The sentence in the heading was on a poster made in the Information Ministry during the Second World War in fear of a German invasion, which was never distributed. This is the best advice for what to do now in the United Kingdom as well as in Europe – this is the correct way to speak about geography as in local language Europe is everything across La Manche.

A combination of all bad circumstances

In hindsight view of the historical moment researchers may find, that all bad circumstances coincided. Weakness of the oppositional, but historically pro-European Union Labour in supporting the “yes” campaign due to Jeremy Corbyn’s half-heartedness, the Cameron government’s modest “yes” campaign, the fact that 64% of 18-24-year-olds did not vote, absence of an e-voting opportunity, the government rejecting the right of 16-17-year-olds to vote etc. Mainly however it is a question of the situation of the European Union as a whole. The convenient air bombing of Libya and Syria that are associated with the flood of refugees may have been the beating of a butterfly’s wings, which destabilised Cameron and the entire Europe. Immigration and the Eurozone crisis are elements of one larger mosaic. The success of populists and extremists in Europe is related to the end of the journey that has been beautiful so far. A naïve hope of a welfare federation with perpetual economic growth is stuck in the standstill of the economy and the unsustainability of the costs of the pensions system and healthcare.

Is it common sense?

It may seem incomprehensible in Estonia, how anyone could want to leave a Union that has brought us relative prosperity and open borders. The behaviour of English politicians and 17 million voters can conditionally be characterised with the expression “fair-weather friend”. Due to the deterioration of circumstances it is no longer reasonable to continue the game with Europe on the basis of the old agreement. Faith in the Queen and the British pound is incomparably greater on the island than in old-men-kissing Juncker. I shall say in balance, that of course the topics that are a lot more important for the voters are related to the failure of national politics, regional disparity and backwardness have only worsened in this century.

Internal tensions strengthened in the United Kingdom

Besides the Scottish and Northern Irish, the Welsh have also started talking about their own country. The manifestations of xenophobia in areas inhabited by Eastern Europeans are embarrassing for an educated Brit. According to lawyers the discretion for initiating Article 50 of the Lisbon Treaty is in the hands of the House of Commons. The current Conservative Home Secretary Theresa May could in October become the new Prime Minister that can put the issue of withdrawal to a vote in Parliament.

Financial sector and real economy

The financial markets, which reacted strongly to the results of the vote, are always more volatile than the real economy. The banking sector of the United Kingdom was already weak before that. Loss-making high-street banks received another hit. Cameron in fact was the person that saved them from the EU’s financial services tax earlier with his veto. To summarise the problems of banks, their enormous network of branches and obsolete IT systems have made them an easy catch for fin-tech companies. Banks leaving London for Europe are not the problem for those voting to leave, only a narrow circle of London’s residents enjoyed the flow of money related to the status as a financial capital. Nothing will probably change for at least 2 years, but at one point sailing in Europe with an FCA licence may end for Estonian fin-tech companies together with the membership. Then an additional licence must be obtained in the European Union. For example Wise and Monese have an FCA licence. Both are companies with an international ambition and it is likely the respective preparations are already underway. Investors’ money must however also then move from London to Berlin to follow the offices of fin-tech companies, which currently is clearly gathered in London.

The market with 65 million consumers will remain in the European Economic Community

As long as the federation of England, Wales, Scotland and Northern Ireland stays together, it is still Europe’s third largest market by the number of consumers, which Estonian ambitious businesses cannot ignore. By size of economy it is the world’s fifth and Europe’s second country after Germany. Similarly to exporting goods and services to Norway, Estonian companies will continue to sell their services to the private and business clients of the British Isles. Eurozone export goods are however currently more expensive due to the reduction in the exchange rate. In case of contracts concluded in pounds, Estonian exporters are paying the exchange rate risk realisation price. As a positive it may be concluded that British exporters are more competitive due to the depreciation of the pound and it is cheaper for Estonian companies to enter the market.

Let the politicians argue, business will always find a way

These are the words used by a rational British entrepreneur to describe continuing to do business with Estonians. Any open-minded entrepreneur with an international reach in the United Kingdom would probably also respond in the same way. Entrepreneurs clearly supported staying in the Union according to joint statements as well as a Gallup of business organisations.

In summary it was a world-class circus, where the spokesman of the leave supporters camp Boris Johnson, who used plenty of demagogy tricks, has already resigned with shame from the position of candidate for Prime Minister. Unfortunately both mainstream parties lost even more of their credibility with this political circus. The voters could no longer distinguish expert opinions and demagogy in the media war. The image of several politicians became ridiculous due to irrational claims used in the course of the campaign. In summary it must be admitted, that the lack of trustworthy politicians is not just an Estonian problem.

Ivar Veskioja
1Office Group, partner