The United Kingdom faces a new chapter in its relationship with the world following yesterday’s historic vote. When judging what this new relationship will look like, it is prudent to take stock of what we know at this stage, and what too are the ‘known unknowns’.
So what do we know? We know that the country, by a small majority, has voted to exit the European Union and that the decision is deeply divided across the nation. Indeed, the split in sentiment defies all established political conventions. England and Wales, excluding London, are strongly in favour of today’s final outcome. Scotland and Northern Ireland, deeply opposed. The potential for this outcome to further polarise the nation will be one of the most important considerations for the new Prime Minister.
Speaking of which, another thing we know: despite promising to stay on, David Cameron has announced he plans for a new Prime Minister to be in place by the Party Conference in October. And we know who the frontrunners for this race are, with Boris Johnson and Theresa May leading the odds. We also know that the Conservative Party has a history of electing the ‘underdog’ in its leadership races, but also that it has never conducted one in such peculiar circumstances.
And finally, one of the last important things we know is how the markets will react. Despite fluctuations, the overarching trend will be a reduction in international investment resulting in a slowing of economic growth, pushing the new Government to reassess its fiscal objectives when monetary policy is at the limits of what is prudent and sensible.
Moving, perhaps more positively, to the most significant ‘known unknowns’. We do not know how the rest of Europe and the EU will react to today’s decision. While the EU may wish to demonstrate how uncomfortable leaving its membership can be for nation states, it may also wish to use the vote to revisit its own purpose and to reflect on some of the causes of the UK’s decision. This may make a better European Union than the one Britain has decided to leave, one which is more acceptable for its increasingly concerned members.
We also do not know how Parliament will respond to today’s decision. We know that the majority of MPs support continued membership, but that the new Prime Minister will almost certainly be elected on a Eurosceptic platform. This could present an interesting democratic tension, and one which may require a redefining of the debate if we, as a country, are to move forward.
Lord Paul Myners is the Chairman of Edelman in the UK, providing senior strategic counsel. He spent most of his professional career in fund management with N.M. Rothschild & Sons and Gartmore before chairing a number of major companies, including Guardian Media Group, Marks & Spencer and Land Securities. He has also experienced frontline politics, serving as City Minister in the Labour Government between 2008 and 2010. He was a trusted advisor to Gordon Brown over many years.
Edelman has prepared a full briefing on the result of the EU Referendum, to read it please click here or see below.
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