Read more: 24th June—the Conservative Party reacts to Brexit
Most of us have probably had more than enough of the EU referendum debate. But while tribal members of both the “Remain” and “Leave” camps will not change their minds during the countdown to 23rd June, many other voters will be undecided. What should be said in order to influence them over the next three weeks? And in particular, the minds of young people who may not be planning to vote? The debate over whether we should “Leave” or “Remain” basically boils down to three issues: the economy, immigration and sovereignty.
First, the economy. “Remain” is widely credited with winning the argument here, and will be keen to keep the focus on it. The economic case for staying in the EU has been endorsed by what “Leave” campaigners have called a “cosy clique” of institutions and elites. These include the Treasury, the Bank of England, the National Institute of Economic and Social Research, and the Institute for Fiscal Studies in the UK, along with the IMF, OECD, the World Trade Organisation, the leaders of the G7, the ECB, and US Treasury Secretaries from the past and present. Other policy makers abroad have endorsed this case too; President Putin has not. You decide if this is a cosy clique or if their common narrative reflects a conviction that we would be well advised to take seriously.
Economists have opined about the modeled short and long-term costs arising from leaving the EU. “Remainers” have emphasised that leaving the EU could result in economic disaster, while “Leavers” have poured scorn on the economic forecasting. There are always uncertainties associated with precise economic predictions, especially ones that look far into the future, but there is broad agreement that there could be significant costs to the economy and to employment if we decide to leave. Iain Duncan-Smith acknowledged as much last week, arguing it was a price worth paying. The reality is that uncertainty and unpredictability of the next few years would result in weaker spending, investment and borrowing by households and companies for an indeterminate period of time, and that it would take a long time before the UK’s trade and economic relations with the EU could be put on to a new footing. We would be poorer. It does not seem that we are prepared for this: households are saving less than before the financial crisis, the ratio of house prices to incomes is higher than it was then, and the external (balance of payments) deficit is significantly larger. These facts are irrefutable.
Without access to the Single Market, which the “Leave” leadership has stated it neither wants nor needs, it isn’t clear how the UK would acclimatise to a new world. “Leavers” say the UK could exist perfectly well inside the 161 member WTO. But the Director-General of the WTO, Roberto Azevedo, last week argued that if Britain left, it would face unprecedented negotiations with the 161 other WTO countries and would not simply be able to “cut and paste” the EU terms that have been negotiated over the past 20 years. Brexit, therefore, would lead to new arrangements on thousands of tariffs, quotas and subsidies and on access to markets. The UK would lose preferential access to other markets covered by 36 trade agreements and 58 countries, negotiated by the EU. These new arrangements would cost billions of pounds, and have to be conducted by trade negotiators that the UK doesn't even have at this point.
One economic statistic that should be put out to grass is the much-touted £350 million a week, now rebranded as the £50 million a day, that the UK supposedly pays to Brussels, and that could supposedly be reallocated to causes such as the NHS. The independent UK Statistics Authority has deemed the claim “misleading,” saying it doesn’t account for the rebate from the EU. If you want to check, look up the ONS’s so-called Pink Book, which is an annual, comprehensive review of the balance of payments, and dig up Table 9.9. The UK’s net contribution to the EU in 2014 was £9.9 billion, and it’s lower still if you allow for other monies spent by the EU in the UK. Few people will, but most will hopefully understand that the rebate halves the cost, and that outside the EU, this money would be swallowed up by the costs of having to “reboot” our administration and governance systems, by the hit to public finances from a weaker economy (estimated at £20-40 bn by the IFS), and by additional years of austerity, which a new Conservative administration would doubtless insist on.
Given that the levels of employment and labour force participation (that is, people who are either in or looking for work) are at all-time highs, and that unemployment is roughly 5 per cent, the threat to jobs doesn’t stack up. On the contrary. In the healthcare system and a raft of other sectors, immigrants are less stealing jobs than filling shortages. It is possible that immigration tends to lower pay in a handful of specific sectors, but the fundamental issue of low pay in the UK, as elsewhere, is really down to a potpourri of factors ranging from weak investment and productivity growth, demographics, and the effects of new technologies on middle-level wage and middle-skilled occupations. Further, there is simply no evidence that there is any material cost to the economy from immigration. Immigrants, who tend to be younger and healthier than the average Brit, tend to contribute more in taxes and charges than they derive in benefits.
Pressure on public services, such as hospital waiting lists, doctor’s appointments, school places, and housing availability is clearly an issue that is of deep concern to voters. But level of immigration is not an unmanageable problem if the government and local authorities fulfill an enabling role. However, at a time when the government has chosen to lower spending on public services—by 12.6 per cent between 2011/12 and 2019/20 despite a rising population, especially of older citizens—is there not a better explanation for pressure on public services? To check the flow of EU migrants overnight, we would have to both leave the EU and the Single Market, which require participants to respect free movement provisions. We have to ask if the price of leaving both weighs against the significantly smaller cost of managing our migrant flows more effectively.
Third, the issue of sovereignty and taking back control has become a populist rallying call. Every nation state makes choices about how to balance high levels of economic integration (eg the Single Market in the EU) from which it derives material benefits, with some pooling of sovereignty, and some ceding of democratic decision-making. UK regions do this with regard to Parliament in London, as US states do with regard to Washington DC. It happens inside the IMF, WTO and so on. So it is not strictly correct to say that the UK, one of the least regulated countries in the EU, would reclaim control of its sovereignty outside the EU. Yes, the UK has to conform to sometimes annoying rules and standards for products, markets, the environment, and as some employers would say, workers’ rights. On the other hand, on all major matters pertaining to public spending and taxation, national security and defence, education and welfare and so on, Parliament’s decisions are first and final. “Leave” campaigners will insist that regaining control over migrant flows is of paramount importance, but, as stated before, people will have to decide if this alone warrants leaving the EU.
Whether you’re a “Remainer” or a “Leaver,” you can’t duck the reality that the world economy has become a more dangerous place since the financial crisis. Great economic uncertainty and nationalism are rife in Xi Jinping’s China and Putin’s Russia. In the US, we may hope that Hilary Clinton secures the White House to temper these pervasive trends, but a Trump presidency that would exacerbate them is a realistic possibility. In the troubled Middle East, the new era of low oil prices means a high likelihood of political and economic upheavals in and around Saudi Arabia. Emerging markets, that we once hoped would keep the global economy healthy, have lapsed into a growth hiatus and trade funk of unknown duration. And then there is the environment, terrorism and security, the fight for fairness when it comes to income inequality and multinationals paying taxes, the absorption of new technologies, collaboration and funding in science and innovation, and much more. We have the choice to stick with our neighbors and try to deal with a complex world as it is, or leave them to find our feet in a benign, welcoming world that simply doesn’t exist.
Most of us have probably had more than enough of the EU referendum debate. But while tribal members of both the “Remain” and “Leave” camps will not change their minds during the countdown to 23rd June, many other voters will be undecided. What should be said in order to influence them over the next three weeks? And in particular, the minds of young people who may not be planning to vote? The debate over whether we should “Leave” or “Remain” basically boils down to three issues: the economy, immigration and sovereignty.
First, the economy. “Remain” is widely credited with winning the argument here, and will be keen to keep the focus on it. The economic case for staying in the EU has been endorsed by what “Leave” campaigners have called a “cosy clique” of institutions and elites. These include the Treasury, the Bank of England, the National Institute of Economic and Social Research, and the Institute for Fiscal Studies in the UK, along with the IMF, OECD, the World Trade Organisation, the leaders of the G7, the ECB, and US Treasury Secretaries from the past and present. Other policy makers abroad have endorsed this case too; President Putin has not. You decide if this is a cosy clique or if their common narrative reflects a conviction that we would be well advised to take seriously.
Economists have opined about the modeled short and long-term costs arising from leaving the EU. “Remainers” have emphasised that leaving the EU could result in economic disaster, while “Leavers” have poured scorn on the economic forecasting. There are always uncertainties associated with precise economic predictions, especially ones that look far into the future, but there is broad agreement that there could be significant costs to the economy and to employment if we decide to leave. Iain Duncan-Smith acknowledged as much last week, arguing it was a price worth paying. The reality is that uncertainty and unpredictability of the next few years would result in weaker spending, investment and borrowing by households and companies for an indeterminate period of time, and that it would take a long time before the UK’s trade and economic relations with the EU could be put on to a new footing. We would be poorer. It does not seem that we are prepared for this: households are saving less than before the financial crisis, the ratio of house prices to incomes is higher than it was then, and the external (balance of payments) deficit is significantly larger. These facts are irrefutable.
Without access to the Single Market, which the “Leave” leadership has stated it neither wants nor needs, it isn’t clear how the UK would acclimatise to a new world. “Leavers” say the UK could exist perfectly well inside the 161 member WTO. But the Director-General of the WTO, Roberto Azevedo, last week argued that if Britain left, it would face unprecedented negotiations with the 161 other WTO countries and would not simply be able to “cut and paste” the EU terms that have been negotiated over the past 20 years. Brexit, therefore, would lead to new arrangements on thousands of tariffs, quotas and subsidies and on access to markets. The UK would lose preferential access to other markets covered by 36 trade agreements and 58 countries, negotiated by the EU. These new arrangements would cost billions of pounds, and have to be conducted by trade negotiators that the UK doesn't even have at this point.
One economic statistic that should be put out to grass is the much-touted £350 million a week, now rebranded as the £50 million a day, that the UK supposedly pays to Brussels, and that could supposedly be reallocated to causes such as the NHS. The independent UK Statistics Authority has deemed the claim “misleading,” saying it doesn’t account for the rebate from the EU. If you want to check, look up the ONS’s so-called Pink Book, which is an annual, comprehensive review of the balance of payments, and dig up Table 9.9. The UK’s net contribution to the EU in 2014 was £9.9 billion, and it’s lower still if you allow for other monies spent by the EU in the UK. Few people will, but most will hopefully understand that the rebate halves the cost, and that outside the EU, this money would be swallowed up by the costs of having to “reboot” our administration and governance systems, by the hit to public finances from a weaker economy (estimated at £20-40 bn by the IFS), and by additional years of austerity, which a new Conservative administration would doubtless insist on.
“There is simply no evidence that there is any material cost to the economy from immigration”Second, on immigration, the campaign boot seems to be on the other foot. In 2015, net immigration from the EU was 184,000, while from non-EU countries it was 188,000. Yes, that's right, most migrants still hail from outside the EU. These numbers were seized upon last week by the Leave campaign as an example of the government’s inability to stem the inflow of EU migrants. If we assume that the official data are accurate, there were 2.9m people of EU nationality living in the UK, and 2.15 million in the labour force. Foreign citizens of all nationalities represent about 8.5 per cent of the population, which isn't massive. Yet how realistic are the allegations that immigration threatens jobs and wages, costs the country, and adds to social pressures?
Given that the levels of employment and labour force participation (that is, people who are either in or looking for work) are at all-time highs, and that unemployment is roughly 5 per cent, the threat to jobs doesn’t stack up. On the contrary. In the healthcare system and a raft of other sectors, immigrants are less stealing jobs than filling shortages. It is possible that immigration tends to lower pay in a handful of specific sectors, but the fundamental issue of low pay in the UK, as elsewhere, is really down to a potpourri of factors ranging from weak investment and productivity growth, demographics, and the effects of new technologies on middle-level wage and middle-skilled occupations. Further, there is simply no evidence that there is any material cost to the economy from immigration. Immigrants, who tend to be younger and healthier than the average Brit, tend to contribute more in taxes and charges than they derive in benefits.
Pressure on public services, such as hospital waiting lists, doctor’s appointments, school places, and housing availability is clearly an issue that is of deep concern to voters. But level of immigration is not an unmanageable problem if the government and local authorities fulfill an enabling role. However, at a time when the government has chosen to lower spending on public services—by 12.6 per cent between 2011/12 and 2019/20 despite a rising population, especially of older citizens—is there not a better explanation for pressure on public services? To check the flow of EU migrants overnight, we would have to both leave the EU and the Single Market, which require participants to respect free movement provisions. We have to ask if the price of leaving both weighs against the significantly smaller cost of managing our migrant flows more effectively.
Third, the issue of sovereignty and taking back control has become a populist rallying call. Every nation state makes choices about how to balance high levels of economic integration (eg the Single Market in the EU) from which it derives material benefits, with some pooling of sovereignty, and some ceding of democratic decision-making. UK regions do this with regard to Parliament in London, as US states do with regard to Washington DC. It happens inside the IMF, WTO and so on. So it is not strictly correct to say that the UK, one of the least regulated countries in the EU, would reclaim control of its sovereignty outside the EU. Yes, the UK has to conform to sometimes annoying rules and standards for products, markets, the environment, and as some employers would say, workers’ rights. On the other hand, on all major matters pertaining to public spending and taxation, national security and defence, education and welfare and so on, Parliament’s decisions are first and final. “Leave” campaigners will insist that regaining control over migrant flows is of paramount importance, but, as stated before, people will have to decide if this alone warrants leaving the EU.
“Whether you’re a “Remainer” or a “Leaver,” you can’t duck the reality that the world economy has become a more dangerous place since the financial crisis”Finally, until now, both “Remainers” and “Leavers” have claimed it would be a disaster for the country to leave and remain, respectively. This won’t change. The truth, though, is more nuanced. The UK will neither sink without trace outside the EU, nor face a future of abundance and opportunity if it is freed from what has been called the Brussels yoke. We will not be over-run by migrants inside the EU, nor will we be condemned to permanent economic collapse outside it. We will continue to pool some of our sovereignty with others formally inside the EU, or less transparently outside. But the bottom line is that after the economic downturn that would likely follow Brexit, life outside the EU would be riskier, harder and more costly over the next several years, affecting our children.
Whether you’re a “Remainer” or a “Leaver,” you can’t duck the reality that the world economy has become a more dangerous place since the financial crisis. Great economic uncertainty and nationalism are rife in Xi Jinping’s China and Putin’s Russia. In the US, we may hope that Hilary Clinton secures the White House to temper these pervasive trends, but a Trump presidency that would exacerbate them is a realistic possibility. In the troubled Middle East, the new era of low oil prices means a high likelihood of political and economic upheavals in and around Saudi Arabia. Emerging markets, that we once hoped would keep the global economy healthy, have lapsed into a growth hiatus and trade funk of unknown duration. And then there is the environment, terrorism and security, the fight for fairness when it comes to income inequality and multinationals paying taxes, the absorption of new technologies, collaboration and funding in science and innovation, and much more. We have the choice to stick with our neighbors and try to deal with a complex world as it is, or leave them to find our feet in a benign, welcoming world that simply doesn’t exist.
