The thrust of Michael Keating’s essay on Brexit is that the vote in favour of leaving the European Union taken by the British electorate on 23 June will be bad for the UK but will have a minimal impact on the rest of the world.
If the British government accepts the advice put forward in what is an advisory referendum, Dr Keating may very well be correct. Already significant damage has been done to the UK economy, even before Article 50 has been triggered. The exchange rate for the pound is in a nosedive, some banks have lost 40 per cent of their value on the stock exchange and the nation’s AAA rating has been withdrawn.
Yet there is a perfectly reasonable argument to suggest that Britons would be better off in the longer term outside the EU than remaining within it. The EU has a protectionist streak, particularly in agriculture, and most of its members have had little appetite for the microeconomic reforms that the Anglophone countries have undertaken in recent decades. The common currency to which most member countries subscribe is a disaster, particularly for countries such as Greece and Spain where the youth unemployment rate is around 50 per cent. Italy’s banks are tottering.
Overall, the Eurozone countries have had little or no economic growth since the GFC and Prime Minister Cameron suggests that Britain has created more jobs in the last five years than the rest of the EU put together. Free movement of people may have worked when the EU was small and relatively homogenous but it becomes more difficult when, in an uncontrolled way, it allows people from countries with low wages and poor social services to take advantage of the UK welfare state. The EU is by no means democratic and individual nation states have to endure being pushed around by the unelected Jean-Claude Juncker, President of the European Commission.
Outside the EU, the UK would have the opportunity to negotiate trade agreements with faster growing economies such as the US, China and India and select its immigrants it wants from a global labour market. Independence could offer a more dynamic alternative to continuing as a second-class member of a sclerotic group of disparate and low growth countries. And while it remains outside the Eurozone, as it should, Britain will be increasingly marginalised in the higher councils of the Union.
The key question is, assuming Britain had never joined the EU, would they vote to join it now? It is very difficult to find one person, even those fiercely on the Remain side of the argument, who believes they should. That said, in the words of the Irishman, if I wanted to go to Dublin I wouldn’t have started from here.
Britain is embedded in the EU now and the big problem, which probably amounts to a deal breaker, is that none of the leaders of the Leave campaign appear to have the remotest idea of how to develop a credible exit strategy that would deliver an independent Britain at minimal cost. One example of the problems Britain would face is that the Civil Service has not negotiated a trade agreement for forty years and has no idea how to do it. While some Leavers see the world as their oyster, others seem to wish to retreat behind barriers to imports of goods, services and people.
The leavers ran a mendacious campaign, promising benefits that can never be delivered. On the one hand, Nigel Farage, the leader of UKIP, resorted to racially-based, dog-whistling tactics of the most unsavoury kind. Immigration was the major issue for the supporters of UKIP. These people generally are little Englanders who, as Dr Keating puts it, “have a nostalgia for a supposedly great and glorious past”.
On the other hand, it is becoming clear that Boris Johnson, the de facto leader of the Leave campaign, never expected or perhaps even wanted to win the referendum. If he did, he comprehensively failed to develop a strategy to implement Brexit. His article last weekend in the Telegraph newspaper, which postulated that Britain would be able to retain all the benefits of EU membership without paying the costs, suggested he is living in cloud cuckoo land. On an earlier issue where he appeared to be walking both sides of the street, he said his position was “pro cake and pro eating it too”. Nice work if you can get it, Boris.
At this critical time, the country is virtually rudderless and people are worried. The Prime Minister and Chancellor of the Exchequer were the most prominent Remain campaigners and understandably have no appetite to continue the fight on the other side of the argument. On the Labour side, Jeremy Corbyn has become a figure of fun, supposedly supporting Remain, although with minimal energy and conviction, but widely suspected of voting for Leave as he did in 1975. Currently he is clinging to the leadership in the face of an overwhelming vote of no confidence from his Parliamentary colleagues.
As a final insult, in the Euro championships, the perennially underperforming England football team contrived to lose to Iceland, a nation of 330,000 playing its first international competition.
It is a very interesting time to be in the country of my birth.
Jon Stanford is a Director of Insight Economics and formerly worked in the Department of the Prime Minister and Cabinet. He is currently on holiday in Somerset.