“No big institutions back Brexit,” a fellow journalist barked in my face at a drinks party last week. As I tried to respond, the point was repeated, this time more aggressively. “No big institutions want Brexit – not the CBI, the big banks or accountancy firms, they all think it’s mad”.
With less than seven weeks until the UK’s referendum on European Union membership, the rhetorical battle-lines are drawn. The main strategy of the government and broader Remain camp is “Project Fear” – scaring ordinary voters they’ll be thousands of pounds poorer each year if we leave. Such psychological bombardment – presenting self-serving and deeply dubious forecasts as “fact” – will continue all the way to Thursday 23rd June.
Then there are the various sub-narratives – pithy phrases, again relentlessly repeated, designed to convey the impression they seal the argument. “The big institutions all reject Brexit,” is one, of course. “Denying the free movement of people shows intolerance” is another, combining the unspoken yet potent accusation of racism.
“Brexit would spark a repeat Scottish referendum, splitting the UK” works well on patriotic yet undecided voters. “No-one knows what Brexit looks like – let’s stay with what we know,” is also often used, appealing to the UK’s inherent conservatism. All of these statements, far from decisive, are eminently questionable or wrong. Presented as unshakeable truths, they actually fall to pieces when countered with knowledge and just a few moments’ thought.
A slew of bad survey data struck the UK last week. Our construction industry just suffered its worst month in three years, managing only slight growth in April. Manufacturing actually contracted, amidst falling export orders and a lack of domestic demand for consumer goods. On top of that, the UK service sector, accounting for almost four-fifths of our economy, recorded its weakest performance since February 2013.
These disappointing figures were widely blamed on “uncertainty over the EU referendum”. No matter that the US economy is struggling, European banks are shaky or UK manufacturing has for several years been on a downward trend. No matter that trade is slowing markedly right across the globe or that investors everywhere, from Asia to the Americas, are now openly questioning, with increasing alarm, how the world’s big central banks can maintain their Indian rope trick of using printed money to rig bonds markets by buying their own government debt.
There are many, many reasons why the UK economy remains skittish and the global recovery extremely patchy – and almost all of them predate not only this referendum campaign but even the announcement the UK electorate was to be given its first say on our relationship with Europe since the mid-1970s.
Yet, while real investors fret about the prospect of another sub-prime style meltdown, a lack of genuine banking reform, the implosion of the Eurozone, the lunacy that is negative nominal interest rates and now, we’re told, “helicopter money” – a kind of quantitative easing on steroids – it suits a wide variety of political and financial interests to blame every blip in the British and broader European economy on “the prospect of Brexit”. And all that, of course, feeds nicely into “Project Fear”.
I respect many economists and politicians I know campaigning for the UK to stay in the EU. There’s a respectable case to be made – one with which I disagree. What is unforgiveable, though, is the repeated use of rhetorical barbs and misrepresentations to browbeat the public into voting for what they think is the status quo.
I’ve tackled the recent “research” reports published by the Treasury and the Organization for Co-operation and Development in previous columns. Both use twisted assumptions to generate scary headlines, warning households how much they’ll lose from Brexit. Both also assume the broader EU, whether the UK stays or not, grows steadily over the next ten years, continuing in its present form, avoiding even the slightest hiccup. What nonsense.
Just last week, Moody’s warned the EU faces “significant vulnerabilities” that have noting to do with Brexit. European economic stagnation and the biggest influx of refugees in half a century have, the ratings agency said, created “the impression the question is when the system breaks, not if”. The EU’s “direction of travel” towards ever-greater integration, Moody’s concluded, “does not imply stability”.
The Greek debt crisis rumbles on, the bankrupt Eurozone member having received over €21bn (£17bn) of its original €86bn bailout now once again at loggerheads with official creditors. With a majority of just three seats, the Greek government is hanging by a thread. Another bust-up could easily send bond-yields soaring, spreading financial contagion across the Eurozone and beyond.
If Greece could upend the EU, just think of the fall-out from a banking meltdown in Italy. Italian bank stocks have lost a third of their value this year, on fears over €360bn of bad loans – equivalent to an astonishing 20pc of GDP. In the midst of a chronic debt crisis, Italy is on the verge of a banking collapse which, given the size of the economy, the European Central Bank may find impossible to contain. We’re often told about the risks of leaving the EU. How about the risks of staying?
It’s hardly surprising “all big institutions reject Brexit”. Multi-lateral bodies like the IMF and OECD are deeply politicized organizations and Remain is the choice of the political establishment. The same institutions said the UK should join the euro. They said, in the run-up to the sub-prime crisis, that the big banks were safe.
The Confederation of British Industry and the accountancy firms – they follow the whim of the big international businesses that fund them and which can influence and cope with the EU’s regulatory thickets, knowing they prevent smaller firms from mounting a challenge.
The big banks themselves also back the European project, of course, the same European project that’s done nothing significantly to reform them, or prevent them benefitting from too-big-to-fail status and the exercise of raw marker power. Luckily, banks and institutions don’t vote. But people do.
Control of our borders? Yes please, and only Brexit can make it happen. The US, Australia and Canada have vibrant, economically-vital immigrant cultures and they put limits on numbers entering each year. Such controls, decided by elected politicians, provide reassurance and keep immigration manageable, so increasing the public’s tolerance. Today’s EU-imposed lack of controls in the UK, tragically, is doing precisely the opposite.
And I very much doubt, given how oil price volatility has destroyed an already flimsy economic case for Scottish independence, that the SNP will be calling a new referendum any time soon. Not least because they’d lose.
Of course, we don’t know what Brexit looks like in ten years’ time. But we don’t know what EU membership looks like either. I do know that, if we vote to leave, a powerful country like the UK will be well-placed to continue trading with the EU, given World Trade Organization rules, potential European Economic Area membership and our £60bn annual EU trade deficit.
I know the EU is showing signs of unavoidable and on-going crisis. I also know it’s administered by a cabal of highly-paid, yet blinkered and deeply anti-commercial bureaucrats who are not only unaccountable to voters, but also in cahoots with out-of-touch political leaders harboring an unworkable and ultimately incendiary vision of “European political union”.
I know, in addition, that almost all British voters and the majority of people elsewhere across the EU want nothing to do with that – and actually want to stop it. And I suspect that only the UK can make that happen.