Political Impact of Brexit Most Concerning, Rogoff Says

  • U.K. decision to leave EU is ‘retreat from globalization’
  • Says ‘real concern’ is if other countries also try to leave EU

The biggest danger from Brexit may be its potential to spark other anti-European Union votes, deepening political discord across the continent, accord to Harvard Professor Kenneth Rogoff.

Britain’s decision to leave the EU represents “something of a retreat from globalization,” Rogoff said, speaking to an audience of bankers at the Neue Zuercher Zeitung’s Swiss International Finance Forum in Bern on Tuesday. “My real concern is if other countries try to do the same.”

Brexit immediately sparked turmoil in financial markets, but its longer-term economic and geopolitical ramifications have yet to emerge. A slowdown in U.K. growth could spread to the euro area, Britain’s biggest trading partner, and provide a spark to populist anti-trade and anti-immigration movements. U.K. politicians who campaigned to leave the bloc put stemming the inflow of migrants to the U.K. and gaining sovereignty at the heart of their argument.

Other European countries following suit -- like France holding a referendum on leaving the bloc -- would be a concern, Rogoff said. French National Front leader Marine Le Pen has spoken of “Frexit” and told the European Parliament Tuesday that the EU “has worked against the people of Europe” for decades.

Voter Anger

The U.K. referendum result also reflects a growing lack of faith in international institutions, with many of those who campaigned to leave the EU tapping into a distrust of elites in the aftermath of the financial crisis.

“If you look at the Brexit vote, it was the less well-off and disenfranchised workers and also the nationalist right that wanted more independence, and it’s very similar in the Trump vote,” Rogoff said. “These forces are everywhere in the world today.”

“There’s a coalition between the nationalists who want more isolation and more independence and the disenfranchised workers, who if you tell them they’re going to be worse off, they reach a point where they tell you they don’t care,” he said. “They just want something different.”