The exit option: How contagious could Brexit be?

The UK referendum vote on leaving the EU is reverberating across EU politics in a range of ways. Economic and market volatility has brought to the boil a simmering banking crisis in Italy. The huge implications of British exit for the Republic of Ireland have triggered a febrile debate on Ireland’s ability to insulate itself from the implied economic disruption. In the UK itself, the political settlement of the British union has been called into question by the apparent divergence of Scots and English on the question of continued EU membership. These are all clearly material and important examples of ‘contagion’ from the vote. In the Italian case, they have potential wider implications for the stability and political and policy consensus of the EU.

Many things can destabilise the EU, but only political choices can dismantle it. For now, the Brexit vote has established a new point of reference in European politics: that the EU has an exit door, membership is contingent and integration reversible. It is hard to overstate the importance of this new political fact. It will reframe the aims of many European eurosceptics and create a unique test case for life after the EU. The focus of this report is on political actors in the EU who will take inspiration from this choice, and who may be in a position to act on it in the months and years ahead. Focusing on the scope for referendums on the UK model, it assesses the prospect of others following the UK towards the exit door.

Other European governments are acutely aware of the way that the British experiment will be watched by their own domestic eurosceptics. This will shape their domestic politics and their demands of Brussels, especially in areas such as migration and demands for policy flexibility. It will shape the way they manage the UK’s transition out of the EU and the terms of its future relationship with the EU.