"It's even more serious than economics because if you rob people of their identity, if you rob them of their democracy, then all they are left with is nationalism and violence. I can only hope and pray that the Euro project is destroyed by the markets before that"
With these words back in 2010 Nigel Farage described his opinion on the current situation of the European Union. These words and many other speeches of Mr. Farage and the UK Independence Party left the European Union and the United Kingdom in a very unstable situation.
The European Union has always been the symbol of political and economical integration and co-operation. The Union is founded on the values of respect for human dignity, liberty, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. The Union with the Schengen agreement has allowed the free movement of people and goods and services across Europe.
Nevertheless, during a warm midsummer night in Finland, the United Kingdom decided to vote for leaving the European Union in a referendum. The stock markets all over the world crashed and the dollar strenghed against the euro as suspected. The signs of danger are floating in the air. Currently I'm waiting for the reaction in the Helsinki Stock Exchange on Monday when it opens its doors for the first time after the referendum because of the Midsummer.
51,9% of the Brits voted for leaving the European union in a referendum and 48,1% voted against leaving. The referendum was unbelievable close, and the regional totals are illustrated in the figure below. The blue regions represents the votes for the membership and the red regions against the membership.
One of the major concerns of the referendum is that there have been lots of votes from people who actually don't know about the dilemma. As far as I have heard from my friends who currently study in Great-Britain, students and young people in the cities were definitely for the EU and the against votes have mostly come from older people from the countryside. Noticable is also that immediatly after the vote a lot of people in the UK started to google to "what is EU". After they had already voted.
The results of the referendum are disturbing and will cause a lot of uncertainty and instability. The first source of instability is that Northern-Ireland and Scotland were "for the EU" where Wales and England were against the EU. As we already know from history, Northern-Ireland with IRA has been for years against the United Kingdom and Scotland just recently voted for its independence. The EU-referendum doesn't just pose threat to the European Union, but also for the United Kingdom.
The European Union is facing a crisis like never before. The Greek debt crisis has been going on for years, Italy is in the edge of a similar debt crisis and the immigrant crisis is causing the rising levels of nationalism and extreme right governments in Europe. If one state wants to leave the Union, that tells from significant faults in the Union. The European Union now has a tough job to maintain its position as the ultimate representative of peace, co-operation and liberty.
Brexit is an example to other countries as well who might not be satisfied for the current politics of the EU. The Greek debt crisis has been one of the major sources of EU-criticism in Finland for example. The common man wants Finland's own currency back and wants the money to stay within the borders of the state which is currently in a economic slowdown. The countries in Europe have been almost demanding the resignation of Greece from the Union. Could Greece be next? Or someone else? Only time will show.
One of the major advantages for the UK is the pound. The pound has been strong against the euro and the dollar and the country has maintained its own independent monetary policy with its own central bank. It's one of the rare countries inside the EU that has still its own currency. In case of abandoning the EU, the economic situation in UK might remain relatively stable because of this. But if a country with euro as its currency, for example Greece, the costs of resignation will be much, much more devastating. The country would have to create its own currency from scratch and would face even bigger problems trying to resolve their debt for the Union. United Kingdom has the financial strength to survive in this case.
My personal belief is that the abandoning wont happen in a 2 years or so. The problem most likely will be pushed for the next government to handle. Because the vote was so close, there is no guarantee that the Brexit would 100 % still happen. However, the results of the referendum still tell from the current state of the European Union; the Union is facing significant problems and the members are very unsatisfied. Something needs to be done and needs to be done fast.
Back in my economics-lessons in 2010, I stated that the European Union will face dissolution within 10 years. We will see if I turned out to be right, but I really wish I was wrong.
Text: SW
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