Brexit still poses a threat to long-term European unity

Brexit has not yet found any imitators. The real threat to the cohesion of the EU, posed by the UK's vote to quit, was always more likely to come over time rather than immediately.

The Brexit referendum was preceded by a long process of political alienation between the UK and the EU, which had its origins in the 1980s and early 1990s. The same process is now under way in some other European countries, albeit for different reasons.

Euroscepticism has been on the rise in Greece - which has been in a state of permanent depression thanks to the eurozone's crisis management - and Italy, where the economy has performed dismally since joining the single currency. The entire political system in Italy is now rebelling.

Fiscal rules

Matteo Renzi, the former prime minister and general secretary of the centre-left Democratic party, wants the EU to dump some of its fiscal rules. Silvio Berlusconi, another former prime minister and leader of the centre-right Forza Italia, wants a parallel currency. Others are demanding a referendum on euro membership or even complete withdrawal.

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Poland and Hungary, both run by ultra-right governments, have also been distancing themselves from the mainstream. The EU has launched a sanctions procedure against Poland in protest at reforms that would leave the government largely in control of the judiciary.

Listening to Viktor Orban, the Hungarian prime minister, one wonders how long his country will want to stay in the EU

Listening to Viktor Orban, the Hungarian prime minister, one wonders how long his country will want to stay in the EU. When Hungary ceases to be a net beneficiary of EU funds, his Euroscepticism may no longer be tempered by financial considerations. Once the UK leaves and stops contributing to the EU budget, the assessment of the pros and cons of EU membership, especially by non-eurozone countries, will change.

The UK, Italy, Greece, Poland and Hungary may have different reasons to be disillusioned with the EU, but one unifying theme is variable geometry - a notion that became popular in the 1990s, denoting integration at different speeds. As it turned out, the eurozone is not a club within a club, as some pro-Europeans in the UK naively thought.

Diverging interests

Over time, interests diverge in many areas. Within the eurozone free movement of labour is needed as a partial offset to economic imbalances. Yet what is known inside the eurozone as freedom of movement is considered in the UK as immigration. Inevitably conflicts between a dominant eurozone and a weaker and disaffected fringe will become more acute.

I expect the EU to make another attempt to shift power from the national level to the centre in a number of areas, notably the governance of the euro zone

Another reason why there is no rush for the exit is the lack of clarity over Brexit. We do not yet know the precise nature of the exit agreement. Nor can we be sure of its economic impact. A long transition leading to a comprehensive trade deal - the most likely scenario - would minimise the costs.

If it becomes clear that leaving does not necessarily trigger an economic crisis, other countries may feel less inhibited. Brexit could set a precedent for further exit agreements under Article 50 of the Lisbon treaty as an EU exit comes to be seen as a less scary prospect. That assessment will obviously be different if Brexit were to lead to an economic mess.

Macron’s agenda

Over the next few years I expect the EU to make another attempt to shift power from the national level to the centre in a number of areas, notably the governance of the euro zone, driven by the agenda of Emmanuel Macron, the French president, rather than by Brexit.

I am fairly confident that France and Germany will agree on a reform, but one that will be very much based on German ideas for a more powerful European Stability Mechanism, the eurozone's bailout fund, and stricter supervision of national fiscal policies, tempered by some token concessions to Paris. The changes may bring France and Germany closer together politically, but they may drive Italy further away.

As for the non-eurozone countries, I would not be surprised if they were starting to question the value of a union that is likely to bring fewer material financial benefits in the future and that is run primarily in the interest of the eurozone. The EU is not bound to break up, but it would be foolish to assert that Brexit implies the opposite.

- (Copyright The Financial Times Limited 2017)