On June 23, 2016, the United Kingdom held the Brexit referendum. The Brexit camp won with 51.9% of the votes. As one of the countries with the strongest economic strength in Europe, Brexit is undoubtedly a heavy blow to European integration. It has caused the European Union and European integration to face severe challenges in the three dimensions of economy, politics and society. The decision by Britain to leave the EU was a product of long-term historical factors that have existed for decades. The UK had never been a comfortable member of the European Union; it stood aside while European integration took place and only joined much later in 1973(Pisani-Ferryetal,2016)..
First, the economic challenge of Brexit for European integration. The Brexit will have the potential to slow the EU’s free trade process. On the one hand, the United Kingdom is a firm supporter of the trade investment agreement between the European Union and the United States and Japan. The Brexit of the United Kingdom will allow the EU to slow down the progress of free trade and bring about broad and lasting uncertain expectations for the European economy.On the other hand, Brexit will have an impact on the TTIP negotiations. If Europe and the United States successfully reach the TTIP, the two sides will build the world’s largest free trade zone, covering about 40% of global economic output and 50% of trade activity. However, due to the results of the UK referendum on the Brexit, the prospects of the TTIP negotiations have suddenly become bleak. Secondly, Brexit will further impact the financial supervision system that the EU is trying to build. As an important member of the European Union, the United Kingdom is an active advocate of opening up the financial sector and reforming financial supervision policies within the EU(Dhingra,2016). Its claim has played a positive role in enhancing the vitality of the EU financial industry. Brexit will undoubtedly have an impact on the confidence of EU investors and trigger a devaluation of the euro. The fall in the exchange rate of the Euro will in turn pose challenges to the ECB’s ongoing expansionary monetary policy. After the United Kingdom left the European Union, both the UK and the European Union’s financial institutions will be affected. London is the financial center of Europe. According to the EU’s current financial management system, banks of EU member states can conduct business independently. London’s banks can sell financial products and services to all EU member countries. The annual turnover of this one service could be up to 20 billion pounds, of which the EU achieved a fiscal service surplus of 16 billion pounds. After Brexit, EU member states could not provide a better financial services environment than London, such as banking facilities, financial laws, bank accounting, and financial advisory services. The UK banks also need to re-establish subsidiaries in EU member countries to conduct financial services within the EU. This will require not only additional financial support, but also a significant impact on their turnover.
Second, the political challenge of Brexit for European integration. The Brexit will impact the EU’s common security and defense policies. The EU’s common security and defense policy, economic and monetary union, and domestic and judicial cooperation constitute the three pillars of European integration. Moreover, of the EU member states, only Britain and France have nuclear weapons, the veto power of the UN Security Council, and large-scale overseas long-range military delivery capabilities. They have played an important role in the European defense integration process. At the end of the 1990s, when the EU’s common security and defense policy was officially launched, the UK had played a key role. Nowadays, the United Kingdom has chosen to leave the European Union and the EU has lost the British military power. Its overall defense capabilities will be even less affected in regional and international affairs. At the same time, because of the existence of special British-American relations, the United Kingdom has always been acting as a coordinator of relations between the EU and the United States. After Britain leaves the European Union, the EU will have to face the pressure of the United States on its foreign relations and its foreign policy will be forced to make adjustments. Britain’s Brexit exposed the institutional malady in the EU governance structure. The European Union, as the political and economic community with the highest degree of regional integration in the world today, has brought peace and prosperity to the European continent for more than 60 years. However, in recent years, under the impact of the economic crisis, debt crisis, and refugee crisis, the EU has been fighting each other, responding to miscalculations and exposing huge defects in its governance structure. At present, although the form of European integration has developed to a very high level, within the EU, the European Commission, the European Central Bank, and the European Court of Justice are often under the leadership of the technocrat. Such a governance structure coupled with complex and opaque decision-making procedures has prevented the EU from forming a unified power center. The European Union’ss decision-making mechanism is more like a network structure, connecting each other through various nodes, and the responsibility of decision makers, decision-making practices and policy areas are ambiguous. This kind of complicated professional governance structure that is separated from the people can only increase the sense of political alienation among people. The debt crisis in Europe has exacerbated this situation and has led to widespread doubts about the legitimacy of EU policymaking. British Brexit is largely due to people’s dissatisfaction with this governance structure.
In short, the Brexit has caused the EU to lose an important leading country. The EU’s military, diplomatic capabilities and overall international influence will all decline. Faced with this unprecedented challenge, the EU needs to undergo a long period of institutional adjustment before it can fully adapt. This will surely be a difficult one.
Third, the Social Challenges to European Integration. The Brexit will make the hope of establishing “an increasingly close alliance” in Europe after the Second World War disappear. This will further stimulate the suspicion of Europeanism within the EU, thus further weakening the sense of European identity and eroding the social basis of European integration. Brexit will further reduce European people’s European identity. Looking at the history of European integration for more than 60 years, despite the fact that countries can break the country’s borders and create a unified currency, it has never completed the transformation of identity and failed to create a true European identity. In 1973, the “European Declaration of Identity” gave European citizenship to citizens of European Union member states and tried to strengthen European identity in the process of integration through political participation. However, up to now, 90% of Europeans still insist on their national identity, or firmly place their national identity before European identity. Only 2% of people see themselves as complete Europeans(Hobolt 2016). After Brexit is accomplished, if the UK wants to retroactively apply restrictions on EU citizens living in their territory, the European Court of Justice (ECJ) can do nothing about it because it is no longer a member. In the current treaty, EU nationals who have been residents for at least five years are entitled to permanent residency. Brexit is not accomplishing productive measures for their citizens regarding its platform on EU migration(Mortera-Martinez & Springford, 2016). Also. Brexit may have the potential to stimulate the rest of the European Union to follow the example of the United Kingdom. From March 25 to April 8, 2016, the surveys conducted by the Yisuppo polling agencies in Belgium, France, Germany, Hungary, Italy, Poland, Spain, and Sweden showed that 45% of the respondents wanted to be able to hold a referendum as the one in Britain to decide whether they want to stay in EU, one-third of respondents said that if they have such an opportunity, they will choose to leave the EU. Following the announcement of the referendum on the Brexit vote, Marie Le Pen, leader of the French National Front of the extreme right-wing party, immediately called on Twitter to hold a similar referendum on “Brexit”. The “Brexit” voices in countries such as Sweden, the Netherlands, and Italy also rose. The new EU member states, such as Hungary, Slovakia and Poland, also show increasingly strong resistance to EU efforts to maintain certain key principles (such as supporting the independence of the judiciary). All kinds of extremist forces are based on the example of Brexit, and even advocate the dissolution of the EU. The risk that Brexit will stimulate Europe’s extremist forces and erode the social foundation of European integration, thus threatening the future of European integration, is visible. Therefore, Brexit may have a demonstration effect in more countries. Once a “domino effect” occurs in the next few years, the loss caused by European integration will be incalculable.
Brexit is a major change in the process of European integration and will have a profound impact on the pattern of the United Kingdom, the European Union and even the world. It exposes the drawbacks of the EU’s governance structure and differences that are difficult to bridge among member states on major issues. It is an unprecedented crisis in the process of European integration. However, looking at the history of the development of European integration, it is the times of crisis that have driven European integration to a higher goal. In fact, after the announcement of the results of the British referendum, the leaders of the other 27 member states of the European Union expressed their stance and called for greater solidarity and common response to this unprecedented crisis and challenge. In any case, the European Union, as a highly creative achievement of political civilization in human history, is a major advancement in the concept of human society governance and governance practices. The Brexit move will enable the European Union to further reflect on and improve its system design, implement effective reforms, and further promote the integrated business to proceed steadily.
Pisani-Ferry, Jean, Norbert Röttgen, André Sapir, Paul Tucker, Guntram B. Wolff “Europe after Brexit: A proposal for a continental partnership.” Policy Paper, 08/25/2016
Mortera-Martinez, Camino and Springford, John. (2016). Britain Will Struggle to Make EU
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Kierzenkowski, R., Pain, N., Rusticelli, E., & Zwart, S. (2016). The economic consequences of brexit. Oecd Economic Policy Papers.
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