Nobody Voted to be Poorer

Poorer 2This is true but also a truism, it adds nothing we didn’t know but it’s a slimy statement from anti-Brexiteers. It presumes that leaving the EU will make us poorer without demonstrating it as a fact. It says that we, the voters, didn’t realise this so they, the experts, have a duty to save us from the consequence of our ignorance and stupidity.

These ‘experts’ and their predecessors have seldom been right in previous, comparable situations:

Leave the Gold Standard? Disaster! Leave the Exchange Rate Mechanism? Disaster! Stay out of the eurozone? Disaster! Vote to leave the EU? Immediate disaster! Wrong! Wrong! Wrong! Wrong! Things were fine each time. There will surely be problems but disaster only if we have lost the will and the competence to deal with them.

Establishment 1The Establishment generally chooses the established way: that’s its job, if it didn’t it could lose its job. Those ensconced with the EU’s ways want to stick with it. If you want to know what’s best for farmers ask the NFU and it will tell you what big agri-businesses want, like subsidies based on farm size – yet most farmers voted Leave. Ask the CBI what business wants and it will tell you what corporate Britain and multi-national industries want – most businesses won’t mind too much but might find it easier to give their customers the right stuff without regulations designed by and for those in different markets. Ask the Treasury or IMF and you will get a forecast that will only prove correct by chance, not by science – these experts are usually wrong when they guess the medium to long term, and sometimes even the short term.

Gold 1We’re not claiming to be more expert than the Experts but judging by past events or current trends doom isn’t the most obvious outcome. Leaving the Gold Standard and the ERM both boosted GDP growth. Staying out of the common currency project let the pound take the strain and so avoided the depressions that hit other indebted EU states. UK economic growth is again higher than the EU’s, including growth in France and Germany; last year the EU’s was higher but while the UK stopped QE and continued its deficit reduction programme the EU carried on pumping money into the system. Not only did it continue Quantitative Easing but loaned money to banks at ultra-low interest rates (actually negative interest in real terms) provided the banks lent to companies for growth-inducing investment: TLTRO (Targeted longer-term refinancing operations). Actually the banks have preferred to shrink their balance sheets rather than make loans so are returning the cash early (that too is a consequence of EU regulations that make it easier to comply with capital ratios).

Eurozone crisisOne reason the experts are likely to be wrong again is that they are mostly looking at the UK’s performance compared to a steady-state EU. However the EU is approaching a crisis having shot all its economic bolts to keep the common currency project in place. Greece will soon need a fourth bailout and Italy’s problems are likely to trigger a crisis far bigger than Lehman Brothers did a decade ago. Factor these in with appropriate betting odds and a ‘clean Brexit’ (or crashing out with no deal if you prefer) could look a lot better – relatively of course, because a euro catastrophe will cause us all immense harm.

The UK Government’s view is that No Deal (or WTO Rules) would result in chaos at our ports and airports. In fact the impact on Calais would be so severe that its Mayor is already begging the Macron government to ensure that won’t happen. Meanwhile a 10% tariff against German car imports would tip Germany into recession; it is already on a knife edge due to the impact on its manufacturing industries of new vehicle test standards, falling Chinese demand, plus Trump and Fed actions. Italy too cannot cope with the downturn that a bad Brexit would bring about. If the EU was flourishing perhaps it would carry out its threats to cripple the UK if it doesn’t surrender to its unfair and unequal demands. The EU has already conceded continuity for critical financial services based in London and will surely concede other measures that might otherwise destroy the fragile eurozone. Britain has some big chips to play.

Chips

 

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