It looks increasingly likely that we will have the referendum on Europe this year. Notwithstanding the media commentary I think it will be difficult to hold it in June so I propose 5th November, which has an appropriately historical significance. I’ll get to that in a bit.
The question will be a choice between staying in the EU on terms slightly modified by Cameron, or leaving it. The rational person will make this choice based upon which is most likely to be best for the UK. Of course, defining best is therefore fundamental. There are generally assumed to be three components to this measure, GDP, sovereignty and the UK’s part in the community of nations (whatever that is).
Taking the last point first, if the vote is to leave the UK will remain a permanent member of the UN Security Council, a signatory to the Europe and Convention on Human Rights, a founder member of NATO, the founder member of the Commonwealth, a nuclear power and the 5th largest economy in the world. We will no longer be represented overseas by the EU foreign commissioner (a plus to most rational people as we already have the FCO) and we will have no direct input into the future evolution of the EU, nor will we be bound by its directives. If fact most of the directives are enacted through UK law, so we will continue to be bound by them until they are repealed. The short version is that the only change is our lack of direct influence in shaping EU development. This is in part mitigated by the fact that as the EU’s largest export market we would have significant indirect influence. It is unlikely that the UK’s part in the community of nations is going to determine the outcome of the vote.
Sovereignty is more straightforward. Voting to leave means that all future laws and treaties entered into (or broken) will be determined solely by the Houses of Parliament. MPs will also be able to decide which parts of EU law to repeal. Of course, some of these laws will also be interpreted and enforced with regard to the European Convention on Human Rights, so Mrs Blair and Mrs Clooney’s livelihoods will not be at risk. Given the more direct relationship between Westminster MPs and their constituents compared to MEPs and theirs, this would arguably make the UK more democratic. Perhaps more importantly, government departments would be directly accountable to Parliament and thus to the people; they would no longer be able to cite EU decisions or regulations as a reason for a particular piece of bureaucracy. This argument is compelling to those who believe either that UK government is better than that of the EU (which should be a majority) and those of a libertarian disposition, to whom any reduction in the amount of government is a positive advance. Not a majority of the UK perhaps, but politicians underestimate their numbers at their peril.
Which brings us to economics. There are two fundamental problems with making the decision based upon the impact on GDP. The first is that all economics is based upon the theory of the “rational consumer” while all asset bubbles, panic sales, brands and the like demonstrate that most consumers are far from rational. The second is that, as noted by Niels Bohr, “all forecasts are hard – particularly if they involve the future.” The Bank of England is required to produce quarterly forecasts of inflation, which it publishes. These clever graphs have an error budget in them and clearly demonstrate the problems inherent if forecasting just one parameter. As GDP is in effect the collective purchasing decisions of the UK population and all the companies in the UK for a year there are far more than one parameter. Last year there were claims that many companies would leave the UK in the event of an out vote; so far no company has said that and at least two, Toyota and Hitachi, have said that they will stay. The reason is obvious; the EU exports more to the UK than the UK exports to the EU. If the EU refused to continue the UK’s tariff free access to the EU markets we would reciprocate which would hurt the EU more. It is also very expensive to move a car factory, particularly one as efficient as the Toyota one.
So the rational person will conclude that there is not much in it either way, which is about where the polls have it at the moment. But the rational person has to make a decision, so he (or she) will start to look at the emotional issues (which is, of course, where the less rational – spelt poorly educated – began). The obvious issue is migration.
Leaving the EU actually does not have much of a direct effect for the simple reason that most migrants arrive somewhere else in the EU and find it hard to cross the channel or North Sea. If we have a migrant problem it is because for much of the past two decades the Home Office has consistently failed to enforce our border controls. The one change that leaving the EU will bring is that it will remove the automatic right of an EU citizen to live and work in the UK. The key word is automatic. It will also remove the same right from UK citizens in other EU countries. The concern that an absence of readily available EU workers to fill jobs in the UK is really not defensible; they can come in under a similar (or improved) visa system to non-EU citizens. The fate of ex-pats is harder to predict. That said, few EU countries are going to wish to lose solvent contributors to their economy so I suspect current expats will be granted whatever visas become required.
The less obvious issue is the contempt with which much of the UK electorate loathes the current parliamentary establishment. I believe that this goes beyond the historic lines of tribal voting and is the result of the rise of the professional politician, and this is my 5th November point. Since the farce of the Iraq War and the missing WMD, the astonishing and sudden wealth of Blair, the horror show of Cameron and Osborne and the expenses scandal(s) politicians have managed to fall very low in the public esteem.
At the same time their ability to deliver anything useful, like say a balanced economy or even a balanced budget, is diminished by globalisation. There is nothing, absolutely zip, that Westminster can do about the oil price. Nor can it do much about the Chinese economy or any of the other myriad drivers of our wealth. The best any chancellor can legitimately claim is that their policies have not overly hurt the economy and public – and precious few can claim that. All prime ministers since Thatcher have had to go to war but only Blair and Cameron have joined recreational wars and then lost them (in warfare if you have to ask who has won it isn’t you). None have managed to reform the House of Lords, indeed one could argue that the removal of the hereditary peers has actually made it worse. I think that an increasingly wide selection of the British electorate subscribes to the “a plague on both your houses” school of thought – also spelt “we want our country back.”
In those circumstances when faced with a choice between “stay” recommended by Corbyn, Blair, Cameron, Alec Salmond and whoever replaced Nick Clegg the option of flicking them two fingers and voting “go” will be irresistible.
But it won’t end there. At the moment some are saying that the mechanics of leaving will require negotiation. Why? The day after the vote has been counted if it is “out” then all Mr Cameron has to do is stop writing cheques to Brussels, recall our commissioners and MEPs and get on with running the UK. He also has to state that, subject to reciprocation, imports to UK from EU will be tariff free and EU citizens currently resident in UK will have their current rights. That’s less than five minutes’ work.
The only possible thorny areas are the Common Agricultural Policy (CAP) and the Common Fisheries Policy (CFP). The former is solved by Westminster taking over responsibility for payments. That is pretty much a trivial change. CFP is a bit harder as upon leaving the EU we will wish to re-establish our territorial waters. Again, an announcement that with immediate effect fishing rights of non UK vessels within what are once again UK territorial waters are cancelled and that all such vessels are to leave UK waters at best speed will establish the policy. What’s left of the Royal Navy will be busy for a bit but that is what they are there for.
In any competent administration the wording would already be drafted and the contingency plans in existence. Civil servants are going to have to get busy, but I fear that they won’t. If there is an out vote followed by delay I suspect that there will be fireworks, real and metaphorical, on a similar scale to those Guido Fawkes attempted.