Nima

Director of Client Relationships Responsible for the management & development of the easyMarkets client base as well the development of our IB partner program.

The surprising Brexit decision during the EU referendum last year sparked speculations of a domino effect all over Europe as this may set a precedent for member nations who are seeing a rise in Euroscepticism. From there, all sorts of variations on the “exit” theme came out such as Frexit, Departugal, Italeave, but some may be looking like very real possibilities. Are we about to see some form of contagion from here?

In France, for instance, candidates for the upcoming elections have taken advantage of the populist movement to spark debates on whether or not they should stay in the bloc. For Front National leader Marine Le Pen, the British and Americans have pulled off “coups” last year in challenging the status quo and leaning towards anti-establishment options. Le Pen called the EU a system of oppression and said that a new world is about to be born.

“The first real blow struck against the old order, the thing that will set off the domino effect that will bring down all of Europe, is Brexit – a sovereign people has decided to leave an agreement of the powerful, to decide its own destiny,” she remarked. “The second blow came shortly afterwards and that was the election of Mr Trump to the presidency of the United States, putting the friends of neo-liberalism in an even more difficult situation.”

Meanwhile, Italy’s 5-star movement said it would make its own proposal for a vote to leave the euro zone. The right-wing Northern League, a member of Italy’s opposition centre-right, also echoed calls for their own exit from the region. Their constitutional referendum last year prompted speculations that they might be the next nation to break off, but an understanding of their laws reveals that this is more complex than the UK situation.

Over in the Netherlands, leader of the Dutch anti-immigrant PVV party Geert Wilders said that he would make a Dutch referendum on EU membership a central theme of his campaign to become prime minister in next year’s parliamentary election.

“I congratulate the British people for beating the political elite in both London and Brussels and I think we can do the same,” Wilders told Reuters. “We should have a referendum about a ‘Nexit’ as soon as possible.”

In Denmark, populist anti-immigration Danish People’s Party also called for a referendum on membership of the European Union. Although this particular party is not in government, it is one of the three parties supporting the one-party administration and its call for a popular vote was echoed by the head of the left-wing Red-Green Alliance.“I believe that the Danes obviously should have a referendum on whether we want to follow Britain or keep things the way we have it now,” DF party leader Kristian Thulesen Dahl said.

Over in Sweden, he anti-immigration party the Sweden Democrats also declare that it would step up the  pressure for change. “We demand that Sweden immediately starts to renegotiate the (EU) deals we have made and that the Swedish people will be able to speak up about a future EU-membership in a referendum,” party leader Jimme Akesson said. This political party has the support of around 17% of voters.

Even German Finance Minister Wolfgang Schäuble admitted that the Brexit may inspire other Eurosceptic nations to join the movement. “You can’t rule it out,” he mentioned. “How would the Netherlands, which has traditionally been very closely allied with Britain, react, for example?”

Several surveys published ahead of the EU referendum in June last year suggested that the percentage of Europeans that viewed the EU favorably has dropped. This was likely due to widespread unhappiness over how Brussels handled the European refugee crisis and persistent economic concerns.

However, for some nations, staying in the bloc offers more benefits than giving up their membership. This covers the smaller eastern European countries such as Hungary and Poland. Political parties in large European nations such as Germany have also conceded that the Brexit may at least initiate talks of reform within the EU, possibly offering contentions that may make it more enticing to keep the region intact.

Besides, a lot may hinge on the actual negotiations as all eyes and ears are on the UK and EU teams to see how nasty the proceedings could get. UK Prime Minister May has warned EU officials that making things difficult for the British may backfire on the rest of Europe since they might have more to lose.

“Britain wants to remain a good friend and neighbor to Europe. Yet I know there are some voices calling for a punitive deal that punishes Britain and discourages other countries from taking the same path. That would be an act of calamitous self-harm for the countries of Europe. And it would not be the act of a friend,” she declared.

“Britain would not – indeed we could not – accept such an approach. And while I am confident that this scenario need never arise – while I am sure a positive agreement can be reached – I am equally clear that no deal for Britain is better than a bad deal for Britain.”

Now this places the ball in the EU officials’ court since they may still alter their approach to the negotiations, and choosing to be civil and understanding to UK concerns may actually pave the way for an amenable deal to both parties. However, they are also mindful that letting the Brits have their way may encourage other EU nations to take the same path as well.

On the flip side, seeing members of the British negotiation team get grilled by EU officials may discourage Euroscepticism among other nations, as this may lead them to second-guess their inclination for breaking off with the union and standing all on its own. By the looks of it, more details on the benefits of EU membership may circulate in the coming months, possibly giving people cause to pause and think about the repercussions of leaving the union.

http://www.reuters.com/article/britain-eu-outers-idUSL8N19G4T6

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