Brexit

The United Kingdom has voted to leave the European Union.  Results from the referendum on membership put the leave side at 52% and remain at 48%.  Turnout was 72% – the highest in a UK election since 1992.  Wales and England (outside London and the South East) were in favour of exit, whilst Scotland, N. Ireland and the Capital were in favour of staying.

The initial outcome is likely to be uncertainty.  The Pound has already slumped on fears of what happens next.  Against the Dollar it has slumped by 10% to £1 = $1.35; its lowest level since 1985.  Against the Euro, Sterling has moved rather less – indicating Brexit is as much an issue for the EU as it is for the UK.  At the time of writing £1 = €1.24 (or €1 = 81p).  Gold is up and stockmarkets are sharply down.  Paradoxically, the weakening of the Pound will be good news for UK farming – at least in the short-term.

There is then the question  of what happens next.  The referendum is only an advisory vote, but it seems inconceivable that the UK Government would ignore it.  There has been some talk of the EU offering a ‘better deal’ to the UK to tempt it to stay in, but, again, this seems highly unlikely.  It will therefore be up to the British Government to start the process of formal exit.  This is done by triggering Article 50 of the Lisbon Treaty which sets in motion negotiations for exit.  Once this is done, the UK could only reverse its decision to leave the EU if all other EU Member States unanimously agreed to it.  The Article 50 process is meant to take two years but can be extended by agreement of all parties (or, indeed, shortened). 

There is a school of thought that article 50 will not be invoked straight away.  There will have to be a Conservative leadership election and perhaps even a General Election first.  Indeed, some are suggesting there should be a period of informal negotiations before the formal declaration is made.  These negotiations are likely to be very difficult.  The level of acrimony between the parties will be high.  As we have said before, the EU will not want to offer the UK a particularly good deal, such as in the area of trade, in case it encourages others to leave the Union.  The European Parliament has the power to veto any agreement and the EU politicians are unlikely to be favourable to those that have abandoned the European ‘project’.  On the UK side, Parliament has to agree to any new treaty.  The majority of MPs are firmly pro-Europe, and many have said they will block any deal that does not allow UK access to the Single Market (even if this requires free movement of labour and EU legislation to be retained).  All very difficult.  It may be 2020 before ‘Brexit’ actually occurs.  Negotiations on some aspects of UK/EU relations will almost certainly continue after the formal Brexit date.

Until such point as we actually leave, we remain part of the EU.  Therefore, in the short-term, farmers will continue to be eligible for the BPS, and we can trade our agricultural goods freely in the Single Market.  But attention will inevitably shift over the coming months and years to what comes next.  The UK Government will have to start thinking about what is going to replace the Common Agricultural Policy.

Added to this will be constitutional upheaval in the UK.  Scotland may well push for another independence referendum.  The situation between Northern and Southern Ireland will be made far more complex.

This is undoubtedly a generation-defining moment.  After ten weeks of campaigning which was uninspiring, un-enlightening and, at times, unedifying, the British people have spoken.  For better or worse, things may never be quite the same again.