What they didn’t tell you during EU referendum debate

Some thing that weren’t always made clear during EU referendum.

Economic experts are worth listening to. A string of senior ‘leave’ politicians lined up to say you shouldn’t listen to economists making warnings about short term and long-term damage to economy. But, just because economic analysis is inconvenient to your point of view, doesn’t alter the fact, if you leave EU, there will be fall in confidence, fall in inward investment, falling Pound and a negative impact on trade. The impact is hard to define precisely, but the basic rationale is there.

Economic forecasts are not certainties. On the other side, many people disbelieved the ‘scaremongering’ tactics of the Treasury giving precise figures for how much your pension would be affected e.t.c. These kind of calculations are notoriously hard to predict 5 years in advance.  The quantity of numbers presented as certainties were probably off-putting.

There will be no Emergency budget. One of the most bizarre aspects of the government’s remain campaign was the chancellors threat to impose an immediate austerity budget with huge tax rises and spending cuts. It makes no sense to increase tax on the basis of possible decline in public finances 5 years time in the future. Even if there was a short term recession, tax rises and spending cuts are the last thing you want to do.  See also: Can you talk yourself into a recession?

Higher prices. A falling Pound will lead to higher import prices, more expensive holidays. Some Daily Mail readers are apparently expressing shock no one ever warned them this might happen. (Link)

Austerity is responsible for the declining quality of public services – not immigration. Immigration and the EU became a convenient scapegoat for several years of austerity. In recent years, the % of GDP spent on the NHS has steadily declined, just as an ageing population places more strain on it. Labour did occasionally make this point, but it was mostly lost in the campaign.

£350m a week for NHS is not true. One study showed 50% of voters believed the claim the EU cost the UK £350 a week. Experts were uniting in stating this is clearly false. Cost of EU

£350 million pledge was not a promise but a possibility

Asked about the £350 million pledge for NHS, Iain Duncan Smith stated:

“We never made any commitments. We just made a series of promises that were possibilities.”

The net benefits of migration. The Daily Express have been on a ‘crusade’ to highlight the fact migrants impose costs on the economy But, this is only 40% of the story. Migrants (who are mostly young and working) make a net contribution to the Treasury paying income tax, VAT e.t.c. Take away migrants and taxes will have to rise. Fiscal impact of migration.

UK’s demographic time bomb. The UK has a demographic time bomb – an ageing population, which will place huge pressure on the NHS and pension spending. This has been mitigated by economic growth and net migration which has increased the working population. Leaving the Single Market and cutting migration, will mean we have to face the full effects of this demographic time bomb, which will require spending cuts / tax rises.

You will have no choice about whether the UK stays in the Single Market (EEA model) or not. Supporters of Leave relentlessly campaigned on leaving the EU to be able to stop migration. But, this is very unlikely to happen. Worried about a shrinking economy and fall in confidence, will any major political figure dare to cut off the UK completely from the Single Market? – i.e. following Norway into EEA. Access to Single market means free movement of labour – no reduction in immigration. It also means paying very high sum to EU. Voters may have chosen Brexit. But they will not be choosing whether it is a Single Market or complete isolation. It will depend on who emerges as leader of Conservative party – and what they think they can get away with. (Possibly confirmed in general election, but will any major party dare to break from the Single Market? – I doubt it. But, if we do restrict immigration, then there is no Single Market access and there will be tariffs on trade with Europe!

Cost of being outside EU. Countries outside the EU, like Norway pay considerable amounts into the EU for benefits of Single Market. If we want some kind of agreement with Europe, the EU has every reason to make Britain an example of the fact leaving the EU imposes a very high cost.

You don’t get better European co-operation, by leaving the EU. Member countries will want to maintain good trading relations, but at the same time the political pressure is very strong to show leaving the EU is bad for an economy to deter Frexit e.t.c.

CAP was actually a very good reason to leave the EU. Amazingly, Leave never highlighted one good reason to leave the EU. Leaving the EU means we can end the situation where wealthy landowners get paid huge sums of money for owning agricultural land under the CAP. This is maybe because Leave campaigners are quite happy to maintain the status-quo, where the government pays these large sums to wealthy landowners, (which happen to include the family of Iain Duncan Smith) According to this article by G.Monbiot at Guardian.

Rise in xenophobia, blaming migrants and racism damages Britain’s brand. Abroad, the only people cheering Brexit were the European far right and people like Donald Trump. Britain is now viewed not as heroic nation fighting European bureaucracy, but an inward looking, selfish nation. This doesn’t give you more influence, it gives less. Ironically, the rise in xenophobia and blaming migrants could lead to fall in migration – because who will want to come and live in England. But, is this the society we want to see?

However, I should add, we have to be careful not to become more divided and insinuate those who voted Leave did so for ‘racist reasons’. It is important to respect there are different viewpoints, and just because you don’t support free movement of labour doesn’t mean you are xenophobic / racists. This is an economic rationale behind stopping free movement of labour, just as you can make a case for.

I don’t blame the Leave campaign for this, but unfortunately some people seem to think voting Brexit means repatriating immigrants. But, a better question to ask is – Who in Britain isn’t descended from former immigrants?

Brexit will invariably lead to the break up of UK. Scottish independence, united Ireland are all real possibilities. Even Welsh nationalism could grow when they realise voting Brexit wasn’t such a good idea when Wales was a net beneficiary of EU funds.  It is ironic that petty party politics in the Conservative and Unionist party will bring about this breakup of the UK.

European / global co-operation is actually really needed. Why did the European Fisheries policy place limits on catching fish. Because we nearly decimated fish stocks in the North Sea. You can’t have a selfish attitude – we will take whatever is our ‘right’ and ignore the long-term international comparisons. Similarly we need European co-operation to reduce global warming. We can’t just stay we are going to ignore environmental regulations and we will ignore consequences to future generations.

UK already had sovereignty over key policies. Loss of sovereignty was exaggerated. Housing, education, health, fiscal, monetary policy, spending, tax decisions, were all made by UK. Leaving the EU won’t change very much. True we can get ride of regulations on bendy bananas, but most people won’t notice much difference. The sad thing is the UK had the best of both world. – In the EU, but outside the Eurozone, with control over interest rates, exchange rate and fiscal policy.

 

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2 thoughts on “What they didn’t tell you during EU referendum debate

  1. It is a sad day for the older generation when the day dawns on this one donkey trick country that their children never saw what went before. The bad management in our industrial past by both shades of government and the private hand on the tiller saw the end of the Vast motor cycle , automobile and the wonderful m/c tool business.
    Sixth form pupils should be made to read British modern history1945-1980 there are many books out there on the decline of ,what? skills? ,pride ? hope springs to mind ,Industry will make that cake, that Margaret Thatcher spoke of, grow and take its place as
    a major factor in a resurgence of our wonderful country

  2. Remarkably well-thought of. Have been following all your work especially on the recent ones about Brexit. Being neutral about this, I can see the rationale where leaving actually poses more economic threats than opting to remain. With all the incoming problems e.g. sharp fall in pound, depreciation of asset prices, tumbling confidence in both consumers and businesses, i dont think future leaders will have any room in their mind to think about immigration. Probably, it is all about restoring the former and the latter becomes a secondary issue. Campaigners are indeed misleading the commoners

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