The outcome of the Brexit referendum is a negative scenario, both politically and economically for the European Union (EU) and Britain. Reforms are urgently needed for the EU for find a way forward.

SERIOUS IMPLICATIONS

"We will have a period of uncertainty which will cost Europe politically and economically," Fabian Zuleeg, executive chief of the Brussels-based think tank European Policy Center (EPC), told Xinhua in an interview.

He said in the end the cost will be far higher for Britain than for the rest of the EU. But at the same time the EU loses standing in the world and loses a momentum of integration process which has been going in the right direction.

The referendum outcome means a risk of international economic recession with global stock markets reacting negatively to the Brexit. World markets have slumped in Europe, America and Asia, as economists predict that the Brexit vote will push Britain into recession.

Economists said markets have to absorb the fact of Brexit, the resignation of prime minister David Cameron, the slump in the pound to a 31-year low, and very deep losses across Europe's stock market.

"It shows the European project has been an incredibly important fact for stability and prosperity for the European continent and there are certainly some doubts now for the way forward," said Zuleeg.

IMPACTS AND RISKS

There is a risk that others may follow the British example and want to cherry-pick aspects of "Europe" that they find attractive and ignore the rest, Maria Demertzis, research fellow with Brussels-based think tank Bruegel told Xinhua.

"I anticipate that the EU will have a very tough stance to such requests to prevent the dilution of the EU project," she said.

Zuleeg also worried that a number of member states within the EU supporting by populist parties and anti-EU parties which will try to achieve a similar outcome to Britain. He predicted there will be political turmoil within the EU.

"For the EU, the question now is how far the EU will be able to continue deepen integration. The EU integration process is becoming more difficult, not easier because of the UK being outside," said Zuleeg.

However, he believed that the economic impacts were relatively limited compared to political impacts. "Ultimately we will talk about political cost for years," he said.

However, Zuleeg believed that the economical impact for the EU is relatively limited compared to political impacts. "Ultimately we will talk about political cost for the EU for years," he said.

There will be great uncertainty in Britain too, which will pay significant political and economical costs.

Zuleeg said Brexit could split the conservative party and lead to the independence of Scotland.

"Cameron might have managed to spit two unions not just one. The United Kingdom might not exist any more in a few years time," he added.

NEXT STEPS?

In accordance with EU law, the British government first has to launch a proposal to activate Article 50 of the Lisbon Treaty, which sets out the procedural requirements for a member state to terminate its membership.

Then a "withdrawal agreement" needs to be negotiated on such things as tariffs on British goods and freedom of movement between Britain and the remaining EU member states. Legal withdrawal would mean that EU treaties and their protocols no longer apply to Britain, and EU financial programs would be phased out.

"This will be difficult to negotiate and will take a lot of energy and will take probably at least two years at a time when the UK is already in political turmoil," Zuleeg said.

"So it's going to be a turbulent period in the next couple of years, and what we need now is a real agreement between France and Germany on the way forward. But when they get down to really finding a way forward, I don't see a lot of momentum, nor the leadership within the EU," he added.

Donald Tusk, President of the European Council, has warned that renegotiating the relationship between Britain and the EU could take up to seven years.

EU REFORMS ON CARDS?

Giles Merritt, secretary general of Brussels-based think tank Friends of Europe, told Xinhua that Brexit's unexpectedly high support has been all about Britain's "national identity," but that dangerously emotional support has also been fuelled by the myths and prejudices about the EU and how it works.

"The lesson to be drawn is that the EU's communication effort is extremely poor and must be greatly improved," he said.

"I myself advocate 'privatizing' the EU's PR and outreach efforts, including its spokesmen, and placing communications in the hands of a highly independent but EU-funded new organization made up of professional journalists," Meritt added.

His view was echoed by Bruegel's Maria Demertzis.

"There is a great urgency for the EU to reform in ways that bring Europe closer to the ordinary citizen," said the research fellow.

She underlined that efforts would need to concentrate on explaining to disengaged citizens why European solutions are better solutions to national problems.

"I am convinced that this is true, but I admit that this is not obvious to the citizens. This has made Europe the easy scapegoat in the past for all problems. The European political establishment will have to work on making this clear and convincing," said Demertzis.

There is a very urgent need to overturn the negative narrative associated with Europe into the positive narrative that Europe truly is, she added.

REFERENDUM MOTIVATION

That Britain found herself at the crossroads regarding Europe is neither new nor surprising.

Demertzis said Britain had been very clear from the start that any steps towards more Europe, would have to be evaluated on their own merits, rather than an inevitable "ever closer union."

However, the Treaty of Rome reference to "an ever closer union" had always been the bone of contention in this debate. Those British who oppose Europe see this as a trip that necessarily ends with a united Europe where the nation state disappears. Those who instead support Europe see this as no more than a series of intergovernmental agreements.

Both agree that Britain should never lose its sovereignty but disagree that being part of "Europe" necessarily leads to that.

This difference in interpretation, and therefore the precarious nature of its relationship with Europe, had always been present, sometimes in the background and sometimes in the foreground.

Interestingly, however, since Britain entered the European Economic Community in 1974, and even before that, no prime minister with the exception of Margaret Thatcher, believed Britain should break with Europe.

Cameron continued that legacy but since a considerable crevasse had emerged inside the Tory party on the issue (fueled no doubt by the threat of UKIP) he felt sufficiently pressed to delegate the decision to the public.

"By consequence, and unfortunately for the cause, the referendum on June 23 was not about the pros and cons of membership. Rather it is about disciplining dissidents and enforcing political stability," Demertzis said.

She said it is the nature of referenda that their outcomes are unpredictable and not necessarily reflective of true underlying preferences. However, involving the public has been a popular political instrument throughout the past year in other parts of Europe as well.

"But the need to involve the public is a reflection of divisiveness, itself a reflection of instability or, at the very least, out of the ordinary circumstances," she said.

Source:
courtesy of XINHUA NEWS AGENCY

by Shuai Rong, Zhao Xiaona, Liang Linlin

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