16 June 2016
Just Give Us The Facts
Muddled politics after a Leave vote
by J.R.Thomas
Political events develop their own mythology. So, it seems, do referenda. That, for the referendum on Scottish independence, was that the Remain (in the UK) voters were compelled to that position by fear. Fear of what would happen if they opted for independence, that the Scottish economy would collapse and famine stalk the land, whilst jobs vanished south over the border. They might have been confirmed correct in their concerns had independence indeed been chosen, the oil price collapsing as it did within weeks of the referendum and destroying all the Scottish Nationalist computations of government spending, investment and growth.
But neither Scottish Remainers nor Leavers knew about that at the time; the Remain campaign (it is alleged in this theory) managed to inject fear into a vote already heavily influenced by emotion and sentiment, so that in the end the voters clung nervously to nurse, in fear of meeting something worse. Naturally, when the European referendum came along, the Remain group hauled the box marked “Fear” out of the cellar, and proceeded to make the voter’s flesh creep, in the expectation that they could pull off the same trick twice. They may yet do that, though the evidence is that the British public, as in many democracies in the West and in the Presidential contest in the USA, have turned on their mainstream politicians and now treat with contempt anything that comes from a conventional political mouth. The more nurse tries to frighten the public, the more the public seems to make vulgar noises and rude signs.
The cry from the public now is “Give us the facts!”, “Tell us what will happen if we stay or if we go” and “Treat us like adults”. What we seem to want, in our material world, is to be assured that we will not get poorer if we Leave, or indeed, if we Remain. But much of what we all would like to be told about our future prosperity is unknowable. Who knows what the economy will be doing in fifteen years’ time? Not the Treasury for sure – they are remarkably poor at forecasting what will be happening in six months’ time. Which is not to blame them. No expert knows, of course. The future is based on an infinitude of variables. Or, as Harold MacMillan put it when asked what could upset his ministry: “Events, dear boy, events”.
It seems unlikely, though not impossible, that the EU will impose punitive tariffs on British exports if we leave. Apart from anything else, we import more from them that we export to them – we are significant trading partners with each other – and, on the presumption that we would do unto the EU whatever it might do unto us, neither side would benefit but the EU would lose more.
Would the EU attempt to suffocate the UK’s largest earner of overseas remittances, the City of London? The answer to that must surely be “yes”; it has long been an ambition of the Commission to have a centre of financial excellence within the Eurozone, and it has had several attempts at promoting Frankfurt as the rival to the City. Each has failed, for several reasons, not the least being that there are advantages to the City in being seen as a world player with an independent currency. (Switzerland too has that advantage and might have become a more serious rival to London had it not been for its traditions of secrecy and its inward looking nature; and most of all because of its strict control of immigration.) It’s migrants that will be the City’s great defence to any attempt to steal its thunder – the greatest conglomeration of financial talent in the world is parked happily in London and it is talent that makes the markets work. It seems unlikely that those employees would move with much enthusiasm to Frankfurt, but, if the capital barriers do go up, then some investors and financiers will need to be within the Eurozone, and if Britain began to erect tougher barriers to immigration, the City might be slowly smothered by loss of skill and enterprise.
One final economic point; markets do not like uncertainty – in capital freedoms, in regulation, in legislation. This is being written on the Tuesday afternoon before this week’s Shaw Sheet edition; the FTSE indices have been dropping steadily over the last few days, directly inversely to the strengthening lead of Leave in the opinion polls. That is not so much a comment on long-term economic prospects – the markets at least know those are a known unknown – but it is a strong comment on the worries of uncertainty.
Voters can make their decision on whatever grounds they please; on the possibilities of decanting David Cameron from public office, if that be their will, in spite of the urging of Tom Watson that it is better to Remain and wait for another opportunity to pursue that ambition; or in the hope of stopping immigration, even if that is an unlikely consequence of the vote for a very long time at least. All those abstruse worries about sovereignty, control, nationhood, the emotional appeal of who we feel ourselves to be, that is what should determine how we vote on the 23rd. But we can be sure of one thing; if we do vote Leave, what we then face is not the end of the debate, merely the beginning.
We will then enter a period of uncertainty, especially if the margin is narrow. Indeed, we are likely in those circumstances to have to face another referendum before too long, to approve the proposed terms of our exit. That, if it happens, will be an interesting conundrum; the House of Commons is probably around two thirds Remainers, even allowing for some who currently are Remainers but are known or believed to have doubts.
Most of the cabinet and the Prime Minister are profoundly Remainers. Yet in these circumstances they will have the job of trying to negotiate a Leave package, almost certainly to be put back for approval to the British people. The wording of that question will be interesting – does a “No” vote mean “Negotiate something better”, or “If that’s the best you can do, let’s stay in” or “I voted Remain anyway”? Even if David should move out of the back door of No 10, and another, say, B Johnson move in through the front, any new Prime Minister will still head a party that in parliament, though probably not in the constituencies, wants to Remain. It seems a trifle difficult to imagine how such conflicting interests can possibly be resolved, or what the incentives are for Remainers to negotiate something which is likely to secure Leave support. “Uncertain” is a gentle way of expressing the characteristics of what is likely to be a prolonged period of turmoil.
A glance at nineteenth century history offers some useful parallels, as the clash between liberalism and conservatism convulsed the two main parties in the Commons, culminating with the reordering of the parties, as Irish Home Rule and Free Trade became the issues du jour. The Tories and the Whig/Liberals went through several convulsions, splitting and triggering general elections on the issues. Referenda then were not considered acceptable, and in any case politics were in some ways less complicated so elections could ratify particular courses of action. Would the 2016 Conservatives split on how to handle a Leave vote, and trigger a general election? A general election which would, if the opinion polls are reflecting the public mood correctly, give a majority to Labour, led by Mr Corbyn, albeit probably with the assistance of the Scots Nats. Do the Conservatives care enough on this issue to pull the barn down on their heads? It would not take many defectors (a majority of twelve, remember) to do this. Maybe there indeed is still much to fear.
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