The Long Goodbye

VIEWPOINT UNITED KINGDOM EU REFERENDUM, 2016
commission a new analysis, which the Autumn Statement would provide an opportunity
to present. The independent Office of Budget Responsibility, which actually prepares
the regular economic forecast for the Treasury, has stayed out of the debate so far, but
will in due course need to say what it thinks. This holds out the prospect of a (possibly
public) tussle between the OBR and the Treasury about the most likely scenario.
Leaving the EU has substantial tax implications and the Chancellor might need to put in
place emergency legislation to deal with the consequences (especially immediate
attempts by tax avoidance schemes to either delay or bring forward tax liability). For
example, the EU has a common VAT policy, which will no longer apply once Britain
leaves. 4 This enables, for example, an immediate cut in VAT on fuel from 5% to 0%,
though the overall fiscal situation means that substantial cuts in VAT are very unlikely.
A snap General Election looks unlikely for now
Rather more seriously for British politics, there could be a snap General Election. This
requires a vote of no confidence in the current Government by the House of Commons.
The mechanisms for achieving this are set out in the 2011 Fixed Term Parliaments Act.
A two-thirds majority in favour of an early General Election, or two sequential simply
majority (50%) votes of (no) confidence in the Government two weeks apart, would
trigger an election. Given that there is a huge pro-EU majority in the Commons, it would
not take much for the necessary conditions to be achieved. 5 But with the country in
impatient mood, it seems unlikely that enough Conservative MPs would vote against the
Government to cause a General Election. They would not want to risk a reduction in
their already slim working majority of 17. So, without something else, we think a
General Election is unlikely.
Leave To Remain: a second EU referendum becomes possible
The shock of the UK deciding to leave the EU is likely to seriously destabilise the EU
concept. So EU leaders (if not the EU institutions, which have simply told the UK to ‘get
out now’) are likely to do everything they can to hold open the option of getting the UK
to change its mind. A new compromise of some sort looks likely in the longer term, even
though, after the vote, EU Commission President Jean-Claude Juncker has already said
that there would be no second deal. 6 And quite what European leaders could offer is not
clear, without breaching the very principles on which the EU is based and
compromising the integrity of the EU project. Nevertheless, all of the actions by any
politician of any gravity in this debate do leave open the door to a compromise which
keeps the UK in the EU – in time.
Some commentators argue that Leave campaigners were also hoping for a resetting
rather than an abandonment of the relationship. If there is a new improved offer, it
could lead to a second referendum. It was tactically dangerous for either side to propose
a second referendum during the campaign, and it remains dangerous now. However, a
new improved offer from the EU Council might emerge as the exit date looms closer
and the terms of exit are debated. If Article 50 has not been triggered, a new UK Prime
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