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I concluded, for this reason, that the UK should consider joining. Shortly thereafter I changed my mind, arguing that the UK could not thrive inside it. Subsequent events have confirmed this judgment. But my earlier concern has also been vindicated.
If David Miliband had been leader of the opposition Labour party, Mr Cameron would probably not have won the election. One could go on. Nevertheless, the UK’s disenchantment with the EU project and lack of belief in its existential purpose always made this sad outcome possible.
Brexit might still not happen. The referendum is, after all, purely advisory. It does not bind parliament and, what is more, parliament cannot bind its successors. Furthermore, the referendum result merely specified that the UK should leave the EU. It did not indicate what Leave meant. As choices become clearer to the public, the latter might be subject to a severe fit of buyers’ remorse.
Another referendum is not inconceivable but it is very unlikely. The political costs of ignoring, or seeking to overturn, the result exceed those of acceptance. Even if that did not have to be so, all the candidates to replace Mr Cameron believe it. The UK is leaving. That has to be the assumption of its EU partners, particularly if free movement of people remains an inviolable principle. So how should the rest of the bloc respond?
The UK’s almost certain departure is a threat to the EU on two dimensions.
But the best way to do so must be to give Europeans the security and prosperity they seek. One of the reasons so many in the UK wanted to leave is that the EU is no longer seen to deliver on these promises. That has not just been a difficulty in the UK. It is a difficulty throughout the bloc.
The paramount example of recent failure lies inside the eurozone. That has nothing to do with the UK. The sad truth is that, far from launching a period of prosperity, the euro has delivered a lengthy period of stagnation and massive divergences in living standards. Between the first quarters of 2008 and 2016, aggregate eurozone real gross domestic product rose by a mere 0.5 per cent, while real aggregate demand fell by 2.4 per cent. This is grim enough. Even worse, between 2007 and 2016, real GDP per head is forecast to rise 11 per cent in Germany, stagnate in France and fall by 8 per cent and 11 per cent in Spain and Italy respectively.
These dire outcomes are no accident. They are the product of a misdiagnosis of the crisis as mainly fiscal, of asymmetrical macroeconomic adjustment, and of obscurantist opposition to fiscal stimulus, even at a time of negative real interest rates on long-term borrowing. Germany has done well out of the euro. Its principal partners have not. This divergence poses a big threat. No effective plan exists to end it. (See charts.)