Three Reasons Why There Won’t Be A ‘Domino Effect’ After Brexit

Three Reasons Why There Won’t Be A ‘Domino Effect’ After Brexit

Three Reasons Why There Won’t Be A ‘Domino Effect’ After Brexit

2048 1200 Michael Petraeus

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ritain chose to leave and the EU leaders are now losing sleep over a possible fallout from this decision.

Here are a few reasons why the ‘domino effect’ that is now discussed in the media, is not going to happen.

1. Support for nationalists doesn’t equal support for EU exit

Anti-EU sentiments are simply a consequence of the ongoing economic and refugee crisis which is felt in many countries across the continent. As long as the economic situation was good, nationalists had very little to say. Their current rise is not a result of strengthening national identity, but simply a populist game of putting the blame on external forces (like EU, bureaucrats from Brussels) rather than taking responsibility for internal mismanagement (best example is Greece, portraying itself as the victim, despite years of reckless spending).

Just because people are dissatisfied and put some of this blame on Brussels, doesn’t mean they would like their country to shut the borders and leave the union. They just support parties that vow to fight for what they perceive as ‘their interests’. Populism is winning.

Brits have never had really strong ties with the EU or the European continent as a whole – and many of them still remember the days of the old empire that they long for. The same is not true for the rest of Europe.

 

2. Nationalist parties are not in charge

British referendum was triggered by the prime minister in charge. Cameron had to offer this as a pledge during elections (and to save his head as the Tory leader). If he hadn’t, Euroskeptics would have risen in prominence anyway, his seat would be challenged and a possible future PM, Boris Johnson, would organize a referendum anyway.

The same cannot be said about other EU countries. In Eastern Europe where populists are already in charge, like in Poland or Hungary, there is no incentive to leave the EU, because they are the biggest net financial beneficiaries, relying heavily on EU money. They may not like Brussels, but they won’t vote to leave union that supports their economies with tens of billions of euros every year.
And in countries where populists are on a dangerous rise (like France or the Netherlands), elections have yet to be held (next year). Even if they participate in the government, it’s not certain they would have the power to organize a referendum – and if one happens, there’s no indication that any of the nations would actually support it with a sufficient majority.

In other words first they have to clinch enough power, then they have to organize a referendum and convince more than half of the population to vote their country out. It’s not only very challenging, even if some of the nationalist parties lead the polls, but it would take at least 1-2 years to organize after they assume power.

And than may not be so easy, because…

3. Consequences of Brexit may kill support for right wingers

Britain is out and the world will be watching closely. Nationalists are celebrating at the moment, but their happiness may be short lived. Despite the fact it will take 2 years to negotiate the terms of the British exit, economic & political consequences of the decision will be felt straight away. Slowdown, diminishing investment, companies moving operations to neighboring countries, currency collapse, inflation, possible debt rating cuts – and more – will materialize very quickly.

With important elections slated for 2017 in France, Germany & the Netherlands, the coming year will be critical in shaping public opinion about what leaving the EU entails. And examples of British suffering may be enough of a deterrent to prove to nations across Europe that leaving the Union may just not be worth it.

So while right wingers around the continent are popping champagne today, their moods may be much less festive after months of turbulences British economy is about to enter. When EU citizens witness the extent of the consequences, they may very well be inclined to vote for more predictable, less radical politicians after all.

On balance, then, there’s a pretty good chance EU will come out of Brexit stronger – not weaker.

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Michael Petraeus

Business strategist, economist, entrepreneur, explorer and blogger publishing about the past, present and the future.

All stories by:Michael Petraeus
mm

Michael Petraeus

Business strategist, economist, entrepreneur, explorer and blogger publishing about the past, present and the future.

All stories by:Michael Petraeus
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