Hello, economist here (based in Africa)
In the comments, nobody seems to know what Brexit is about. There are a lot of 'disparaging words', but not a lot of knowledge if you don't mind me saying. So here is a summary:
In the 1990s, cheap money meant that governments spent like there was no tomorrow (thank you, New Labour). Therefore, with the exception of Germany, Holland and Finland (who arrested and jailed bankers and paid the debt back), the European countries are in debt. With the financial crisis of 2007/8, several European countries (Greece, Cyprus and possibly France, Italy and Belgium) are technically insolvent.
Debt HAS to be paid back. Governments do this by 1. devaluation, 2. raising taxes, 3. Quantitive Easing/Inflation, 4. Austerity (cutting welfare and state provisions), or (God Forbid) default. Greece has already defaulted 90% of its debt.
You might have noticed that the GBP pound has lost value over the last couple of years. The UK government started paying back the New Labour debt by raising taxes, devalued the pound and implemented austerity (every being cross about the NHS and other services). You might have noticed the government telling us that the deficit is reducing as a result of these measures. Insolvent EU countries who are tied into the Euro cannot devalue so they are stuck.
Any of these measure breaks the social contract. The social contract is an agreement between government and citizens about how much they will be taxed and what services they will be given. You might have noticed that taxes have gone up, and services (such as the NHS) have gone down in quality. This makes citizens, both tax payers and recipients, angry.
The other thing I have to bring up right now, is immigration. What the EU did, was open the borders to mass immigration from the third world. Now, before you start jumping up and down, it's about $ numbers. The average EU per capita income, lets say for arguments sake, is Eu 20,000. The average third world pci is (f a s) Eu 3, 250 if that. The Eu also promises instant welfare on arrival (one of the things David Cameron tried to negotiate on). They do not risk their lives getting on boats for nothing! That means that European's average income WILL fall (the complaints about depressed wages).
You might also remember that Cyprus raided people's bank accounts and took 47.5% of their savings to stop going bankrupt. Portugal and Poland expropriated private pensions to shore up their balance sheet. This really breaks the social contract. Everyone is angry, the social contract is breaking down globally. We are all cross with each other, the Americans are cross with eachother, the French are rioting, populism is on the rise - its all about the social contract.
Now: Germany being in surplus, has the capacity to pay back the European debt and bail out illiquid European nations. Quite understandably, they require that other countries behave a bit more like them before they write a blank cheque. Germany would like the following conditions to be met:
- Each Eurozone member hands over some of their fiscal sovereignty to a central authority in Brussels
- Each Eurozone member agrees to the creation of a common federation in which there will be one single Foreign Minister, which of course means there will be one single Finance Minister as well.
This is fuelling the rise of populist parties in Europe because it involves handing over sovereign authority to unelected officials who will probably come from other nations. Again, this is a break of the old social contract and an introduction of the new European Federation social contract which officials are trying to persuade Europeans is in their interest (The Project). [Paying back the European debt however, breaks the German social contract hence the rise of populist parties there and in Austria]. Either way, a social contract is broken.
UK: because the UK is outside the Euro, that means that the UK still controls its own monetary policy, interest rates and its own current, tax and fiscal affairs. This makes it an attractive destination economically. The UK now has the lowest tax rates relative to everywhere else, and a strong rule of law in a world where the social contract is breaking down. This is why the rich of the world are buying in London and elsewhere.
So for the British, the deal Britain signed up for upon entry into the EU (economic) is not the same deal today. For countries that require bailouts, they must hand over power discussed above. For the British public, the UK does not need a bailout and this movement towards centralisation of power is what Brexit is about. For Leavers, losing any control over their sovereignty and fiscal affairs is not a good idea.
Economically, the EU is a safe market. However, it is very protectionist (labour laws, tariffs, voting to pay Africa reparations for being colonised etc), which raises costs and reduces competitiveness. The EU is the slowest growing economic zone in the world. Being in control of ones own taxation and fiscal affairs means that UK could in theory on leaving drop taxes to 20% and the EU would have a 'Singapore' style economy on their doorstep (what Jacob Rees-Mogg talks about)
Brexit is ultimately about an economic choice: whether to stay in the safe but slow growing and uncompetitive market where centralised bureaucrats make the decisions;
or whether to leave and take the risk of reconnecting with Commonwealth economies and rising markets such as India, Africa and of course, China, on WTO trade terms.
One is safe, the other is risky but could come with greater growth.
Hope that helps.