU can’t proceed as it has before, as German Finance Minister Wolfgang Schaeuble acknowledged on Tuesday.
France should resist the temptation to pull up the financial-services drawbridge. Banking business is likely to flow naturally to Paris, Luxembourg and Frankfurt and away from London. Europe’s banks are in enough trouble — Deutsche Bank’s shares are worth about half of what they were a year ago — and attempting to prevent London from clearing or settling trades in euro-denominated securities risks smothering those trades rather than simply repatriating them.
At home, the ruling Conservative Party needs to heal the rifts caused by a divisive and ill-tempered campaign. Prime Minister David Cameron and Chancellor of the Exchequer George Osborne backed the “remain” side, trading barbs and insults with Conservatives Boris Johnson and Michael Gove, who fronted the “leave” campaign. With last year’s surprise election win a fading memory and a risky referendum bet gone badly wrong, Cameron has resigned, reaffirming Enoch Powell’s dismal maxim that all political careers end in failure.