EU referendum results: What the experts say

Experts at the University of Sheffield comment on the results of the EU referendum (Friday 24 June 2016).

Tamara Hervey, Professor of European Law:

Professor Tamara HerveyIt is important to remember that there are no immediate legal changes. EU law continues to apply - including our rights to move freely within the EU with only our passports and the rights that our EHIC cards give to emergency health care in other EU countries. People from other EU countries still have rights to live and work here.

The UK government (with a new leader) will now negotiate an agreement with the EU under the process in Article 50 of the Treaty on European Union. The terms of that agreement will take account of the UK's future relationship with the EU.

Martial Staub, Professor of Medieval History:

Today’s result points to a more fundamental issue to which the country will have to respond in the coming months and years. Has Britain turned its back on European politics?

Professor Martial StaubEven now, the EU does not cover the whole of Europe or what has historically been seen as pertaining to Europe. But it would be too easy to dismiss the question on this trivial ground. For, the EU is as European as it gets. It is deeply rooted in European political theory and, above all, practice. Sovereignty is shared, at least in part; bottom-up and top-down power arrangements coexist, as they do in its national constituent parts; and this is by no means an exhaustive list of characteristics.

The British Isles have made an essential contribution to European political culture. Parliamentary sovereignty is one of their most distinctive legacies. All the same, British politics has developed against the background of European developments. While Magna Carta became seen in the English Civil War as the foundation stone of the country’s liberties, its principles and its form rest to no small extent on the communal movement which reached London from the continent in the 12th century.

It is this complex interaction that has been at the core of European and British political cultures for centuries. Britain has given up its membership in the EU, but it remains to be seen how it will engage with European political culture post-EU. If it turns its back on it, the decision made on the 23 June would turn out to be one of the most momentous in the country’s whole history, and it would impoverish Europe for ever.

Dr Juan Paez-Farrell, Lecturer in Economics:

The decision by the UK electorate to leave the European Union will now herald a long period of economic uncertainty. The fact that both the pound and the FTSE 100 have fallen dramatically suggests that the decision to leave will harm Britain's economic future.

At least in the short term, the main impact will be driven by firms postponing investment decisions until there is greater clarity as to when the UK will decide to trigger Article 50, giving us two years after which the country will be outside the EU.

Much will depend on what arrangements the UK government can agree with the rest of the EU regarding trade and the free market but if the new government decided to cut loose our economic ties to the rest of Europe we can expect substantial costs.

Jason Heyes, Professor of Employment Relations:

'The decision to leave the EU might have substantial consequences for employment rights in the UK. Many individual employment rights are underpinned by European directives. Leading 'Brexit' campaigners have spoken of freeing employers from 'bureaucracy' supposedly imposed by BrusselProfessor Jason Heyess, while some of those who campaigned for the UK to remain in the EU fear a 'bonfire' of employment rights. What will happen in practice will depend on the nature of the UK's future relationship with the EU and domestic politics. The possibilities range from a continuation of all employment rights derived from EU directives to a wholesale stripping away of these rights.

A Conservative government with the freedom to implement changes would be likely to amend or repeal legislation relating to working time and agency workers. Rights relating to transfers of undertakings and information and consultation would also be in the firing line. Furthermore, it seems that the European Court of Justice will no longer have jurisdiction over UK courts and its future decisions will not be binding. There will be uncertainty about how domestic courts will interpret any EU-derived rights that are retained once the UK leaves the EU'.

Read more about Why Brexit would be bad for employment rights

Dr Jay Cullen, Lecturer in Banking and Finance Law:

The short-term likely initial consequences of Brexit are extreme pressure on Sterling, exacerbated by the fact that financial markets had mostly priced in a ‘Remain’ vote. There will in all likelihood be concerted falls in European stock markets. In terms of the UK, FTSE-100 companies have most of their debt denominated in dollars so wider effects might be somewhat containable but bank shares will be hit particularly hard.

Dr Jay CullenBanks are better capitalised than in 2008 and are therefore in a stronger position to weather any turbulence, and the Bank of England has promised to do what it can to support markets, providing £250bn of emergency liquidity support this morning. However with interest rates at record lows it has little room to assist with monetary policy. The Bank of England has currency swap lines in place with other major central banks to allow it to provide foreign currencies to banks if funding markets dry up. However, currency markets will be volatile for some time thanks to uncertainty about the UK outlook. The UK’s credit rating looks likely to be downgraded, making government borrowing more expensive. Investors are likely to pull capital from UK markets, which may lead to job losses and recession.

The likely medium-term consequences are less certain. Much will depend on the attitude the EU takes to negotiations, and whether the UK wishes to join the EEA, assuming it is permitted to do so. The possible loss of the EU “passport” rights for financial institutions to access EU markets and offer services is likely to add to costs.

In terms of financial regulation, extricating the UK from the huge number of Regulations and Directives will be extremely challenging and add to legal and economic uncertainty, which may contribute to further financial turbulence, which will have a negative effect on the banking sector. Many key financial regulations are derived from Brussels and ensuring a smooth transition to operating under UK law will be challenging. If the UK wishes to maintain business with the EU, it will still be bound by many of its laws and regulations, despite having no influence on how they are drawn up. On the other hand, the City might be glad that it is no longer bound by some of the EU’s more onerous regulations; for example, the EU bankers’ bonus cap, which the City opposed, or the proposed European Financial Transactions Tax. It is likely is that London will preserve its pre-eminent status as one of the world’s most important financial centres, thanks to its laws, its infrastructure, its institutions and its geography.

The long-term consequences are simply unknowable, particularly until the radical political, legal and administrative uncertainties which characterise the current situation are resolved. As Keynes said, the only certainty is that “in the long-run, we’re all dead.”

Professor Matthew Flinders, Director of the Sir Bernard Crick Centre for the Public Understanding of Politics:

The UK’s EU Referendum was not a triumph for democracy. Democracy was deceived, the public duped, the facts and expert analysis simply rejected as ‘the politics of fear’. The referendum was an orchestrated collection of soundbites that simply got louder and more populist as time went on. It created heat but not light, smoke not fire and noise but certainly no music. The problem for British democracy now is that it is almost guaranteed to fail – democracy will fail, public trust in politicians will fall further, ant-politics will increase - because the public’s expectations of what Brexit will deliver for the country are (and always were) unrealistic.

Tim Vorley, Professor of Entrepreneurship:

Professor Tim VorleyFor the post-brexit government promoting innovation will be a critical if the UK is to remain a global leader. The brexit will see the UK as an outsider of Horizon 2020 – the €80bn collaborative EU Research and Innovation programme. This means investing in the research base and supporting innovation though universities, catapults and businesses is now more critical than ever. Arguably this sees the role of UKRI and Innovate UK become particularly critical to the future country's innovation system.

With a plethora of difficult decisions to be made, funding for science and innovation need to be one area that is given special consideration. If support for science and innovation waivers with it will the nation's competitiveness. Indeed enhancing the strength of the research base and fostering innovation will now become more important as we seek to forge our position post referendum. With the UK a net beneficiary of research and invariant funding in the EU, the stakes are big.

For Boris, Farage and the leave campaign the coming months will demand the need for detail about the future of science and innovation. For many organisations currently benefiting from their participation in EU Research and Innovation programmes there is a need for stability and continuity. The level of investment required to keep pace with other world leading nations will demand a major commitment and an even more sizeable investment. The UK's network of leading academics and innovators is precisely why we are well placed - the challenge now is to ensure that brexit does not undermine this strength.

Dr Owen Parker, Senior Lecturer in European Politics:

The challenge in the UK in the aftermath of this vote will initially be to contain the nationalist — and in some cases outright xenophobic and racist — forces that the referendum campaign has unleashed and to some degree legitimised. With respect to addressing the underlying concerns of these particular groups that will, in particular, require some serious soul searching in the divided Labour party as to its future direction of travel and, ultimately, its willingness and ability to challenge a neoliberal agenda. Those politicians who persuaded these groups to back Brexit are unlikely at the best of times to support higher public spending or regional investment and certainly not if the widely predicted economic downturn materialises.

Dr Dina Gusejnova, Lecturer in Modern History:

Dina Gusejnova

We should take real stock of the nature of pro-Europe beliefs in Britain in their historical evolution. The falling apart of the European project has much to do with the emotional void emerging as a result of the end of the Cold War. Instead of the fear of revolution, however, we have now got the fear of immigration. This is not new: immigration had spiked around the time of the Second World War.

What is new, however, is that there is no sense of charitable compassion towards the refugees because the wars from which they flee, while having been conducted in the name of Europeans, have not enjoyed the same kind of support as Europe's last 'just war', the Second World War.

There are two significant factors which affected the vote: geographic location and education. The North of England has a population which has had a significantly lower level of access to higher education. Paradoxically, this group has been the most likely to follow the tunes of a 'Ratcatcher of Hameln' like Boris Johnson, the Eton-educated cosmopolitan masquerading as a little Englander. What this referendum has made clear yet again is that education will never, ever make a difference in the world unless it is matched by a real commitment to humanist values among the widest possible population groups: humanism, not in the sense of learning Latin phrases by heart or reciting your Shakespeare in front of Number 10. But ideally, something to do with humans and humanity.

Yes, the EU is in crisis, and yes, this crisis is felt in very different regions of Europe, including Greece and Britain. Why should the EU crisis look different from Britain as opposed to Greece?

The case of Britain is entirely different. Here, we have a former coloniser taking up the rhetoric of the colonised to mobilise the basest kinds of racism in order to sort out an internal squabble of the Conservative party. The effects of this irresponsible action will be a weakened European Union, a return to the reactionary rhetoric of national sovereignty, and the strengthened role of the United States and China as the remaining world superpowers.

Sumon Bhaumik, Professor of Accounting and Financial Management:

Sumon BhaumikIf the sterling is allowed to continue on its path of sharp depreciation, this may fuel inflation without necessarily boosting exports, given the rise in cost of imported inputs. If, on the other hand, the Bank of England has to pre-emptively manage the depreciation of the currency without support from the market, it may have little choice but to raise interest rates in an environment of weak economic recovery and uncertainty.

In the medium term, the concern would be about the renegotiation of trade (and other) treaties with the EU, and simultaneously rewriting UK laws and regulations and aligning them with those of the EU. As has been widely argued, in order to get the kind of deals that Switzerland and Norway have with the EU, contributions to EU budget and relatively free mobility of labour may have to be accepted.

At the same time, the political economy in the UK in the post-Brexit world would make it very difficult for the new UK government to cross some of these red lines. Membership of the EEA, may have to be carefully negotiated to ensure that the UK does not fall afoul of rules concerning rules of origin etc.

Overall, however, there would inevitably be some increase in what economists call transactions cost - the cost of negotiating, managing and enforcing contracts that underpin business - and there is likely to be (adverse) economic consequence of such rise in transactions cost.

In the long run, however, the challenge would be to reconcile the need to be a small but competitive economy with economic inequality and what development economists call entitlement failure among a large section of the UK population, one that may have contributed most to the Brexit referendum outcome. This, indeed, may be the biggest of the three challenges and the ability of politicians and governments to strike a balance is likely to have a much more profound impact on the longer term economic future of the UK than macroeconomic issues and trade negotiations.

James Wilsdon, Professor of Research Policy:

James Wilsdon 300This is a distressing outcome for UK universities and research, because of the myriad uncertainties it creates for research funding, student and researcher mobility and our place in all sorts of European collaborative networks. But also because of the disconnection that many of us feel today from the society and communities that we are part of - given that an overwhelming majority of those studying and working in our universities voted to Remain.

As it enters Brexit negotiations, the UK government will need to take seriously the implications for UK universities and research. In particular, the nature and structure of access to European research funding, and how we approach freedom of movement.

Those who ran the Leave campaign also need to deliver on their pledge to make up any shortfall in funding that results from Brexit, given that we are a net beneficiary of EU research funding. Between 2007 and 2013, the UK received around €3.4 billion more in research funding than it paid into the EU. With domestic funding for research more or less flatlining, Europe’s contribution is vital to the health and continued excellence of our research base.

Scott Lavery, Research Fellow in the Sheffield Political Economy Research Institute:

Scott Lavery

The ‘Leave’ victory was delivered by larger than expected turnouts and victory margins in generally poorer areas of England. In particular, working class communities in the North East and East of England, the Midlands and Wales came out in large numbers to vote for Brexit. The greatest irony of the Leave vote, however, is that it is these poorer regions and working class communities which are most likely to be adversely affected by the economic consequences which will now follow the referendum result.

The value of Sterling has already fallen to a 30 year low. In this situation, there is a danger of further capital flight, as investors withdraw their money from the UK economy in the face of economic uncertainty. This means that over the coming weeks and months the Bank of England may come under pressure to instigate an interest rates rise to protect the value of Sterling. In the context of an already fragile economic recovery, this could potentially pitch the UK economy back into a recession and put a further strain on already highly indebted British households.

This, in combination with possible further rounds of public spending cuts from the Conservative government to stabilise the value of the pound, could have a devastating impact on the poorer UK’s regions.

In addition, and as outlined in SPERI research prior to the referendum, poorer regions receive far more in structural funds from the EU than richer regions in the UK. Wales and Cornwall, for example, are net recipients of structural funds which have helped fund jobs growth, investment and business activity in these areas. Regions in the North of England have also been more reliant on the EU for export markets in goods than the national average. The Leave vote puts both of these links between poorer regions and the EU into jeopardy, with potentially very damaging consequences.

Dr Stefanie Pukallus, Centre for Freedom of the Media (CFOM):

As a result of Brexit and moving forward, Europe will undoubtedly move away from neoliberal austerity measures of the kind imposed on Greece and move towards what Matteo Renzi, Italian Prime Minister, called today a 'more humane and just Europe'. The irony here is that rather than threatening European integration Brexit may be the action that has saved Europe from internal divisions caused by gaps in wealth, employment and equality.

Brexit may have jolted the European elite into returning to the European founding fathers' civil ambitions of the 1950s and 1960s. The result of returning to these will be the enhanced standing within the European Union of all European citizens replete with extensive rights and opportunities.

Simon Bulmer, Professor of European Politics:

The referendum outcome administers a shock to British and European politics alike. Seat belts may need to be fastened.

For Britain it creates economic uncertainty over the immediate and medium terms during the exit negotiations. In addition there is the near-term political uncertainty associated with the resignation of David Cameron. The significant ‘Leave’ vote in Labour’s former industrial heartlands could signal the party’s vulnerability to a collapse in support along the lines in Scotland. The Remain votes in London, Scotland and Northern Ireland—all of which have devolved powers—could present strains to the integrity of the UK itself.

The challenges for specific policies will be great. For instance, is the northern powerhouse embedded enough as government policy if leadership roles in the Conservative Party change significantly? How will student mobility and research funding work after Brexit? Finally, the tone of campaign politics was irrational on both sides of the campaign and a threat to evidence-based policy.

In European politics the EU will have to contend with Brexit negotiations while contending already with the divisions caused by the Eurozone and refugee crises. There may well be contagion effects, particularly if the French National Front seeks a referendum on membership in France. In central European states, whose EU membership the UK promoted, there will be considerable regret at the loss of an important ally. Germany’s reluctant leadership role in the EU will be heightened. The French and German elections in 2017 are going to be especially important, with the future of the EU itself at stake.

Dr Owen Parker, Senior Lecturer in Politics:

While the demographics of the vote are interesting and important in a variety of ways (for instance on age) a particularly significant feature of the result was the decision by a sizeable number of working class traditional Labour voters — particularly in post-industrial parts of the country such as south Wales and the north of England — to back a leave campaign run by the most unnatural of allies: the Conservatives of Johnson and Gove and Farage’s UKIP. During one of many victory speeches to the media this morning (24th June) Farage explicitly presented himself as a champion of precisely such groups.

Shifts from an ideological 'left-right' to a nationalist 'us-them’ politics have been key to the results in such areas. These are shifts that have long been underway and were clearly signalled in the context of recent local elections and the 2014 European Parliament elections, which both saw gains for UKIP. The puzzle here is that while leaving the EU will, according to a majority of expert opinion, have particularly adverse consequences for these groups and regions (see recent SPERI reports), they nevertheless voted to leave. By its very nature the referendum forced these groups to channel their legitimate concerns — relating to post-industrial decline, limited employment prospects and eroded welfare settlements — into a simple pro or anti EU binary. Longstanding evidence suggests that such groups feel let down by the status quo of mainstream political parties and an associated elite expert class that has failed to engage with or address their struggles and predicament. On one level then, this was seen as a chance to give the mainstream a bloody nose. Populist parties such as UKIP have entered the fertile territory left by the mainstream to very effectively present the key problem as ‘Europe' — and particularly the ‘uncontrollable’ immigration tied to EU membership — even though the proximate causes of these legitimate concerns are in fact domestic.

The challenge in the UK in the aftermath of this vote will initially be to contain the nationalist — and in some cases outright xenophobic and racist — forces that the referendum campaign has unleashed and to some degree legitimised. With respect to addressing the underlying concerns of these particular groups that will, in particular, require some serious soul searching in the divided Labour party as to its future direction of travel and, ultimately, its willingness and ability to challenge a neoliberal agenda. Those politicians who persuaded these groups to back Brexit are unlikely at the best of times to support higher public spending or regional investment and certainly not if the widely predicted economic downturn materialises.

Views posted in comment articles are those of the author(s) and do not necessarily reflect the opinion of the University of Sheffield.