Black Friday

Black Friday

So the Brexit voters have won, certainly for the moment and maybe forever. Article 50 of the Treaty of Rome will be invoked to start the UK's exit process. The Article is unclear on whether the exit process, once started, can be stopped and reversed but that remains the one straw for people like myself to clutch at. Maybe……….if the terms of exit prove unacceptable even to a right-wing Conservative Britain, just maybe the UK can still stay in the EU. Much may depend on whether the remaining 27 EU countries want to retain the UK enough to try last-ditch persuasion or whether they simply can't be bothered any more.

I find it ironic that, to claims of more democracy, populism, the big weakness of democracy, has won. Who really has won? Boris Johnson and Nigel Farage, obviously, and the tabloid comics such as The Sun, The Express, The Star and The Mail. Oh, and Donald Trump and Sarah Palin from the USA have expressed their approval. By their friends shall ye know them.  Above all, xenophobia has won.

Who has lost? Just about everybody else, in the near future. The UK just got smaller in importance on the world stage and may even get physically smaller if Scotland springs a new referendum and votes to leave the UK. Less probably, but possibly, Northern Ireland may just vote to merge with its southern half in order to stay in the EU. Still less likely, but possible, are moves already taking place for London to declare itself an independent city.

The UK economy loses, with growth forecasts from the major economic bodies all downgraded, the FTSE 100 down 8% and the pound at its lowest for more than a decade. Private sector employment in the UK must suffer too, as foreign-owned multinationals move their UK-based operations serving Europe into EU countries. The CEO of JP Morgan is on the record, about a week ago, as pointing out it employs some 3500-4000 people in London to service the European market. If the UK voted Leave, he said, that operation would have to be moved to Europe. How many staff would need to be retained to service just the UK market? Friend Steve commented, on learning that Sunderland, with its Nissan car plant employing thousands making cars for Europe, had voted Leave: “It must be the first time that turkeys have voted for Christmas”.

Another irony is that, with even more austerity and cuts looming, a new army of civil servants will be required for, among other things, increased border controls with quite probably no different terms for entry, to negotiate EU exit terms and to negotiate separate trade agreements with some 100 countries which are currently covered by EU agreements. I wonder how that lot are going to be paid for? Increased spending on the NHS……..Where is Boris Johnson going to get his promised £350 million?

Europe also loses. Chaos will threaten for a time. The overbearing interventionist bureaucracy in Brussels will now certainly be overhauled, if only to avoid demands for referenda in other countries. But the EU will survive; the political will for that is too great for it not to. The result is likely to be a much looser Union, quite probably a two-tier Europe with countries all having opt-out clauses for any central legislation they find unpalatable. Probably the power of the Commission will be curtailed and that of the elected European Parliament increased. In fact, exactly my worst-case scenario, the EU we always wanted with us outside it.

The EU also retains some strengths, in particular its bargaining position with the UK. It's opening position will certainly be that everything remains the same except that the UK has no say in its future legislation. But the UK will have to accept that legislation and pay (significant) amounts to the EU. That is the case with Norway and Switzerland, the other European countries outside the EU with which it has trade agreements. I have previously pointed out that the immigration situation remains the same, in or out; open movement of labour will have to be maintained. That also is a condition of other EU trade agreements. The alternative to agreeing to these conditions? No trade agreement. Some 40% of British exports go to the EU and will then have to find other markets somewhere in the world or suffer a tariff barrier. Cheaper than China, India? England is, and always has been, a nation that lives off its exports; it has few natural resources. It imports, makes and trades. Imports will cost more (devalued pound) and exports will hit tariffs. A stronger economic Britain?

I have one economic hope. It is that the rising cost of living (through weaker pound and imports), rising unemployment (as pointed out) and increased public sector costs will hit home early, in time for this decision to be reversed. Otherwise I can forsee only economic misery for the UK. Whether those who voted Leave in the belief that Britain will be stronger are right remains to be seen. The financial markets can't see it, which is why they called the referendum result wrongly; they didn't think Britain would vote for economic suicide. And if this is simply the result of some people being irritated by annoying legislative details or thinking there are too many Polish plumbers in their locality (a situation that won't change, as pointed out) then this decision will indeed be a tragedy of Shakespearean proportions.

What about little old me? I shall try for French citizenship, for which I qualify in principle. So goodbye Little Britain. I knew you when you were a country of which I could be proud to be a citizen.