There has long been hostility towards the European Union in the United Kingdom, as most recently notable in the push by London's mayor for Great Britain to exit. The average U.K. resident has never fully embraced the notion that Britain is part of Europe, and there has been ambivalence regarding many of the demands made by the EU. The refusal to join the eurozone currency system is just one of the higher profile differences of opinion
There are many in the conservative and labor parties that want Britain to pull out of the EU altogether—the "Brexit" as opposed to the "Grexit," the often-rumored Greek withdrawal that never came to fruition. There will be an emotionally charged referendum on continued membership this June, and now the EU is making a sort of final offer to the U.K. regarding what it will be willing to do to keep the country involved.
The EU would like to see the British remain, but there are clear limits to how accommodating the rest of Europe will be. Demands have focused mostly on the rules and regulations that come from Brussels. The British chafe at many of these and resent the need to adhere to them. The EU is not ready to exempt the U.K. from the majority of these. The latest statements from the EU suggest that a final offer is going to be made and, if the U.K. decides that it wants to pull out, no further negotiations will take place.
It seems the Europeans have tired of this drama and want a definitive end. The June decision could well be final and, if the British decide to execute the Brexit, the split will be considered permanent. Both Germany and France have pushed hard for an end to the drama and expect the British to make a definitive choice. The two states acknowledge the importance of the U.K. but do not believe the EU will be weakened as would be U.K. Analysts have asserted the British have far more to lose than gain from a Brexit, but emotions run high on issues such as these. Either way, volatility in some key commercial markets will almost certain follow an exit.
- Chris Kuehl, Ph.D., NACM economist and co-founder of Armada Corporate Intelligence