Open Review of Management, Banking and Finance

«They say things are happening at the border, but nobody knows which border» (Mark Strand)

UK referendum and Brexit hypothesis (The way out perspective and the convenience to ‘remain united’)

by Francesco Capriglione

Abstract: This paper concerns the position of the United Kingdom in the framework of diversity that characterizes the European Union, by focusing on the uncertainty caused by a referendum on the ‘Brexit hypothesis’.

The Author considers also the UK’s will to base the decision on remaining or not within the Union on a mere ‘cost-benefit analysis’, by underlining that the relationships between European countries are now gradually carrying within a framework mainly characterized by financial patterns (with obvious, consequent limited possibilities to refer the abovementioned relationships to socio-political purposes).

In this context, the Brexit perspective increases the feeling of uncertainty, highlighting the difficulty of identifying a «way out» from the impasse situation in which the EU currently seems to be stuck.  This is why the Author shows that the ‘future fate’ of Europe should be characterized only by economic and financial relationships aimed at increasing the ‘common market’, but not also adequate to support the concrete realization of a «political union dream», that risks to remain segregate in an unreal “wishful thinking”.

Summary: 1. Introduction. – 2. UK’s uneasy relationship with the European Union. – 3. The uncertainty caused by a referendum that will instead bring certainty. – 4.  (continued): a cost benefit-analysis. – 5.  (continued): an opportunistic logic in contrast to the European political project. – 6. The path toward a new regional context.

1. In a recent analysis on the reasons behind the complex relation between “politics and finance in the EU”, I stressed how a general tendency, observed in the European environment, towards a Union with wider borders could practically lead to a weakening of the integration process; hence an obvious, consequent surrender of the possibility of a political union, in which only the most nostalgic of the “European Dream” continue to believe in[1].

Actually, in describing the current de-escalation of the original project of the founding fathers – at the moment reduced to the achievement of a simple «free trade» zone – I underlined how the United Kingdom has to be included among those Member States that, more than others, contributed in determining the conditions for a revision of the political plan of an «united and free Europe» (proposed by Altiero Spinelli and Ernesto Rossi in order to oppose the totalitarianism prevailing in the “Old World” during World War II).[2]

This conclusion is coherent with the conduct of such State that – absent from the initial phase of the creation of the European Union started by six other States – only in 1973 ended the negotiations for entering in the «common market», after having overcome the obstacles behind the transition from a global context (to which it was traditionally connected) to a regional one (in which it has always wanted to participate in the decision making process).

The agreements signed in Bruxelles on February 2016 between Prime Minister David Cameron and the European leaders grant to the United Kingdom a peculiar status among the EU. Those concessions extend from the symbolic “statement” that the aforementioned State will never be a member of a «tighter» Union to variegated facilitations (among those the possibility of limiting aid towards EU migrants has a specific importance).[3] Those agreements have an important meaning as they are the ineluctable evidence of the difficulties met by the European Union and by its Members in overcoming the logics of the mere economic benefit, that were at the base of the method used in order to realize the project of the founding fathers, through progressive forms of convergence, all aiming at the political union.[4]

This difficulty has been displayed during the most crucial political phases that the Union had to face in the recent years, from the Greek crisis to the Libyan one and said difficulty is at the root of the undeniable weakening of the reasons that led the United Kingdom to participate first in the European Community and then in the European Union, (as is shown by the fact that in the UK has been prevailing a policy that prefers the economic convenience over value-driven motives shaped around cohesion and solidarity between Member States).[5]

The difficult moment during which a decision on Brexit has to be taken – characterized by hypothetical suspensions of the Schengen Agreement, by a problematic definition of the division of migrants between Member States and  by an evident disparity  between the level of growth inside the EU –  could encourage other States to ask for a “privileged treatment”, with the inevitable consequence of starting an opposite process compared to the one that, more than a half century ago, persuaded the subscriber States of the “Treaty of Rome” to unite and to hope in a common future. This would incite the mistrust in the construction of a «common house», hence the failure of the hope that it is still possible to search for another way to experience the European Union!

2. To fully appreciate the range of the agreements mentioned above, intended to influence the future relations between the UK and the EU, we have before to examine the position of the first one in the framework of diversity that characterizes the second.

In this regard it must be stated that United Kingdom – due to its cultural characteristics and its attitude towards EU policies – has often shown a sort of detachment from the rest of the continent, or, more precisely, the intention not to become fully involved in European affairs, which it sees as foreign, too distant from its domestic sphere, which is accorded a priority status to.

The United Kingdom, despite the image it gives of itself, was among the first European countries to realize the importance, in the aftermath of World War II, of a process capable of leading to the gradual integration of the nations of Europe.[6] It is very important, in the second half of the 20th century, a debate (in which a significant role was played by two important PMs, Harold MacMillan for the conservatives and Harold Wilson for Labour) on topic accession (as membership) to the EEC[7]; we have to remember also the French veto to repeated applications submitted by UK for membership of the «common market», vetoes ended only with the advent to power of M. Pompidou (who succeeded to M. de Gaulle in 1969) marked the beginning of negotiations – as already mentioned – in 1973, when the UK finally joined the ECC, this one so way looked for reinforcing itself in the perspective to better confront the United States of America and the Soviet Union.[8]

However, the British ‘choice of Europe’ (endorsed by a referendum), has not been accompanied by much empathy, and economic integration was not viewed as necessarily leading to a political union. Support for the latter outcome has remained very low over the years, with a preference for Community mechanisms based on intergovernmental decision-making procedures.[9] Its line of conduct is based on a traditional attachment to national sovereignty (to be intended in its various components), which, although understandable by reason of the pursued economic improvement (exports, occupation, etc.), nevertheless appears strongly contradictory, given the strong opposition to the European policies which often arose in such Country (including, in the 1970s, such authoritative politicians as Sir Teddy Taylor, who resigned from the Heath cabinet as soon as he was informed about the decision to sign the Treaties of Rome).[10]

 What we are facing here is a context in which even the decision to scrap the pound is viewed as a loss of sovereignty! The United Kingdom, therefore, has kept out of the «single currency» and its policy towards European affairs, from 1992 (i.e. from the Maastricht Treaty) onwards, is seemingly oriented to protecting its national interests first and foremost. This, of course, entails frequent requests for legislative adjustments (rectius: changes), as well as taking positions that are inconsistent with the idea of an all-embracing membership, which, moreover, would be required in view of a form of integration, in which the common prevails over the particular interests of the EU member states. It is no accident that, in literature, the analysis of this situation contains evaluations and references to the «gatekeeper» attitude of the UK government towards the European Community (as a means for safeguarding national sovereignty) and to its obvious «semi-detachment» from the construction of the EU.[11]

If such circumstances are rooted in the differences that historically separate Sceptered the Isle from the Continent, cannot ignore that they are also been fueled by a certain distrust of Franco-German axis which has from the beginning influenced the destiny of the European project, not always in the light of the logics of cooperation, mutual respect and solidarity that were at the base of such project. [12] And this also due to Italy’s secondary role, which – for its old and continuous internal conflicts – have not been able for a long time to gain the political clout suitable to its socio-economic position[13].

This explains the positions assumed by the UK, with respect to certain of the main issues concerning the measures for coordinating the EU’s economic and banking policies. In relation to the above has to be first considered the Report prepared by the House of Lords on the crisis in the Eurozone and, in particular, on the proposed ‘fiscal compact’ (and connected measures), considered not compliant with the European Treaty structure;[14] from such point the clear intention of UK to avoid any form of responsible involvement in the affairs of the Eurosystem.

At the same time, the declaration according to which UK intends to submit the matter to the European Court of Justice (which will be allowed to decide on the issue of whether the member states are obliged to introduce in their domestic law the balanced budget rule) highlights its respect for the EU institutions and orientations, which (although formally flawless) is hardly consistent with the position mentioned above (being manifestly finalized at avoiding any possible marginalisation).

Moreover, further confirmation of this ‘detachment’ (rectius: substantial separateness) of the UK from the fate of the continent – or, more precisely, from the pre-ordered processes for achieving the highest possible degree of economic and financial stability of the EU countries – can be inferred from the statements released with regard to the revision of the rules regarding the capital requirements of banks as per the well-known normative package (enacted by EU Regulation 518/2013 and Directive 2013/36/EU, known as CRD IV); the imprecise and indeterminate arguments that have been used to justify the refusal expressed in such statements of introducing legislative rulings aimed at ensuring financial stability (and the compliance with the EU’s international commitments in the field of banking regulation)[15] represents the main evidence[16].

The UK’s determination not to join the EBU also responds to this logic. In fact, despite certain analyses – carried out with reference to criteria founded on a cost/benefit ratio – have demonstrated that the UK and Sweden are among the principal beneficiaries of an eventual adherence to the EBU,[17] this countries have not submitted any request on this matter  and there are well-founded doubts that it may not be requested in the future, based on the first reactions to the proposal formulated on the matter by the Commission.[18] This is regardless of the further consideration, whereby countries not concerned by European supervision will inevitably express, in the competent European forums, votes and judgments that contrast with the success

of the initiative, or who at least are oriented to downscaling its scope, thus fueling «the undesirable development of a multi-speed Europe».[19]

What we are faced with here is an approach that appears defensive, aimed at protecting the United Kingdom’s financial independence. It is, in fact, justified by a mindset based on the principle of separation of the supervisory mechanisms – and, therefore, on the possibility of continuing to manage banking supervision without external interferences – which is an essential prerequisite for the predominant role that the ‘London Financial Centre’ (which has always been the expression of an environment where operating freedom reigns supreme) plays on a worldwide level with practically no competition.[20]

3. The recent political events, with the victory of the Conservative Party at the elections, have probably worsened the so-called ambivalence that constitutes a hallmark of the UK’s relations with the EU, or, in any case, determines the prerequisites for establishing a different approach. Reference is made, specifically, to the migratory and refugees crisis, in addition to the difficult definition of certain general issues (relating to competitiveness, economic governance, the social security and free movement).

Despite the important signals sent out by the German Chancellor Angela Merkel, and other EU leaders, aimed at intensifying the cooperation (rectius: the participatory relationship) between the latter and the UK, signals remaining often without consequences. The possible changing is questioned, first and foremost, by the firmness of the Prime Minister, Peter Cameron, who reaffirms that «his demand for restrictions on freedom of movement within the EU», as observed by the British press.[21]

Once again the lack of willingness in accepting a unitary logic (which the accession to Europe should be founded on) leads UK to apply for exemptions to the requirements imposed to the majority of other European Member States! These requests – which express, inter alia, a decision-line distinctly diverging from the one that, within the European Union, have been hardly carrying out on migration policies[22] – reflects the described ambivalence of the behavior of this country towards the EU and, therefore, the limited interest to maintain its permanence in the European regional context hence the conditioning that does not hesitate to propose for the achievement of an unwarranted, privileged position (rectius: contrary) to the egalitarian spirit that must characterize the relationships  within the Union.

The abovementioned requests (that ought to lead to changes in the EU Treaties, a highly outcome, especially at this moment in time, characterized by economic uncertainty and imbalance) could express the latent threat of a final separation from the EU sanctioned by the “in/outreferendum, which Mr. Cameron promised in 2013 and which he has confirmed after the recent Tory victory.[23] It follows that the concessions package now got from the English Premier (and, therefore, the commitment of the UK contracted with European summits) has become – in view of the consultation to be held on the next June 23rd – presupposition to a strict comparison between his position and that in favor of Brexit from EU (backed by some ministers and by the Mayor of London).[24]

This new scenario is dominated by unpredictability and it is difficult to make certain previsions. Obviously, we are going to observe a punctual evaluation of the various interests involved and this comparison could be essential in order to identify the ultimate political choices to be taken.

More in particular, concerning the United Kingdom, the eventual economic and financial advantages that could arise from an hypothetical exit from the EU should be compared with the negative implications regarding not only the current accounts, the capital flows, the stock market, the bond market, the British real estate market but also the pound sterling[25].

Hence, the necessity to consider, on the one hand, the various causes that could generate an economic weakening of the United Kingdom (having to considerate in this regard the current negative exposure of the balance of international payments, the high levels of the London real estate market and the possible capital flights)[26] , and on the other hand the serious political implications that could emerge from Brexit, such as the awareness that Scotland will not leave the European Union against its will[27],  and the reactions of the United States, notoriously against the exit of Great Britain from the European Union, as they are willing to use their long-standing relationship with the UK in order to impose their influence on the EU.[28]

On the contrary, it seems that the consequences of this way out could be less significant for the European Union as they would be for Great Britain; this could be affirmed if we consider both the overall export amount of the Member States towards the United Kingdom and the intrinsic difficulty in calculating the negative effects of the decrease of the London “financial center” (thus, of the consequent possibility for many British banking operators to continue interacting within the EU markets, even if they allocate their products outside them)[29].

As a matter of fact, the most remarkable effect of an eventual exit from the European Union by the United Kingdom can be recognized in the risk that other Member States, characterized by strong populist currents (such as France and Italy), may promote initiatives for referendums that, regardless of their outcome, would lead to undeniable repercussions on markets stability; therefore, it would become probable a loss of trust towards certain Member States, with a consequent restart of the perverse spiral that, through the fear of sovereign debts “consolidation” o “restructuring”, to the detriment of Member States’ creditors, originates the spread difficulties (calculated looking at the yield differential between the decennial State bonds issued by a country of the Eurozone and their German analogous).[30] Obviously this would generate the failure of certain Member States’ reliability and, more in general, would increase the credibility of a separation of the European group.

Unfortunately, this referendum cannot clarify several uncertainties that could be created by this radical change, like the innovative ways that the British finance will use to present itself to the “single market” – particularly, the terms of agreements under which the United Kingdom will participate in the European Economic Area, contributing (even if to a lesser extent) to the Union balance sheet – and the existence (rectius: the identification) of remaining Member States’ reactive capabilities. Actually, the increased autonomy and the diminished obligations that could be brought to the United Kingdom by a positive result will barely compensate the operative contraction (that the latter will have to bear), extended until now to «500 million customers in the European Union»[31] .

Consequently, it is obvious that the real risk (for all the parties involved) behind the examined matter is that it has started a modification process that is going to directly affect the European “common destinies”. In fact, analyzing the possible consequences of Great Britain way out, a distinguished scholar affirmed that, compared with the founding fathers’ original project, had come to light (and it seems that it is going to be confirmed)  «a federal structure, by now partially acquired by the European Union», that does not «automatically require a tighter union».[32] Therefore, Brexit accentuated the intervened, substantial failure of the aims that started the European integration process; thus, it could become a facilitator in determining a new institutional asset among Member States, probably more stable than the current one (and more inclined in granting a higher level of autonomy to Member States) but obviously not in line with the cohesion and solidarity forms than can be achieved only through a political union.

4. If we want to analyze the methods that will be probably behind the evaluations that will guide the British people in the difficult choice proposed by the referendum, we will come upon completely opposite reasons. Actually, together with observations arising from the United Kingdom scarce empathy towards the European Union, there are others that are otherwise founded merely on economic convenience.

More in particular, we are referring to the fact that, under the methodological point of view, the UK summits’ action seems focused on forecasts based on a microeconomic “costs-benefits” calculation, used to verify (through a comparison between various elements associated with a growth program achievable together with other Member States) the economic convenience of the adhesion to the EU (thus, if there are quantitative data that could justify the UK remaining in the EU).[33] In other words, it seems to be fundamental, for Great Britain, a monetization of the “overall net benefit” determined by its stay in the EU; hence, it has been taken into consideration the convenience of keeping the current status quo intact, perceived by said country with increasing annoyance, as UK has always been scarcely prone to accept outer interference since it is believed that they could be a threat to the preservation of the high level of welfare acquired (with obvious negative consequences on the domestic social and economic balances).

So, reasonably, these are the authentic reasons behind the choices that Great Britain will soon have to make on the continuation of a relation that said country would rather maintain characterized only by economic features (because a further political integration is perceived in contradiction with its history and with its traditions). Furthermore, different positions should be expected between the British economic elite, which feasibly restricts its evaluation focusing on costs-benefits aspects and, consequently, shows its propensity to remain in the EU (in this regard, it is significant that the financial field is supporting the “yes” option) and the rest of the British population. The latter, in fact, is often led by different estimations, nationalistic and xenophobic, that head to support the “no” option, regardless of the economic price that will be paid; this is also a consequence of the migration problem, perceived as “foreign invasion”. Hence, the revelation of a discouraging reality, where there is no room for the Europeanist spirit that should be instead at the base of a justified stay of Great Britain in the European Union.

So, we are observing a logic that is not ascribable to a pluralistic dialectic, upon which the political debate, that should search for options of ideal democratic coexistence, should be founded; a logic that should create solutions aimed at reinforcing the bonds with the European Union, in line with a commitment that should end in a form of unity. In addition to that, it is clear that the UK is lacking in having a political intent aimed at throwing the British society (more efficiently than how it has been done until now) in an European framework that, overcoming the national barriers, could create a supranational organizational model, built according to behavioral standards (both qualitative and dimensional) suited for the needs of a world that is facing global changes. On the contrary, we are observing an impetuous success of an economic rationality that is establishing itself, in an auto referential way, as the only parameter of coexistence regulation.

Obviously, the aforementioned decisional criterion, associated with a “costs-benefits” calculus, however in line with market’s principles, should be considered, at least theoretically, as an aid to accomplish an efficient allocation of the available resources. Therefore, said criterion is related with neutral evaluations, that, being unsuitable for analyzing the complex situation here depicted, emphasize the inadequacy of the aforementioned method for solving socio – political matters. This explains the reason why in Great Britain the existence of externality (or, more exactly, the occurrence of unpredictable and unexpected events, such as migrations of populations escaping from death, wars and famine), from which negative consequences on expected economic benefits could derive, becomes the premise for a policy aimed at promoting the exit from the European Union.

In addition to that, it can be deduced how rigid the application of the preceding evaluation method is. It can be understood, then, how using said method in situations regarding relations between Member States, causes the rejection of  a recourse (considered to be a prerequisite of sub optimal balance) to a Member States common action (if appropriate, based on solidarity principles, like the one required for facing the above said migrant crisis) if the costs of the latter are considered superior than the benefits arising from remaining in the European Union.[34] This, regardless of the frequent use of said analysis method to verify the validity of a project, after having tested its capacity to create an economic value for the community.[35]

Therefore, the positive use of this method – from States that would use it in complex economic situations in which an integration between different factors is necessary – must not disregard  the correlation between the before mentioned evaluations and the general nature purposes, towards which public interventions have to be oriented.[36] It is clear how the overcoming of national interests should be founded on a level of cohesion (or on a motion in that way) between Member States unlikely realizable in the European regional framework, a level of cohesion that should lead to the perception of the supranational general wealth as its own (and that should lead to the willingness of taking charge of said supranational general wealth, without expecting any advantage, either political or economic, for the domestic citizenry). Therefore, a first conclusion can be drawn, both on the identification of the cases in which the aforementioned operative criterion could be used (namely when there are great juxtapositions, if necessary also reconciling diametrically opposed situations) and on the modalities that should characterized its performance (avoiding to sacrifice the respect of value-driven scopes, first of all the solidarity, according to which public institutions initiatives should be adapted, in favor of the mere economic rationality principle).

In consideration of all of the above – and analyzing once again the evaluations that will be probably made by Great Britain regarding the European Union – it is evident how using the costs/benefits method could be limited to a short-sighted and restrictive microeconomic vision; with the consequence that the latter will not consider adequately all the different interests connected with the implemented interventions (interests that are inevitably destined to be neglected if the primary aim of common good is ignored).

5. The foregoing leads us to reflect on the meaning of the adhesion of Great Britain to the European Union and, more precisely, on the political impact attributed to it. The utilitarian intent that – as has been said – is identified on the base of the participation of that country in the regional context and hinges on an economic plan the adherence to the constitutional process which the Community’s founding fathers intended to create; this, with inevitable negative consequences as regards the possibility to enable appropriate forms of integration between such country and the plurality of different subjects (often moved by different interests) with which it has to compare in the pursuit of an (organic) union design.

Such intention causes a “remarkable reversal” of the order that traditionally characterizes the inter-state relations, identifying in the politics a prius respect to the economics. Therefore, it is hard to acknowledge – in this case – the natural position of the financial-economic determinants in the ‘decision-making’ policy, in line with the logic that to the first is ascribed an essential role in the development of projects preordained countries willing to be open to innovative forms of modernization[37]

Consequently, in the relationship between UK and European Union, becomes difficult, if not even impossible, to find the shared reflection of an acute scholar that recognized the ‘primacy of politics’ in the design that  “modern subject (does of)….its destinity”[38]; reflection which, as it is to be resized with regard to the European reality- characterized by “Powerful and efficient techno-structures” and by “a very powerful and invasive technocratic bureaucracy”[39]  cannot be a postulate in the evaluation of the methods (rectius: the liberal democratic mechanisms) through which people seek optimal conditions for the fulfillment of their basic needs. It is evident, conversely, as a relational context in which it detects in prevailing way the verification of interest (involved in its traceability to the market logic) may have resulted in the configurability of a’ new Leviathan ‘, symbol of the power whose roots, breaking free from the dialectic of political legitimacy, they appear hinged in the sacredness of a utilitarian culture that takes as its own epicenter the ‘economic rationality.[40]

Returning, then, on the particular issue of Brexit, it can be said that we are certainly in the presence of a behavioral line guided by the well-known pragmatism of the British people! Therefore, despite the British public now seem divided on the issue concerning the outcome of the referendum, it is conceivable that will not take long to establish itself the reasons for demonstrating the prevalence of the advantages (compared to the critical) for the British economy to remain inside the Union. Of course, this result – from the point of view of the English electorate – postulates a level of information and a rationality of the choices  which is not always natural to the decisions of the ‘electorate’, that in the case of Great Britain will also have to reach a conviction grade so high as to enable it to win the lack of empathy for the continental countries, which previously have been mentioned.

Intuitively, in fact, emerges the rational search of optimal conditions in the vital relationships of the country – to be achieved through the practical occur of behavior, in a logical due to the teaching of W. James’ s for identification of processes to achieve the desired ends [41] -will end with the rise on deterministic settings that have their roots in the “deep-seated hostility of the British media and large parts of the political elite against the European Union”[42]; deep hostility that has found its political expression in the movement to promote Britain’s exit from the Union.

That said, based reasons lead us to believe that the referendum will express a favorable vote to the consecration of the permanence of the U.K. in the European Union. ‘Remain united’ for mere economic gain: this is the justification the British people will give to itself to accept the surrender of a own full sovereignty. The Great Britain will continue , then , to be part of EU, with all its reserves, and with the traditional little empathy towards the ‘old continent’; the desire of exit  will remain for a large part of the population, together with the “hostility of those who have lost the referendum”, since, as was correctly pointed out, “it will not reduce their ambition to bring back full sovereignty to the United Kingdom”[43]. Conversely, it seems poorly justified the EU’s interest in maintaining, right inside, a state that clearly manifests its opposition to the community acquis and, therefore, it is configured to be oriented to firmly maintain attitudes that undermine the cohesion. The favor for the hypothesis of a Great Britain held with concessions and blandishments in the Union has a ratio only if, as it will be said in the next paragraph, credit is given to an evolution process of the latter intended to revisit the ‘project’ which had been drawn to the origins.

More specifically, the referendum to be held on next June 23th identifies a strategic move in line with the current legal framework, since the use of popular vote (that would reflect the popular unwilling to remain in the European Union) must be considered as a proper application of decision-making procedures recognized in modern democratic systems. However, even if this measure is going to certify the prevalence of the national sovereignty over the European regulatory approach,  it is worth remembering that the referendum could support Prime Minister Cameron in order to achieve particular benefits from the political campaign against Brexit. Hence it is enough to realize that we are dealing with an improper use of referendum, which – although there could be specific socio-political reasons and it could be in line with the (voluntary, unilateral or negotiated) exit right provided by art. 50 EU Treaty – is actually related with political and economic issues that are going to change its real function!

Given this scenario, it is worth remembering the words of the President of the European Central Bank, intervening just few days ago in “political debate surrounding Britain’s EU”; and, in particular, the precise statement, “I cannnot say which of the two sets of arguments is stronger, the economic or the political ones, neither am I going to enter into a domestic policy debate, but what I can say Is that Europe needs blackberries in European UK as much as the UK needs a British blackberries Europe”. This is a wish that is common to all those who, despite the mentioned skepticism, continue to believe in the profitable cooperation between Britain and the Eurozone; moreover, Mario Draghi has further stated: “with such deep interconnections, the UK and the euro area share a common interest: the stability in the functioning of our economic system and Particularly our economic system and particularly our financial markets».

There is no doubt that higher forms of relationship between the British and continental realities (that would be realized in a renewed spirit of convergence) would enable all Member States to benefit from the cultural contribution of a country (that is the British one) that is characterized by high levels of organizational efficiency , social respect and, more generally, high civic sense, all together considered as underlying values ​​to the ‘government common thing’; hence the idea of a positive influence exercised by UK within Eurozone, which – it is good to recognize it – in some ways still seems far away from the advanced socio-political model that nowadays characterizes the British Government. Unfortunately the European Council summit in which Cameron’s issues have been discussed was a missed opportunity for all EU member States and, indeed, it represented a step in the opposite direction. And this is the unfortunate, but not surprising, result caused by the absence of a true European strategic plan and, furthermore, by the Union’s political weakness as a whole and its member States.

6. The most significant indication that seems to be deduced from the aforementioned Brexit issue concerns the general implications that can be inferred from it regarding the ‘future fate’ of Europe.

First it has to be considered that the above question has to be set within the specific historic phase that the Union is experiencing, characterized by its substantial absence  in the definition of common social policies (highlighting, therefore, an inability to respond to the urgent need to seek uniform decisions to resolve the several issues on the table). We now have, therefore, a situation in which the EU is not able to take «tough decisions» in view of global events; in this respect, it comes out to ou r attention, in addition to the migrations which it has been said of, the fight against terrorism and those interventions aimed at tackle the ‘winds’ of war that, in the last years, involve the Middle East and the north Africa.

Dealing with a general necessity of cohesion and solidarity – which should confirm the idea of a «free and united Europe», born during the full raging of World War II – the Member States show insufficient sense of political responsibility, often rise ‘walls’ and refuse to deal with the humanitarian emergency that characterizes the present times. It is not considered that countries with a high level of civilization shall not remain unconcerned to the cries of pain coming from people who reassert the right to have their dignity respected.[44] It must be added to the above the ambiguities of a difficult convergence with Turkey, which intends to require (on the basis of an exchange of its availability on accepting migrants) to play a greater role in the EU, regardless of the delays (rectius: lacks) that, in such Country, mark the process of democratization.

In such context, it appears extremely hard to compose the articulated puzzle that represents the relationships between Member States of the Union are now contained; hence the diffusion of  skepticism in the continuity of the latter, depending – inter alia – on its growing inability to communicate ideas based on values. Unavoidable the consequent consciousness that, perhaps, the time to overcome the doubt, expressed by several parties, that the Europe of people and nations of the last decades has been replaced by the one governed by technocracies and financial capitals, is not ripe.

Thence, in the scenario analyzed above, the Brexit perspective increases the feeling of uncertainty, highlighting the difficulty of identifying a «way out» from the impasse situation in which the EU currently seems to be stuck. The aforementioned considerations on the ‘cost-benefit’ analysis, on the base of which the UK seems to base its decision on remaining or not within the Union, underline that the relationships between European countries are now gradually carrying within a framework mainly characterized by financial patterns (with obvious, consequent limited possibilities to refer the abovementioned relationships to socio-political purposes). It is clear that – according to what already clarified above – the ‘future fate’ of Europe will be characterized only by economic and financial relationships aimed at increasing the ‘common market’, but not also adequate to support the concrete realization of a «political union dream», that remains therefore segregate in an unreal “wishful thinking” (to use a common English phrase).

This is the important message resulting from the UK behavior, a message of sadness more than of wonder!

[1] See CAPRIGLIONE –  SACCO GINEVRI, Politics e Finance in the European Union, Wolters Kluwer, 2016, p. 105 ff.

[2] Here can be recalled the reflections contained in the famous  Manifesto – written in the August of 1941 in a small island in the Mediterranean Sea, Ventotene, where some anti fascists were confined – published (after the first edition went lost) by Colorni, in 1944 in a book titled Problemi della Federazione Europea, with the annex of two essays by di Altiero Spinelli («Gli Stati Uniti d’Europa e le varie tendenze politiche» and «Politica marxista e politica federalista») written between 1942 and 1943.

[3] See among others BUSSI, Brexit, braccio di ferro finale, in Milano finanza, February 19th, 2016, where Cameron’s declaration is quoted «if we will reach a good agreement, I will sign it, but I am not going to sig n an agreement that is not in line with our needs»; GILES, What are the economic consequences of Brexit?, in Financial Times, February 22nd, 2016; ROMANO, Brexit forza la mano all’Eurozona, on IlSole24Ore, February 23rd, 2016, www.

[4] This is the theoretical orientation – inspired by the «functionalism» of Mitrany (see A working peace system, London, 1943) and by the neo functionalism of Haas (see The Uniting of Europe – Political, Social and economic Forces, 1950-1957, London, 1958; Id. Beyond the Nation State, London, 1964) and Lindberg (see The Political Dynamics of European Economic Integration, London 1963) – according to which the beginning of a functional integration process (where some States combine together certain activities and economic resources) would encourage other type of integrations (in line with a leaking mechanism, the so called Spill Over) also with a political value.

[5] See DE GRAUWE, Why the European union will benefit from Brexit, in Social Europe, February 24th, 2016, on; see also the editorial Niente Europa, siamo inglesi: il governo si spacca, published on Il Fatto Quotidiano, February 21st, 2016.

[6] We would like to recall here the important speech by Winston Churchill, in Zurich, on September 19th, 1946. On this occasion the outstanding statesman, while expressing hopes for the establishment of United States of Europe – as already mentioned above (see supra, Chapter II, par. 19) – gives indications as to the institutional framework of this supranational organization; maintaining above all that both the United Kingdom and the Soviet Union should be the sponsors – but not members – of this new Europe, for the realization of which Churchill promoted the establishment of a Council, which – as we all know – will see the light many years later; see Churchill Commemoration 1996. Europe Fifty Years on: Constitutional, Economic and Political Aspects, edited by Thurer and Jennings, Zurich, Europa Institut-Wilton Park, Schultess Polygraphischer Verlag, 1997; see also, Winston Churchill, His Complete Speeches 1897-1963, edited by R. James, New York-London, 1974, vol. VI; Fondazione Europea Luciano Bolis, I movimenti per l’Unità Europea 1945-1954, Proceedings of the international Conference at Pavia in October 1989, ed. by Pistone, Milano, 1992.

[7] See PARR, Britain’s Policy Towards the European Community. Harold Wilson and Britain’s World Role, 1964-1967, London, 2005; TOOMEY, Harold Wilson’s EEC application: inside the Foreign Office 1964-7, University College Dublin Press, 2007.

[8] See GOZZANO, L’ingresso dell’Inghilterra nel Mercato Comune Europeo, available at content/publication/2007 /11/12.

[9] See CHARTER, Au Revoir, Europe: What If Britain Left The EU?, London, 2012, where it is underlined that “The organisation that Britain joined in 1973 was very different from the European Union of today and therefore, at that time, the true political and constitutional implications of the Treaty of Rome were not clear”.

[10] See CACOPARDI et al., Ingresso del regno unito nella CEE. La Gran Bretagna nella CEE/UE, which can be viewed at http://

[11] See, among others, GEORGE, Britain and the European Community: The Politics of Semi-Detachment, Oxford, Clarendon Press, 1992; MORAVCSIK, Preferences and power in the European Community: a liberal intergovernmentalist approach, in Journal of Common Market Studies, 1993, n. 4, p. 473 et seq.

[12] See CAPRIGLIONE –  SACCO GINEVRI, Politics e Finance in the European Union, cit., p. 216 et seq.

[13] Significant, to this regard, the document of the Italian Ministry of Economics and Finance entitled A Shared European Policies Stratgegy for Growth, Jobs and Stability, February 2016, where it is pointed out that «we have gone a long way towards more integration, but now Europe is at a crossroads: if we were to keep muddling through an uncertain recovery, progress in growth and job creation would fail to emerge and the Euro area would remain exposed to shocks, undermining its sustainability», requiring a main role.

[14] See HOUSE OF LORDS, European union committee, 25th report of session 2010-2012, The euro area crisis.

[15] This is the draft of regulation relating to «prudential requirements for credit institutions and investment firms», as well as the Directive «on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms» (amending Directive 2002/87/EC relating to the supplementary supervision on credit and insurance institutions and investment entities included in a financial conglomerate).

[16] See Council of the European Union, April 2nd, 2013, 7748/13, ADD2 (Addendum 2 to note “I”). In particular, is pointed out the fear of failure to conform such rules to the complex ‘Basel 3’ Accord and to the outcome of an ‘impact assessment’ on remuneration provisions; an argument that, by circumscribing its support to the EU initiatives, essentially reveals the intent of delaying the realization of common programs. This intent is unquestionably contrary to the participatory spirit that should underpin the members of the Union and raises concerns as to the actual will to remain in it for a long time.

[17] See, among others, SCHOENMAKER – SIEGMANNB, Efficiency Gains of a European Banking Union, Duisenberg School of Finance –VU University Amsterdam, January 31st, 2013, p. 17.

[18] See ONNO RUDING, The Contents and Timing of a European Banking Union: Reflections on the differing views, Ceps Essay30 November 30th, 2012, p. 4, available at, where it is outlined that «the UK has already declared its intention to opt-out», even if «its first signal was that it would not block the proposal as such».

[19] See ONNO RUDING,, op. cit.

[20] In line with this policy is the tendency to block the EU directives viewed as contrary to the interests of the UK financial sector, cfr., on this topic, the editorial by CAVALLITTO, Mercati finanziari, il muro della vigilanza britannica contro le riforme UE, at 2013/08/31mercati_finanziari.

[21] See the editorial «EU referendum: Merkel will work with Cameron on EU – but will Tories let him?», in theguardian of 9 May 2015, at

[22] The press has highlighted the support by the EU Commission President, Jean-Claude Junker, for the implementation of an ‘emergency mechanism’ for the definition of a refugee quota plan, forcing the states to ‘share’ the burden of the migrant crisis, cfr. the editorial «Mogherini all’Onu: ecco il piano UE sui migranti», published on, accessibleat mogherini_all_onu_ecco_il_piano_ue_ sui_ migranti; this project, forcefully sponsored by the President of the European Commission, is opposed by the UK Government, as illustrated in the editorial «Cameron chiude all’immigrazione: insorgono i Paesi est europei », published in on May 11th, 2015 and available at cameron-chiude-allimmigrazione- insorgono-i-paesi-est-europei -1127007.html.

[23] See in this regard, the editorial «Cameron plant EU-Referendum schon für 2016» published in the Frankfurter Allgemeine Zeitung of May 12th, 2015, available at www. eu-austritt-13588429.html.

[24] See, inter alia, CAVALERA, Cameron, referendum il 23 giugno. E punta la carriera sul «sì» all’Europa,  published in Corriere della sera of February, 20th, 2016 available at cameron -lancia- referendum-punta-carriera-si-all-europa-70269e9a-d7c6-11e5-afdf-d68b3faa1595.shtml; Gessa, Brexit, ora Cameron affronta i rischi di un’uscita dall’UE. e cinque ministri voteranno per dire addio all’Europa, on of February 20th, 2016; the artiche Brexit, il sindaco di Londra gela Cameron: “Io voterò per l’uscita dall’Unione Europea”, available at _a_boris_johnson _appoggia _permanenza_in_ue_-133909283.

[25] It has to be mentioned that according to some scholars (see CAMPOS – CORICELLI,  Some unpleasant Brexit econometrics, on, regardless of the next «in-or-out referendum» outcome, the relationship between the United Kingdom and the European Union will change substantially.

[26] Significant, to this end, is how the specialist press reacted (see, among others, GIUGLIANO, Brexit, i timori di una moneta più debole e i risparmi sui sussidi dei migranti: ecco i cinque scenari, on economia /2016/02/21/news/il_dossier _i_timori_di_una_moneta_piu_debole_e_i_risparmi _sui_sussidi_dei_migranti _ecco _i_cinque_scenari) to the speech of «Mark Carney, Governor of The Bank of England,…during a parliamentary audtion held in January… (according to whom)… Brexit could lead to a risk premium increase on British assets, an event that could originate capital flights»; see also MAISANO, Brexit, Carney a fianco di Cameron, on IlSole24Ore, March 9th, 2016, where it is stressed that according to Camey the uncertainty regarding the future of the United Kingdom in Europe is one of the reasons behind the pound sterling weakness.

[27] See the editorial Brexit: la Scozia si schiera con l’UE al referendum del 23 giugno, on, where it is specified that «the premier, Nicola Sturgeon, has already bounded the referendum outcome to the Scotland stay in the United Kingdom».

[28] See among others GABELLINI, Gli Stati Uniti contro il Brexit, on, where the vetoes imposed by De Gaulle on «the entrance of the United Kingdom in the European Economic Community, based on the certainty  that London would have immediately become an United States Trojan horse inside the ‘old world’» are recalled and where it is underline that «the recent opinions of John Kerry seems to confirm the De Gaulle’s worries, since the US Secretary of State has always interfere in British internal affairs as long as this could be helpful in order to mitigate the Brexit tendency that is spreading like fire».

[29] The analysts have esteemed an inevitable decrease of the City of London if the referendum would approve the Brexit, resulting in a transfer of the City’s activities carried out in euro zone centers, see on this the editorial published by Milano Finanza on February 24th, 2016, entitled  L’impatto della Brexit in cinque punti, on A concurring opinion with this stance is expressed by the distinguished economist Krugman, see the interview by Haas and Tost entitled «PAUL KRUGMAN: What’s going on in China right now scares», on, in which to the question «Turning to Europe, what do you think about Brexit?» an peremptory answer echoed: «For Britain to be pulling out of that is a bad thing economically».

 A dissenting opinion has been instead expressed by another eminent economist Stigliz  during an event organized by The Labour Shadow Chancellor John McDonnell, see the editorial Brexit better for Britain than toxic TTIP, says Joseph Stiglitz,, in which the following clarification is quoted «I think that the strictures imposed by TTIP would be sufficiently averse to the functioning of government that it would make me think over again about whether membership of the EU was a good idea».

[30]  See CAPRIGLIONE, Mercato regole democrazia, Torino, 2013, p. 115.

[31] In this regard see also, among others, GIUGLIANO, Brexit, i timori di una moneta più debole e i risparmi sui sussidi dei migranti: ecco i cinque scenari, cit., where it is underlined that the Brexit consequences for the European Union «would surely be less significant than those experienced by the United Kingdom: for example, proportionally, Member States as a whole export less to Great Britain than the United Kingdom exports to them».

[32] See PADOA SCHIOPPA A., Un accordo ambiguo. Ora più poteri all’Eurozona, on IlSole24Ore February 23rd, 2016.

[33] In this regard see among others SEN, The Discipline of Cost-Benefit Analysis, in Journal of Legal Studies, 2000, 931-952; CAGLIOZZI, Lezioni di politica economica, Napoli, 2001; CAMPBELL – BROWN, Benefit-Cost Analysis. Financial and Economic Appraisal using Spreadsheets, Cambridge, 2003; ADLER – POSNER, New Foundations of Cost-Benefit Analysis, Cambridge, 2006; Boardman et al., Cost-Benefit Analysis: Concepts And Practice, New Jersey, 2011; SINDEN, Formality And Informality In Cost-Benefit Analysis, in Utah Law Review, 2015. p. 93-172.

[34] On the tradeoff between efficiency and equity that leads to second-best solutions see the classic work of LIPSEY – LANCASTER, The General Theory of Second Best, in Review of Economic Studies, no. 24, 1956.

[35] It should be recalled the quantification of the environmental features in the researches for evaluating the environmental sustainability of a project, from where the required aims of the financial analysis are defined; see for example the indications published on regarding the Ecba Project (Environmental Cost Benefit Analysis), aimed at supporting public institutions and private operators in realizing projects that are economically efficient, socially acceptable, environmentally sustainable and financially feasible.

[36] See ADLER, Well-Being and Fair Distribution: Beyond Cost-Benefit Analysis, Oxford, 2012.

[37] Cfr. CAPRIGLIONE – SACCO GINEVRI, Politics e Finance in the European Union, cit. p. 25.

[38] Cfr. MONTEDORO, Democrazia rappresentativa e mercati finanziari, in Il giudice e l’economia,  Rome, 2015, p. 23.

[39] Cfr. COCCO, L’Europa dei tre disincanti, in Politica del diritto, 2000, p. 200 ff.

[40] Significant, in this regard, is the classical philosophical reflection that leads the political to the entity which owns the major expression of power, identifying the essence in the absoluteness of sovereignty; See, among others, BODIN, Les Six Livres de la République, published in 1576, a work in which it is argued that a cohesive society is based on unified and orderly management of power by the State expressed by royalty; HOBBES, Leviathan or The Matter, Forms and Power of a Common Wealth Ecclesiastical and Civil, published in 1651, where  the problem of the state form and legitimacy is faced.

[41] See.  JAMES,  Pragmatism, a new name for some old ways of thinking, New York, 1907, for an historical reconstruction of the ideology characterized by “seeking to make the expanding rationality and behavior” see the essay of Kloppenberg.

[42] See DE GRAUWE, Why the european union will benefit from Brexit, in Ivory Tower of February 22nd, 2016, published also in on  February 26th, 2016 with the title E se la Brexit facesse bene all’Unione?

[43] See DE GRAUWE, Why the european union will benefit from Brexit, cit.

[44]  We have to remember that the fundamental rights of the person are expressly recognized by Art. 1 and ff. of the European Convention on Human Rights as modified by the provisions of the Protocol no. 14 (STCE no. 194) and by Art. 2 of the Treaty on European Union (TEU) in which is pointed out that «The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities»; it represents the legal basis which several cases decided by the European Court of Human Rights and by the European Court of Justice, that significantly contributed to the definition of such principles, refer to.


Francesco Capriglione is Full Professor of Banking Law and Financial Regulation and Dean of Law Faculty at Guglielmo Marconi University of Rome. Besides, he is President of Fondazione Gerardo Capriglione Onlus and Director of Master in Regulation of the Activities and the Financial Markets at LUISS Guido Carli University. His research interest areas are European banking law, institutional assets of financial top management, regulation of banking and financial markets, banking supervision and operations of financial intermediaries. He is author of over 300 peer-reviewed scientific publications and fifteen books (e-mail:



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