In World Economy News 29/06/2016
The stunning outcome of last week’s U.K. referendum has unleashed waves of doubt about what happens next. Here’s a list of the latest questions doing the rounds:
Can the result somehow be overturned?
This comes up again and again. In short, it’s possible, but unlikely. The referendum is non-binding, so the next prime minister could just choose to ignore it. If there’s a snap election, a political party could promise to call a new referendum. Scotland could also make things difficult.
Still, it would be extremely difficult to ignore the views of the 17.4 million people who voted to leave. We delve into this issue in more detail here and here.
Could the U.K. parliament veto the referendum?
In theory, yes. Human rights lawyer Geoffrey Robertson argues in this article that parliamentary assent is needed to repeal the 1972 legislation that took the U.K. into the EU. So lawmakers could override the public will by refusing to remove that law from the statute books.
Others aren’t so sure. Raoul Ruparel of the Open Europe think tank says that the legislative body can certainly apply political pressure on the government. But once Article 50 of the Lisbon Treaty is triggered, Britain would have to leave the EU after two years, regardless of what parliament does.
And the question remains as to whether lawmakers would risk angering voters by blocking the referendum. Especially as it was backed by supporters of both major political parties.
What have we learned about the government’s Brexit plans?
We got a few bits and pieces in the past 24 hours. A new EU unit will be set up in government to start doing the groundwork. It will comprise of officials from the Treasury, the Cabinet Office, the Business Department and the Foreign Office. Conservative lawmaker Oliver Letwin, who heads the Cabinet Office, will ensure all points of view across the political spectrum are fed into the process.
Boris Johnson, the favorite to succeed Cameron as prime minister, wrote in an op-edthat there will continue to be access to Europe’s single market and EU citizens living in the U.K. He disclosed almost no specifics.
Ultimately we are no closer to knowing what the U.K.’s relationship with the world’s biggest trading bloc will look like when the secession is completed.
When will we have a new prime minister?
With stocks plunging and the pound hitting new lows, the Conservative Party’s grandees today said a new leader will be elected by Sept. 2. That’s nearly a month earlier than originally planned by Cameron.
Just how bad could the U.K. recession be?
Anecdotal evidence suggests that the result is already spreading a chill through the economy. Property transactions are being canceled, Easyjet Plc lost nearly a quarter of its value Monday after saying the result will hurt business for the rest of the summer and Airbus Group SE said it’s reviewing its investment strategy in Britain. Nomura Holdings Inc. estimates that the economy could contract almost 2 percent from peak to trough. That compares with a 6 percent slump during the financial crisis of 2008-2009.
Why does the Labour Party crisis matter if it’s not in power?
With the country mired in its biggest political crisis in decades, the opposition matters because it will push the government on its weak spots and can force concessions on issues such as immigration and market access. Should Cameron’s successor call an election in coming months, Labour will need to clarify its position on Brexit as its leader could be forming the next government.
What is the ‘Shadow Cabinet’ anyway?
Essentially, it’s the Labour Party’s government-in-waiting. Until Sunday, it consisted of 31 people, each with the task of holding a particular government minister to account. With criticism of Corbyn’s leadership style mounting an unprecedented revolt is underway. Since Sunday, 18 members have quit and at least 40 lawmakers have left his wider team.
So will Corbyn quit?
Probably not. He was elected just nine months ago by almost 60 percent of the party membership. He is still popular with them and hence difficult to dislodge. The problem for Labour’s plotters is that the base was swollen by an influx of new left-wing members when membership rules were changed last year. Corbyn, who tweeted on June 23 that he voted “Remain,” has said he intends to stand if a leadership vote is triggered.
Source: Bloomberg
