The Indiependent pauses, on the Tuesday after the week that was, to take stock of events and update you on the issues that matter.
It has been a momentous week. In the last five days, Britain has given its government a mandate to leave the European community of which it has been a part since 1973. It has lost its Prime Minister, or taken his resignation in expectation of his departure from Number 10. It has seen the complete dissolution of Her Majesty’s loyal Opposition, who might be loyal to the crown but certainly aren’t to their leader, Jeremy Corbyn. It has seen its financial markets tank, the value of sterling crumble and its credit rating downgraded for the first time in three years. And finally, it has seen the renewal of tensions across the national borders of the United Kingdom and the threat of more referenda and political turmoil.
The EU referendum result – Thursday 06:00am
It all began last Thursday, with the announcement of the result of the EU referendum. Contrary to the predictions of the country’s major pollsters, 51.9% of Britain’s voters elected to leave the EU, on a margin of 3.8%. The turnout was high, at 71.8%, which is the highest since the 1992 General Election.
— BBC Breaking News (@BBCBreaking) June 24, 2016
David Cameron’s resignation – Thursday 08:00am
The referendum result triggered the immediate resignation of David Cameron, who said that although he will “do everything to steady the ship” of a post-Brexit Europe, he will not “try to be the captain that steers our country to its next destination”.
Cameron’s resignation added to the mix of political events an imminent Conservative leadership election, which will elect a new Prime Minister directly (as happened in 2007 with Gordon Brown’s nomination), rather than through a General Election.
— Ahmed Nihan (@ahmed_nihan) June 24, 2016
The Labour Party starts to divide – Sunday 01:00am
On Sunday morning at 1am, the news broke that Hilary Benn had been fired from the front bench of the Opposition by Jeremy Corbyn.
Hilary Benn sacked from shadow cabinet https://t.co/kVL88k4GVV
— BBC News (UK) (@BBCNews) June 26, 2016
The announcement came after the disagreement between Corbyn and Benn in December, in which each supported opposing sides of the parliamentary debate on Syrian intervention. Benn later revealed that his sacking had come after telling Corbyn that he no longer had any confidence in his leadership. It was to be the first of many departures from the shadow cabinet.
Labour front bench crisis – Sunday and Monday
Over the forty-eight hours of Sunday and Monday, Labour’s shadow cabinet was virtually destroyed. As the days progressed, Corbyn lost more and more ministers in a spate of resignations that became a coup against their leader.
The 1922 Committee
Many internal decisions within the Conservative Party are made by the 1922 Committee, which is similar to Labour’s PLP. The Committee voted on Monday morning to open nominations for the Conservative leadership on Wednesday morning and close them on Thursday evening, giving MPs less than 48 hours to be nominated.
This was a stark departure from Cameron’s original plan, in which he suggested that there could be a new PM by October, and that he wished to stay three months. The new schedule will have a new Prime Minister by September 9th.
On Monday evening, the Parliamentary Labour Party (PLP) met over a proposed no confidence motion against its leader. According to the Labour Party Constitution, a motion of no confidence does not mandate the leader to resign in the same way that a parliamentary motion does, but it could display the party’s dissatisfaction with its leader. They voted to hold a no confidence motion on Tuesday evening.
Labour MPs set to stage a no confidence vote in Jeremy Corbyn as they seek to oust their leader https://t.co/lJd0Jyf0qF
— Sky News (@SkyNews) June 28, 2016
Facing increasing desperation within the Parliamentary Labour Party (PLP), grassroots members organised a #KeepCorbyn rally, in which prominent members of the party gave speeches in support of Corbyn’s leadership. John McDonnell, Shadow Chancellor and Corbyn loyalist, tweeted that 10,000 members had shown up to support Corbyn. Revised estimates suggest the crowd had about 2,000 participants.
— John McDonnell MP (@johnmcdonnellMP) June 27, 2016
Much of the anxiety surrounding Britain’s exit of the EU centres on the economic impacts of the move. Since Thursday, three major effects have presented themselves.
The first is that companies listed on the London Stock Exchange have had over £200m wiped from them since the announcement on Friday morning. Stocks in EasyJet, Barclays and Lloyds have performed particularly poorly, and the financial sector has taken a hit in response to anxiety about the ‘passports’ that the financial service industry uses to trade within the EU.
FTSE's barely moved this morning. Down just 0.7%.
Armageddon, what Armageddon? #brexit
— Piers Morgan (@piersmorgan) June 27, 2016
The second is the effect on currency markets, which unlike the FTSE 250 that had bounced back by 2% on Tuesday morning, remained depressed and at a 35-year low of €1.20 to the pound. Concerns about currency exchange extend beyond tourists buying their holiday money: it makes British imports far more expensive from the continent, which is worrying when Britain runs a trade deficit with the EU – we import more than we export.
The third economic concern is that the UK has had its credit rating downgraded by the Standard and Poor’s credit rating agency for the first time since the depths of austerity in 2013. This makes it more difficult for Britain to borrow on international currency markets – something it might need to do in light of the other economic effects of Brexit – and makes loan repayments on Britain’s existing debt more expensive. This is what economists and economic journalists refer to as “debt-servicing” – the money that it takes to maintain existing sovereign debt levels.
I'm old enough to remember when Britain had a government, an opposition and a AAA credit rating
— Stuart Millar (@stuartmillar159) June 28, 2016
Nicola Sturgeon was one of the first political leaders to respond to the result of the referendum. Her statement on Friday morning made it clear that Scotland would consider a second independence referendum from the United Kingdom, in light of Scotland’s overwhelming decision to remain in the EU.
The only Conservative MSP, Ruth Davidson, replied in a speech to the Scottish Parliament in which she argued that the result did not justify a second referendum. She was in an overwhelming minority within the House.
Over the weekend, Sturgeon suggested that the SNP MPs could veto Parliament’s vote to leave the European Union, which has to follow the referendum result. The referendum itself is not sufficient to pull the UK out of Union, and could actually be ignored by Westminster in favour of another policy or a second vote.
— The Independent (@Independent) June 26, 2016
On Tuesday afternoon, Sturgeon revealed in a speech to Holyrood that Scotland would be willing to work with partners in Gibraltan, Northern Irish and Welsh governments to remain in the EU in spite of the result, and that she had held talks with European governments to ensure so.
— BBC News (UK) (@BBCNews) June 28, 2016
Sturgeon also set up an advisory body for the Scottish government on the EU, which was filled with academics and constitutional experts to help Sturgeon with the third aim of her three-point plan: to keep Scotland in the Union.
Nigel Farage at the European Parliament
Farage provided a bit of light relief this (Tuesday) afternoon in the European Parliament, where he launched into a tirade of abuse of European institutions, reminiscent of his famous “who are you?” speech in February 2010.
Today, he attacked MEPs who have “never had a proper job” and praised a UK that had embraced “liberty” in voting to Leave. Worryingly, Marine Le Pen of the French Front Nationale Party followed him and endorsed his words, suggesting that Brexit was “the most important European political event since the fall of the Berlin Wall”.
Both he and the MEPs that heckled him (largely from the centre-right European People’s Party of Cameron and Merkel) were rebuked by President Schultz.
Labour’s no confidence motion
On Tuesday evening, the PLP held its no confidence motion on the leadership of Jeremy Corbyn. The parliamentary party voted against him by 172 to 40 votes, with 4 abstentions. Yet in a statement, Corbyn refused to resign, arguing that it would “betray” the membership that voted him in in September 2015.
“I was democratically elected leader of our party for a new kind of politics by 60% of Labour members and supporters, and I will not betray them by resigning. Today’s vote by MPs has no constitutional legitimacy.
“We are a democratic party, with a clear constitution. Our people need Labour party members, trade unionists and MPs to unite behind my leadership at a critical time for our country.”
So, what happens next?
There has been some debate over the next steps of the government. Some, like Jeremy Hunt, argue that the UK should take the process of separation slowly and consult the EU in informal negotiations before the official separation begins. But on Tuesday morning, the European Commission and Merkel & co. rejected the country’s call for back channel talks, as Juncker declared that there would be no favours for “deserters” of the EU and that Britain should leave as quickly as possible.
Some within both the Remain and the Leave campaigns would like to see an official roadmap be established for Britain’s post-Brexit plans, the results of which could be put in front of the British people in another referendum. Given that the EU is appearing remarkably unaccommodating to British uncertainty, others would rather see Britain remove itself as fast as possible.
Either way, if Britain does decide to leave, it will have to activate Article 50 of the Lisbon Treaty, which enables it to begin the formal legal process of extricating Britain’s institutions from Europe’s. Once that happens, there will be no going back, unless Britain leaves and rejoins the Union through the formal process and gains the assent of all twenty-seven member states.
What remains to be seen is the result of the Conservative leadership nominations on Thursday evening, the resulting election and the name of Britain’s new Prime Minister.
Questions have been raised over Jeremy Corbyn’s ability to maintain control over a rebellious party – even with grassroots support. If there is a leadership election, Corbyn will be pitted against other Labour bigwigs, and will face the challenge of a hugely increased membership pool over the last few days and a volatile and often hostile collection of voters.
Overall, the effect on domestic politics and markets will be determined by the result of EU negotiations. Will there be another referendum? Will we remain in the EU despite a Leave result on the 23rd June? Who will take control of Government, Opposition or finance in the coming days?
We don’t know yet, but we sure will keep you updated.