Friday 24 June 2016 – Jeremy Corbyn’s leadership on the line and other early consequences of the Brexit vote

LABOUR LEADERSHIP

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The Labour party and its leader, Jeremy Corbyn, have come under fire for their lacklustre Remain campaign in the European Union referendum vote. Corbyn (above) has often called for Britain to withdraw from the EU and its predecessors, but as leader of his party he has campaigned for the UK to stay in the Union. However, many have felt he was half-hearted in his calls for Labour voters to unite behind Remain. Dame Margaret Hodge, who along with Ann Coffey MP have tabled a vote of no-confidence in Corbyn, said of Corbyn that the referendum had been a “test of leadership” – a test he had “failed”.  As a consequence, as Margaret Hodge said, Labour voters had not gotten a clear message. As a result of this Labour voters in their droves throughout the country – and most notably  in their northern heartlands – have voted with the Leave campaign.

 

Former Shadow Chancellor Chris Leslie also echoed the theme of failures in Labour’s campaign and said that he would need “an awful lot of persuading to have confidence in Jeremy’s leadership into a general election.” Former Labour minister Ben Bradshaw was one MP who said he would support the no confidence motion. Although the motion has no formal constitutional force, it calls for a discussion on the subject at the next Parliamentary Labour Party (PLP) meeting next week. It is then up to the chair of the PLP whether it is debated. If that happens a secret ballot will be held the next day.  If Jeremy Corbyn loses a vote he may find his position untenable.

 

Jeremy Corbyn was elected last year by a massive vote, with huge grassroots support, that shocked the Labour party, but his election was not  supported by many Labour MPs.  Many have been waiting for a chance to act and this may prove the moment when Corbyn is ousted. This would be sad I feel for the Labour party and the country. Jeremy Corbyn’s socialist agenda may go against the grain of British politics for the last few decades, but it has massive appeal among Labour supporters who have been disillusioned by the Tony Blair and Gordon Brown years. It seems that a leaked briefing note from the Labour leadership suggested that Labour MPs should argue  that Corbyn is well-placed to re-unite the country after the Brexit vote because he understood why many people had voted to leave. It seems unlikely that many Labour MPs will go along with that suggestion.

 

THE FINANCIAL MARKETS REACTION

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Another, more immediate, consequence of the Bexit vote has been the fall of the value of the Pound against the Dollar. According to Brian Madderson, who chairs the Petrol Retailers Association, this could cause a rise in the price of petrol and diesel by 2p-3p. This is because wholesale fuel prices are quoted in Dollars. The rises could happen as soon as this weekend. The AA agreed, with a note of optimism: “Assuming that current market conditions persist over the next 10 to 14 days, the price of petrol at some fuel stations might be expected to rise.” However, as some suppliers have anticipated the fall in currency value they may have done enough to compensate for the falls and thus  delay any increases – especially if the Pound strengthens. Additionally, any weakening in oil price would also help drivers.

 

Elsewhere in the financial markets, the Dow Jones industrial average has dropped by 460 points (2.6%) and the bank Morgan Stanley is saying that it has already started moving 2000 of its Euro-related banking staff from London to Dublin and Frankfurt so that it can be in the EU passport system that allows “banks to offer financial services in all countries in the EU without having to establish a permanent base in that member state.”  This doesn’t bode well for other London-based banks who may follow suit.  Stock markets around Europe have seen double-digit declines with banks and house-builders among the biggest losers on the FTSE 100. United States banks on Wall Street are suffering too, with Citigroup 8% lower, Goldman Sachs and Wells Fargo both 5% down and Bank of America 5.4%. These come despite the US Federal Reserve trying to calm global financial markets – “The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the US economy.” Here in Europe, the bank Santander is almost 20% down and Barclays by 16%.

 

VOTING DEMOGRAPHICS

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The division of the vote in the referendum is highlighting the vast differences of support for remaining in the EU in different age groups. According to YouGov, 75% of 18-24 year-olds voted to remain, compared to 56% of 25-49 year-olds, 44% of 50-64 year-olds and only 39% of people over 65. The fact that 16- and 17-year-olds weren’t allowed to vote in the referendum suggests that their vote might have made a significant difference had they been enfranchised.  The demographic differences are stark and the reality is that the younger generations who largely wished to stay part of the EU will now have to face the consequences of Brexit for much longer than the generations that voted largely to leave.  The last six years of austerity have hit the youngest the hardest while the older generation who have reaped the benefits of pre-austerity booms have been largely protected from the effects of austerity. These demographic voting patterns will only alienate the younger generation even more as the older generation have taken them out of Europe.

 

IRELAND AND THE PEACE PROCESS

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In Ireland, credit rating agencies are suggesting that that the Republic of Ireland will be the EU country most exposed to the consequences of Brexit. Like others, the Irish Government were preparing: “Today’s result marks the beginning of a new phase of negotiated withdrawal – one that is expected to take place over at least two years and possibly longer. Business can continue to trade as normal and people can continue to travel as normal between Ireland and the UK, including Northern Ireland. In the meantime, the government has adopted an initial Contingency Framework to map out the key issues that will be most important to Ireland in the coming weeks and months. This will be a iterative process as issues emerge and recede in the course of negotiations.” 

 

The Irish Times today was reporting on the road ahead for the Republic and for its relationship with the North and with the rest of the UK.  It spoke of how Brexit will affect the Peace Process in Northern Ireland – “Central to the Northern Ireland peace settlement was a slow but inexorable process of making the border less important. Now it is about to get more important. That may not immediately threaten the peace process, but it certainly requires a resetting of the tri-partite relationships between Ireland, Britain and the North.”  (article)

 

PASSPORTS POST-BREXIT

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I guess people haven’t given much thought when voting to Leave the EU that freedom of movement across Europe has been immensely important to the people of the UK. Some may bemoan the influx of immigrants from elsewhere in Europe, but as part of the EU citizens of the UK have enjoyed a  guaranteed right to move across Europe and to live and work in any other EU state. This is about to change and the consequences may be profound – not only on individual’s ability to travel and live in Europe, but on the travel industry and many other industries that rely on free movement of labour.  The Liverpool Echo today was answering people’s concerns that they will need a new passport to visit Ireland. Liverpool, of course, has a large Irish-descent population. It is interesting to note that Liverpool and the neighbouring Wirral were two of very few English regions who went against the trend and voted by a healthy majority to remain in the EU. According to the Echo,  it seems that current EU passports will remain valid until expiry, but then you will need a new non-EU passport. Confusion, however, is still in the air as no EU member state has ever left the EU and the passport situation will undoubtedly be part of the withdrawal negotiations. (article) In the meantime, hundreds of thousands of British people living in Spain and elsewhere have a tense wait to see what will happen when we leave the EU and the borders come up between ourselves and the rest of the EU.

 

THE EFFECT ON THE EUROPEAN UNION AND THE EUROPEAN CONVENTION ON HUMAN RIGHTS

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The long-term effects of Brexit on the European Union is concerning. The EU has been struggling through several crises – the migrant crisis, the Euro crisis and fears over an increasingly aggressive Russia next door. Brexit may leave them behind in comparison when it comes to negative impacts on the EU. The remaining countries of the EU are worried the impact another crisis in Greece, or in Italy, will have on the Union and mourns the fact that Brexit could mark the end of 70 years of growing European integration. It is sad to see Britain pulling out of the Union it was fundamental in inspiring after the Second World War. It was British lawyers, for example, who drew up the original European Convention on Human Rights (ECHR), which has helped to protect people across Europe for decades from abuse, exploitation and torture – to name just a few benefits of the ECHR. Once we leave the EU we will no longer be answerable to the ECHR and it is questionable that any Government in the UK will replace with it something as robust. (video)

 

Euroscepticism is not confined to Britain. It and right-wing nationalist parties and politicians are on the increase across Europe, and the Brexit referendum has hit a note with many voters and politicians across the Continent. European Eurosceptic politicians are revelling in Britain’s decision to leave. Marine Le Pen (France’s National Front) tweeted:  “Victory for freedom,”  and there are similar voices in Italy and Netherlands, to name just two.

 

The withdrawal negotiations with the EU will be difficult and may bring up even more divisions and hostility among member states as it faces the conflict of saving the European venture against the deep divisions and potential for further disintegration of the Union. It is likely to go one of two ways: “Closer union to show a united European front, or reform and a rethink of the European project.” Whichever way, the next few years for both the EU and Britain is likely to be difficult and the EU without Britain – and Britain without the EU –  could be vastly different, weaker and diminished places.

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