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Uncertainty as the UK prepares to vote

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20 th June 2016
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It is of considerable relief that by this time next week the EU referendum will be over and we will know where we are – hopefully. Clearly, if the Leave vote prevails, we will not have a clue where we are as the mechanics of removing ourselves from the EU are far from simple. In theory, following a Leave decision, one would assume that Westminster would reconvene and pass a motion that would trigger Article 50 of the Lisbon treaty that lays out the exit process and the two year deadline for a country wishing to give up EU membership.

That may sound simple, but some senior Leave campaigners are not willing to go through the process and wish to jump the gun. Chris Grayling, for instance, wants immediate UK legislation to curb the powers of the EU Court of Justice. That, in turn, may be taken by the EU as a failure by the UK to accept the Lisbon treaty rules, with the obvious response being that they will not accede to Clause 50 until the UK conforms. At the other extreme, Michael Gove appears to want to delay invoking Clause 50 - although how that would go down with the electorate, to say nothing of companies trying to survive through this debacle, is anyone’s guess.

In any event, we may not even get to this point very quickly. It is clearly a bit of an error, but EU law dictates in the devolution agreements with Scotland, Wales and Northern Ireland. It would appear that, effectively, before Westminster pushed the button on Clause 50, it would need to have the blessing of the assemblies of each of the devolved countries. It is very difficult to imagine that the Scots are likely to be too helpful in this respect unless sweetened with not only the prospect of a second independence referendum, but also the funding required to support them while the oil price remains at current levels.

The problem with this referendum is that the Leave camp has fought a very effective campaign based on garnering the widespread distrust of politicians, the financial services industry, and immigration levels to produce a massive protest vote. Whether there is much validity in their claims is generally questionable and much of their propaganda, particularly in regard to immigration, can only be described as filth. The Remain camp, apart from attacking the most obvious lies – Turkey joining the EU in the foreseeable future, the formation of an EU army and the ridiculous continuance of claiming the payment of £350 million a week to the EU (even Farage admits the Thatcher rebate is removed before any funds are paid) – have simply fallen back on producing reams of experts and institutions to claim that the economy would take a dive. By labelling it Project Fear, emanating from those with a vested interest in staying in, the Leave campaign have done a great job in defusing the economic arguments.

What is depressing is that the Remain camp appears completely hopeless in addressing the Leave campaign’s claims and pointing out how illogical many of them are. They might start with the saving of the mythical £350 million a week contribution to the EU. In fact the true net figure after rebate and EU expenditure on the UK is around £155 million. Even this may appear a very high figure in isolation, but it is worth remembering that it would only take a drop of 0.4% in GDP to wipe the whole saving out. Gove noted again at the weekend that the intention was to reduce the immigrant number to ‘tens of thousands’ each year. There is no chance of this ambition being reached unless the country slides into a deep recession. We already have many more than tens of thousands of overseas students arriving in this country each year, paying commercial rates for their education and on whom the higher education sector is entirely reliant. They would also be deprived of the very considerable amount of grant that the EU provides to them. The National Health Service is entirely reliant on immigrant labour to keep some sort of service operative. It is now regular practice for Health Trusts to send teams out to the Philippines and other Asian countries to recruit nurses and other medical staff to meet the shortfall we have in this country. The Leave camp recommends an Australian type of approach (forgetting that it is to encourage rather than discourage immigration) while we already have a capped scheme encouraging graduate level jobs supporting a salary in excess of £21,000. If you take just these areas, the UK has a current need of over 100,000 immigrants a year just to maintain vital areas of this country’s economy.

The UK has seen unemployment drop by 20,000 over the past three months and is down to 5% with record numbers of jobs to be filled. Where are all these Brits whose job ambitions have been usurped by a flow of Rumanians and Bulgarians? It is difficult to escape the feeling that they are perhaps a little workshy – or perhaps wanted time off to watch the football in France. They might like to queue up at the non-EU passport control desk on the way back to get a taste of the sort of delays that will become commonplace for UK citizens in some EU countries if we vote to leave.

The Leave supporters make much of the fact that as the UK is the 5th largest economy in the world, and are more than capable of standing on our own two feet. This conveniently forgets how we got to this enviable situation. When the UK joined the EEC, the forerunner of the EU, its economy was in shreds and the consequent growth has largely been driven by inward investment particularly from the US, Far East and the ASEAN countries. Any poll of inward investors will show that membership of the EU was a key factor in focusing their European investment in the UK. The Leave campaign makes much of the prospect of Germany being more than happy to encourage free trade links with the UK given the sales of BMW and Mercedes cars to this country. They completely ignore the fact that the UK is also extremely successful at exporting cars. They may go by odd names such as Nissan and Honda, or even Jaguar, but they have been hugely successful. There will be plenty of EU countries lining up to provide the next production line when new models are being introduced in the future and they have no interest in the UK getting a soft trade deal.

Being a member of the EU has allowed the UK to enjoy faster GDP growth per capita than the US, Germany and France over the past twenty five years. This is neither the time for a protest vote nor, having only just emerged from recession, the time to take on a huge economic and social experiment.

John Rathbone 

All views expressed here are the author’s own and are based on information and data available at the time of writing. 

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