After Brexit, Europe faces an existential crisis

Britain’s decision to quit the EU is a seismic moment for Europe because it points to the inescapable reality that a new national politics – whose angry force was for too long simply denied by the technocrats and governing classes – really is trumping Europe’s supranational ambitions.

To the outside world – Washington, Beijing, New Delhi – who view Europe in large part as a single bloc on trade, climate change and even foreign policy (think Russia Crimea sanctions and the Iran nuclear negotiations), the UK departure opens a disturbing crack in the foundations of global governance.

In the immediate term, for Europe itself, the Brexit vote now fundamentally changes the complexion of a series of votes in the next 12 months, all of which potentially will further amplify the centrifugal political forces that have now been unleashed, and cannot be ignored.

This weekend, Spain – a country that hasn’t had a government since December – will try again. Podemos, the anti-austerity party that was formed only two years ago, is in second place in the polls and threatening a surprise victory that, in the current climate, would not be that surprising.

In October Viktor Orban, Hungary’s prime minister, is promising a referendum on rejecting refugee quotas being imposed from Brussels – it is a PR stunt but it will serve to advertise the chasm in values on religious tolerance and multi-culturalism that now divides Europe east from west.

In the same month Matteo Renzi, the Italian prime minister, holds a referendum on Italian governance reforms that would trigger his resignation if they are rejected - as the polls currently suggest they will be. His departure would be another significant blow to centrist forces.

Then next year, in March, Holland will hold its own parliamentary elections where Mr Wilders – who like Donald Trump, is reviled by much of his own country’s political establishment – will seek a popular mandate to force his anti-Islam, anti-Europe party into government. He currently leads some polls and today called for Dutch referendum on membership.

Then, in April and May, France will vote in an election where Marine Le Pen is likely to reach the second round of the presidential campaign – where she will almost certainly lose – but not before her brand of nationalist, nostalgic politics that is now sweeping Europe is given a massive platform.

All of these upcoming events – not to mention the German presidential election where the centre is strong, but populist forces like Alternative for Deutschland (AfD) are also at work – now take on a fundamentally more threatening hue when viewed through the lens of Brexit.

Still, in the short term, talk of a continent-wide political disintegration is probably overblown – Britain was already semi-detached from core Europe, being outside the eurozone and the Schengen free movement zone – but, as the Brexit vote demonstrates, the paradigm is shifting.

More likely, as the politics of the British exit negotiation begin to bite and the nationalist, anti-globalisation movements continue to rise, Europe’s ability to govern itself as a cohesive entity will diminish. Populism is now the constant knocking in the pipes of European governance. That will impact lives and livelihoods.

Expect a steady rise in government-to-government dealings as EU governments look to work around the now visibly dysfunctional European political system that – echoing the fundamental economic disagreements over the eurozone – is in a near-constant state of muddling through.

In the longer term, Europe’s future looks bleak – demographically, economically, geopolitically – since so many of the challenges thrown up by globalisation (immigration, trade competitiveness, technological disruption) require a scaled-up, collective response that these national politics is making so very hard.

Optimists will see Brexit as a trigger for a new beginning for Europe; a shock therapy that acknowledges the failures of the current arrangements and tries to seek a new mode of governing that better acknowledges national realities while preserving Europe’s open markets, borders and skies.

But no one should underestimate the difficulty of that, given the incoherence of populist political narratives that – as a new European Council on Foreign Relations survey shows – fundamentally want less global trade and more borders; less multi-culturalism and more EU disintegration.

The unavoidable reality is that as globalisation continues, in terms of trade share, innovation capacity and population, Europe is shrinking relative to the rest of the world.

The truly existential crisis for Europe is therefore how to combat that intoxicating populist narrative and drive through the kind of structural economic reforms that will prevent Europe (as distinct from the EU) from sliding into irrelevance and geo-political old age.

In the end, pragmatism and incrementalism may simply not be enough if Europe – to quote a senior German politician I spoke with recently – wants to be more than a museum where Asians and American come on holiday.