Insights into the EU Referendum

BREXIT ANALYSIS – PRESENTED BY EDELMAN
EU REFERENDUM
23 JUNE 2016
MMO
O N NT HTH
S S
DAYS
DAYS
FINAL RESULT
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 Myners is the Chairman of Edelman
in the UK, providing senior strategic counsel.
OVERVIEW
The UK voted to leave the EU by a margin of
51.9% to 48.1%. Scotland, London and
Northern Ireland were the only regions of the
UK to vote to remain in the EU.
The dynamics of the result suggest one of the
decisive factors was the support of many traditional
Labour voters for leaving the EU – indeed, the Leave
camp swept all of Labour’s traditional strongholds in
the North of England, Midlands and Wales. Mirroring
the General Election result, the Remain campaign
was only successful in liberal, metropolitan parts of
the UK, especially London and affluent parts of its
commuter belt, and in Scotland.
Again, much like in the General Election, the result
demonstrates that campaigns which are reliant on
younger voters are likely to face defeat. Turnout, at
72.2% was much higher than anticipated by many,
but it was not driven by a surge in younger voters –
but instead driven by higher than usual turnout in
many traditional Labour areas, and by a huge turnout
in rural communities. The referendum is further
evidence for the tendency that contrary to
widespread assumptions higher turnout boosts the
vote for the right.
The result is also vindication for the strategy of the
Vote Leave campaign. While it was derided by some
commentators as a “core vote” strategy, their focus
on linking EU membership to concerns about
immigration, and their consistent messaging to “vote
leave, take control” proved that rather than being a
narrow strategy, it was simply a clear
and effective one. Again, the parallels
with the Conservative approach in
the 2015 General Election are clear.
Gurpreet Brar
Managing Director, Public Affairs
Insights into the EU Referendum
If you are interested in receiving further insights on Brexit and the EU Referendum, please contact
Gurpreet Brar on gurpreet.brar@edelman.com and 020 3047 2466 for further details
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK
THE LEADERSHIP RACE – Man Overboard
What a difference a day makes. Last night as
the final polls came in a subdued Nigel
Farage appeared to be getting his excuses in
early, conceding that Remain were likely to
“edge it”. Less than 12 hours later and the
country is reeling from its decision to leave
the European Union and the dramatic
resignation of the Prime Minister from the
steps of Downing Street.
So where does this all leave the Conservative Party
and the governance of our country for that matter?
David Cameron has announced that he and his
Cabinet will stay on and “steady the ship” until a new
leader is announced by Conservative Party Conference
in October. But make no mistake this is man overboard
and with it perhaps the modernising, One Nation
Conservative Party that was finally winning elections
and beginning to steal the centre ground from Labour.
So now the battle for the heart and soul of the
Conservative Party will commence as the
Parliamentary Party decides which two candidates to
put forward to its members. Having led the right of his
Party to victory over Europe, Boris Johnson now has a
better chance than ever to make it onto that ballot.
Behind closed doors, Cameronite
Conservatives will be scrambling to
coalesce around a candidate mighty
enough to take Boris down.
Emily Poole
Account Director, Public Affairs
THE (IMMEDIATE) POLICY AGENDA
It’s easy to forget, but just a few weeks ago
there was a Queen’s Speech – as it turns out,
David Cameron’s last. The Government’s
programme for the next year was set out. Is
the Speech now not worth the goatskin it
was printed on?
Mr Cameron did mention the Speech in his
pre-resignation statement this morning and said that
he would be taking forward the legislation announced
in it. There were some meaty proposals – not least
substantial reform of the prison service and
far-reaching measures on public health. But there must
now be a huge question mark as to whether any of it
can be delivered in practice.
David Cameron’s majority was thin even before this
vote, and his backbenchers restive. With his authority
shot to pieces and his Ministers manoeuvring in the
race to succeed him, the political energy required to
take forward controversial measures such as the sugar
tax (and indeed the wider Obesity Strategy) may simply
not be there.
Issues which unite Conservative MPs - measures on
the digital economy, for instance, or Trident renewal
– may still be able to be proceeded. But when it comes
to major decisions such as airport expansion, these will
be bound up closely with what comes next. Boris
Johnson has said that he could not be part of a
government which authorised Heathrow’s third runway;
Mr Cameron could take the decision now in advance of
a reshuffle, or delay it entirely and leave it as a hospital
pass for his successor.
The level of uncertainty is high, and the
inward focus of the political parties
means that we can expect the business
of government to slow to a painful crawl.
Saratha Rajeswaran
Associate Director, Public Affairs
BREXIT PROCESS & THE NEW MODEL FOR THE UK
The Prime Minister has stated that he will
leave his successor to enact Article 50, with
the process of the UK’s exit now including
the leadership race.
The process will include:
1. A new Prime Minister is elected, by Conservative
Party Conference
2. The new Prime Minister holds consultations with
business, the Bank of England, the Cabinet and other
relevant organisations to decide upon a preferred
future relationship with the EU
3. The UK government triggers Article 50 – either at the
end of this year or early in 2017
4. The European Commission seeks a mandate from
the European Council to undertake negotiations on UK
withdrawal from the EU – all other member states must
agree to guidelines for negotiation
5. The European Commission will then undertake
negotiations with the UK to agree its withdrawal from
the EU. Existing EU Treaties will remain in place
6. The withdrawal negotiations are subject to a 2 year
deadline (June or July 2018)
7. If an agreement has not been reached by this point,
the EU Member States must agree unanimously to
extend negotiations or the UK will immediately leave
the EU regardless of whether a replacement
relationship is in place.
8. If a deal is reached, it requires approval from the
European Council (by qualified majority: 20 out of 27
Member States) and the European Parliament.
The period between the election of a new Prime
Minister and the triggering of Article 50 will be critical in
determining the terms of the UK’s new relationship with
the EU that we will seek – and during this time,
business, trade unions and other organisations will be
expected to make clear their views regarding the best
future relationship with the EU.
The main options are:
Norway-EU agreement: gives significant, but not
total, access to the EU Single Market – in return,
the UK would be required to accept freedom of
movement, wide ranging EU obligations and
contribute to the EU budget
Swiss-EU agreement: close to the Norwegian
model but with only partial access to the Single
Market in goods and more limited access in
services. In return the agreement gives Switzerland
greater legislative freedom from the EU
Canada-EU agreement: a more detached
relationship with the EU, with significantly less
Single Market access than the Swiss model, but
free from obligations on free movement of people
and contributions to EU the budget
Turkey-EU agreement: a loose free trade
agreement with some sector-specific access to the
Single Market
World Trade Association membership: the default
fall-back option, marking a decisive
break from EU membership
Harry Spencer
Account Manager, Public Affairs
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK
What it means for labour
Labour’s support for Europe has always
waxed and waned, but at a time when it is
utterly divided on most other issues, it had
seemed broadly united behind Remain. In the
wake of Brexit, the fallout within the party will
be stark – and Jeremy Corbyn can expect to
take the brunt of the criticism.
Labour MPs may now be emboldened. The PLP is
famously reticent to move against its leaders and has
held back because of Corbyn’s mandate, but now all
bets are off. Letters are circulating and MPs will be
taking one another’s temperature for a coup.
Monday’s PLP meeting could see a motion of no
confidence or calls on Corbyn to quit.
Corbyn has never been a fan of the EU. His
comments during the campaign that he was “7,
7.5/10” for Remain and that he saw no limit on
immigration seemed almost calculated to give Leave
a boost. He seemed more interested in the Postal
Workers Directive than on making the European case.
Rob Newman
Senior Account Manager, Public Affairs
Conservative Leadership Contest Rules
Conservative leadership elections follow a
two-stage process. First MPs vote on a
number of candidates to determine the final
two candidates. Members of the
Conservative Party then vote for one of these
two candidates, with the winner becoming
the new Leader of the Conservative Party,
and in this case, Prime Minister.
When a contest is triggered, a deadline is set of 12pm
on a forthcoming Thursday for the Chief Whip to
receive nominations from MPs for candidates.
Candidates require the support of just two
Conservative MPs to be nominated.
Assuming that more than two people are nominated,
then Conservative MPs will vote for the preferred
candidates in a series of ballots, held every Tuesday
and Thursday after nominations close, until there are
only two candidates left. In each round, the candidate
with the fewest votes is eliminated, though others may
also drop out.
The Conservative Party’s membership then chooses
between these two MPs in a postal vote. The length of
time members have to respond to the postal ballot is
not strictly defined, but is usually substantial – a period
of 4-6 weeks is likely.
Given the Prime Minister indicated he would seek to
have a new Leader in place by the Conservative Party
Conference, it is likely the parliamentary phase of the
contest will take place before the
summer recess, with the postal ballot
in September.
Anthony Marlowe
Director, Public Affairs
REACTION
“I fought this campaign in the only way I know how, which is to
say directly and passionately what I think and feel, head, heart
and soul - I held nothing back…. The British people have made
a very clear decision to take a different path and as such I think
the country requires fresh leadership to take it in this direction.”
David Cameron, Prime Minister
“Dawn is breaking on an independent United Kingdom”
Nigel Farage MEP, Leader of UK Independence Party
“We are well prepared for this. The Treasury and the
Bank of England have engaged in extensive contingency
planning and the Chancellor and I have been in close
contact, including through the night and this morning.”
Mark Carney, Governor of The Bank of England
“The past years have been the most difficult ones in the
history of our union, but my father used to tell me: what
doesn’t kill you makes you stronger.”
Donald Tusk, President of the European Council
Insights into the EU Referendum
If you are interested in receiving further insights on Brexit and the EU Referendum, please contact
Gurpreet Brar on gurpreet.brar@edelman.com and 020 3047 2466 for further details
Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | 0203 047 2000 | @edelmanUK