A recession? it’s up to David Cameron

As Project Fear goes into overdrive, there are plenty of good grounds for scepticism.

Lord Stoddart, for one, is distinctly unconvinced.  “On the same day that former Labour Chancellor Alistair Darling stood on a platform with current Chancellor George Osborne to support the imposition of additional swingeing taxes on the British people, if they dare to vote for Brexit on 23rd June, the Labour Leader Jeremy Corbyn emphatically states in the House of Commons that the Labour opposition will oppose any such measures, whether or not Britain leaves the EU,” he said.

 “Since 59 Tory MPs have also said they will not support Mr Osborne’s measures, it is clear that his threat is a completely empty one and yet another scare story bites the dust!  It is equally clear that the Remain campaign is in chaos.  They are so busy inventing irresponsible scare stories aimed at bullying the voters, that they are forgetting to take the elementary step of consulting with each other.  How can we trust anything they say?”

Of course, a vote to leave the EU sounds the death knell for  George Osborne’s hopes of succeeding David Cameron, so it is unsurprising that he has been pressing the “fear” button even harder than usual as the polls swing round towards a leave vote.

Recent headlines talk of the pound “plummeting”. Check out the Sterling/US Dollar exchange rates and although the pound has fallen slightly since the polls started to show a lead for “leave”, £1 is currently (as at 10.30 on 17th June) worth over $1.42. HIGHER THAN THE LOW POINT FOLLOWING MR CAMERON FIRST ANNOUNCING THE REFERENDUM DATE NEARLY FOUR MONTHS AGO.

Those who heard Helle Hagenau from Norway’s Nei til EU speak at our rally last month will remember that she described how the Norwegians were threatened with thousands of job losses the day they voted not to join the EU. This did not come to pass – in fact, Norway became more prosperous after the 1992 vote to stay out.

We pointed out here how 364 economists predicted that Sir  Geoffrey Howe’s 1981 budget would cause an economic calamity and were proved badly wrong. It was this budget, not our entry to the EU eight years earlier, which was the point when our moribund economy finally turned round

Of course, the has been a distinct lack of detail rgarding how we are going to leave. We know that Flexcit has been downloaded by a number of senior civil servants and whatever the proposals of some of the most prominent campaigners, it is highly likely that this is going to be the route which the Government will take as it is far an away the safest route to guide our economy through the Brexit door. It would ensure that any drop in the pound or the FTSE-100 would prove short-lived.

The lack of agreement of a consistent exit strategy has been the Achilles heel of the Leave campaign, which is a pity. If we had been able to silence the scaremongers regarding the route throug hthe Brexit door, the vote would have been in the bag a long time ago. It has been frustrating that we have ot been able to re-focus the issue on the political nature of the EU, which is  pity given the quality of such offerings as this speech by Lord Owen which highlights the federalist nature of the EU project and is well worth listening to.

Therefore, the economic issues will still rumble on right up to referendum day. The bottom line is that if we vote out, the buck stops with David Cameron. The markets will be looking for a detailed response from the Prime Minister regarding the timescale for invoking Article 50 and what exit route he is going to take.  His civil servants know there is a proven risk-free route to economic stability which will quickly calm market nerves. If he chooses to ignore their advice and pussyfoot around,  he and he alone must carry the can for any forthcoming economic downturn.

BBC muddying the waters

Anyone listening to the BBC news last week would have heard a misleading headline that Germany’s  finance minister Wolfgang Schäuble said that we would not be allowed to stay in the Single market

However, if you listened to the article in full, what he actually said was that if we were to stay in the Single Market, we would have to abide by the rules, including accepting the “four freedoms”. In other words, a bespoke deal isn’t on offer.

This is no great shakes. Whatever the wishes of many “leave” supporters, it will be the government which negotiates our exit strategy and we know that senior civil servants have been downloading Flexcit, an exit strategy document co-authored by, among others, Dr Richard North and CIB Committee member Robert Oulds of the Bruges Group. This advocates remaining in the Single Market by re-joinng EFTA and ths accessing it via the EEA agreement.

Herr  Schäuble’s words on which the BBC based their headline were given in response to the assertion that “Britain could continue to enjoy the benefits of the single market without being an EU member, in the same way that Switzerland and Norway do.” He replied, “That won’t work. It would require the country to abide by the rules of a club from which it currently wants to withdraw. If the majority in Britain opts for Brexit, that would be a decision against the single market. In is in. Out is out. One has to respect the sovereignty of the British people.”

As Dr North pointed out,  “The man thinks the EFTA/EEA (interim) option wouldn’t work. And that is on the basis of his interpretation that a vote for Brexit by the British people necessarily means a rejection of participation in the Single Market….What we have therefore, is an opinion based on an assumption, and nothing more than that – from a politician who is not a head of government, and who may not even be in office by the time Article 50 negotiations start in earnest……The finance minister is just another noisemaker in a debate polluted by noise.

While it is true that the degree of extra control over immigration which the EEA/EFTA route will allow us is not the same as that which may Brexit supporters desire, a recent poll conducted by Opinium, for the Bruges Group,  yielded the following results:

33% = Remain EU and Remain in the Single Market
13% =  Leave EU, join  EFTA, Remain in Single Market
39% = Leave EU, and have a Free Trade Agreement
16% = Don’t Know
Taking out the Don’t Knows, gives:
61% =Options to Leave EU (FTA + EFTA)
39% = Options to remain in the EU

(See here for a more detailed analysis of the result)
The poll shows that so strong is the desire of many to leave the EU that they are not taking much notice of the economic arguments. The “leave” side, however, needs to clean up its act. Recent polls are encouraging, but it would be a shame to lose a winnable referendum when the finishing post is in sight  because we are unable to reassure floating voters concerned about their economic wellbeing that the sky won’t fall in on  June 24th.  EEA/EFTA provides precisely such reassurance.

A call to Brexiteers to fill the void on the economic effects of Brexit.

I think that we Brexiteers can be very grateful to Michael Gove for his sparky performance on Sky TV. Apart from having to defend the rather silly figure work of the UK paying £350 million per week to the EU, which we all know to be misleading, he was hung out to dry on his lack of supporting evidence for his assertion that the UK could prosper outside the Single Market.

As the Vote Leave campaign have decided to go for the `nuclear option’ of freeing themselves from the clutches of the Single Market and not embracing the Norway option /EEA route (probably because of the worries about the attendant problems of free movement of people) they must somehow build a firm foundation for this view. At the moment there is a generally held view that evidence for a good outcome is lacking, one which John Major hammered home on the Marr Show on Sunday.

Luckily, there is a group of well-known economists which calls itself Economists for Brexit and which shares Vote Leave`s view. The group has produced a pamphlet which is available on the internet.

This body of erudition can be found here and the summary of their views in the leaflet is that Brexit will result in a better economic outcome than remaining in the EU. Economic forecasts (based on proven financial modelling by Patrick Minford) show that on leaving the EU:

  • Output grows 2%
  • Competitiveness rises 5%
  • Real disposable wages up 1.5%
  • Exchange rate falls 6%
  • Inflation and interest rates rise to 2-3% range
  • Current account improves to -1.5% of GDP
  • Unemployment reduced by 0.2% (75,000 on benefit count)

It also points out that:-

  • The UK does not need to do a trade deal to trade. It already trades extensively with many countries across the globe under the rules of the WTO and can continue to do so with EU countries in the future (in the same way that the US, Japan and China does). Leaving the EU will decrease prices and boost GDP.
  • The City of London will retain its role as the world’s leading financial centre outside of the EU.
  • The UK is a net contributor to the EU budget and those funds could be utilised far more efficiently elsewhere.

To quote from their pamphlet, which is downloadable, they state that: “The Economists for Brexit is a group of eight independent, leading economists who are convinced of the strong economic case for leaving the EU. To date, debate on the economic merits of whether the UK should remain in the EU has become overwhelmed by the Government’s Project Fear campaign. Each of the eight economists have become exasperated by the scaremongering and often economic illiteracy of this campaign.

At the same time, the group believes that whilst there are a substantial number of economic arguments to support Brexit, they are yet to be made in public. The purpose of this group is to explain the very clear economic arguments in favour of Brexit, offering voters – who are crying out for clarity on the economics of Brexit facts based on proven economic models, as opposed to speculation.

It is a useful and insightful view on the way forward if we break loose from both the EU and the EEA and do our own thing. There is even a short but detailed post-Brexit forecast to be found towards the end of the report by Patrick Minford.

Whilst one can understand that were the Leave campaign to link itself to such a document it is then open to the opposition mercilessly to analyse it, tear it apart and use portions of it against them. However, here is a body of professional opinion which is robustly positive for the economic outlook after Brexit and which has some realistic opinions on the excessive burdens which are placed on business by the regulatory zeal of the EU.

The Leave campaign must now ‘up its game’ and use the supporting information which is out there to form a compelling case for life after Brexit. It should also make more use of the information which points to the very real dangers of remaining in a failing, ove- regulated customs union which contains a host of countries whose economies are in a precarious state.

 

Photo by HowardLake

More positive polling, but here’s what we’re up against

Telephone polls carry more weight than on-line polls. That is certainly the message from the markets. The pound has fallen as an ICM poll for the Guardian has given “Leave” 52% of the vote. A week ago, the dollar stood at over $1.46 to the pound. Now it has fallen to barely $1.44 and the main factor is a realisation that Brexit is looking more likely. Importantly, however, this is still higher the than the exchange rate at the time the referendum was announced, suggesting the markets do not view Brexit as the calamity George Osborne has predicted.

Also casting doubt on the gloomy economic “consensus” is Ashoka Mody, a former deputy director of the International Monetary Fund’s European and Research Departments. This is significant given that the current head of the IMF, Christine Lagarde, has been very much part of the doom and gloom  brigade.

Mr Mody, writing in the Independent,  questions whether the UK’s trade with te EU will fall. The essence of what he says is that, whatever scenario international traders are confronted with, they will eventually adjust and all productive trading relationships will remain intact. He does not look at the various alternative Brexit scenarios but pours scorn on the idea that permanent damage will be done to the economy. “The vast bulk of those large estimates come from the further assumption that reduced trade will shrink British productivity growth. This is disingenuous. There is simply no evidence that less trade lowers productivity growth”, he says.

He does not predict an economic bonanza, but does this matter? The prophecies of doom and gloom have lowered the bar. We only need to show that the sky won’t fall in and we can move the debate on to other areas. Following on from Allister Heath’s piece, the “remain” camp’s claim that they have irrevocably won the economic argument does not stand up.

They do, however, have other weapons up their sleeve. The ilustration above comes from a step-by-step ‘How To Vote By Post’ guide was sent by Bristol City Council to residents registered for postal voting last week, along with the actual ballots. Note  how the pencil is positioned above “remain”!

Also very worrying is this article about the strange order in which items appear in Google if you search under “EU referendum”. You would naturally expect Richard North’s blog of that name to come top, given the scale of  its readership. Well, it barely makes the top 10, even though it comes top in other searches like Yahoo! and Bing. Very odd.

Like Bristol City Council, Google has denied any wrongdoing, but it is very clear that our opponents are not playing fair. We always knew this wold be the case, but thankfully, it doesn’t mean that we can’t win, especially given the recent polling, but it does show just what we are up against.

It’s over to you to end this unhappy marriage.

We are now into the “purdah” period when the government will refrain from using its machinery to push the “remain” line. It has been making the most of its advantages in the last three months, it has to be said, with pro-remain propaganda splashed all over government websites, even (as our Chairman discovered) on a link to the Charity Commission website. However, this barrage has failed to flatten the “leave” side and there is still everything to play for.

With both sides being widely criticised for making “lurid claims”, a great opening is being created for ordinary rank and file activists. The statistics war between the big names on both sides has left many voters both underwhelmed and confused. “We want facts” is the cry. They don’t feel thay have been given many.  A leaflet handed to them by someone they know, or even someone prepared to spend a few minutes explaining what the EU is and what its objectives are, may carry more weight with some voters than a statement by one of the “big hitters”. Dr Anthony Coughlan pointed out that in the Irish referendums, “the winning side {was} that which does most personal communication, giving people personally and ideally face-to-face the reasons why their position {in our case  a vote to leave} is the safer option.” 

The personal touch is definitely having some effect. A poll conducted for the Daily Echo in Hampshire found that almost two-thirds of over 1,000 people surveyed who had made their minds up supported Brexit and there were still undecided voters to be won over. One of our supporters recently contacted us from South Herefordshire with the news that his group’s polling found 60% support for leaving the EU in that area.

Your author has received several e-mails from formerly undecided voters won round to withdrawal.  I have been a wavering voter for a long time but since the barrage of economic disaster scenarios from the remain camp, I have now decided on Brexit said one. Following Barack Obama’s visit, another correpondent said, “Up until this moment I have been a staunch EU supporter. but now I will vote to leave and take my place at “the back of the queue”. I’m British, queueing is what I do and being at the back is a place I’m happy to be!! The US President has inadvertently supported the leave campaign.”

Neither these encouragements, however, nor the claims of some people  – including a friend of mine – that “I don’t know anyone round here who wants to stay in” should lead us to complacency. As we have pointed out, the polls may be wrong, but on the other hand they may not. We still have a lot of work to do. The lack of a coherent exit strategy has been exploited by George Osborne and other “remain” people. However, as Allister Heath rightly pointed out in a recent article in the Daily Telegraph, there is way to counter this and if we do so, we could pull off a memorable victory. Our former Chariman Petrina Holdsworth has rightly said that the EEA/EFTA route which Heath advocates “is the only way to smooth jangled nerves over our exit.”

In your author’s experience, EEA/EFTA exposes a weakness in the “remain” camp’s flank. Twice, when advocating this as the most seamless escape route, his reasoning has been countered by barefaced lies. “We would have to become part of Schengen” NOT TRUE. “We won’t be allowed to re-join EFTA. NOT TRUE.  The latter culprit was an MEP in a debate in Oxfordshire in which I took part last Friday. I won’t name her because I can’t actually remember which of the two female MEPs  in ths particular debate actually made this claim! It came as such a shock and thankfully I was able to give chapter and verse regarding statements from politicians from Iceland and Norway who both  said – albeit grudgingly in the case of  Vidar Helgesen, the Norwegian Minister for European Affairs, on 28th October 2015 – that we would be welcome back.

We are producing a leaflet which explains the advantages of EEA/EFTA. This is the pdf, although you will need to print both pages on the two sides of a single piece of paper and fold it to see how it works.

However, some people are totally put off the economic arguments and just need something simple. This leaflet, written by our President, George West, has proven to be very effective according to John Hart,  one of our supporters.

It’s horses for courses, but to repeat, we can still win this referendum in spite of the criticisms of the leave campaign so far. It would be tragic if the net result of what has largely been an ill-tempered battle between senior Conservative ministers past and present was that we remain locked in what is an unhappy marriage  – merely through fear of leaving.

Let’s give the final word to a Norwegian, the playwright Henrik Ibsen.  His play A Doll’s House tells the story of Nora, a wife locked into a loveless marriage to a patronising husband who just doesn’t understand her aspirations. She reaches the conclusion that their marriage has been based on mutual fantasies and misunderstanding and the play ends dramatically with her boldly leaving the house, slamming the door behind her.  When people are as unhappy in a relationship as Nora, economic issues are not necessarily their number one consideration. How apt this analogy will be if we too can walk through the Brexit door to freedom next month.

Project Fear and the antidote

New deceptions every day

Tell us we shall have to pay

Billions if we do not stay

In the wretched European Union.

 

These liars, tell us, who are they?

Cameron, Osborne, Theresa May

Apparatchiks in the pay

Of the wretched European Union.

 

They warn us: “Brits, be very afraid

Because we will lose all our trade

If our exit e’re is made”

From the wretched European Union.

 

These traitors, they begin to bore

And even threaten “There’ll be war!”

If we ever shut the door

On the wretched European Union.

 

We’ll lose security as well;

Britain to become a bombed-out hell

If we ever dare to yell,

“Stuff the wretched European Union!”

 

“Cultural life will wither away” –

(Pampered luvvies come to say)

Unless we vote that we will stay

In the wretched European Union.

 

Obama spouts his usual goo:

“Departure you will come to rue

When you’re at the back of the queue”

Outside the wretched European Union.

 

All these threats are a pack of lies

Like Pinnochio’s nose in size

And told by those conniving guys

Who love the wretched European Union.

 

None of this you should believe

From those who practise to deceive

Raise the flag and vote to leave

The wretched European Union.

 

Once out we’ll trade with every nation

End uncontrolled immigration,

All that taxation and regulation

By the wretched European Union

 

Brits, cast off the superstate

Eurocrats have no mandate

If we remain we shall stagnate

Leave the wretched European Union!”

Rev Dr. Peter Mullen