June 16, 2016
I have fired up the patented crystal ball to ask what Great Britain might look like in twenty or so years time should the population decide to exit the European Union.
Before I write anything else, I ought to add that what follows is my worst fear, but actually, I don’t think that it would be all that unrealistic or far fetched.
Firstly, capital is scared.
There are many that argue that leaving the EU will be positive for the British economy. This is despite a majority of economists suggesting that a Brexit could cause all manner of economic shocks. Fitting with the idea that the UK’s financial services sector could suffer, was the BoE news that up to 65 billion pounds of investment recently fled the country.
As a general rule, capital is going to begin leaving an environment at the first sign of trouble. It is not going to hang around indefinitely hoping for the best. People are tied to their jobs, homes, families and lives. International capital can and will move. Fast.
If this is the preview of things to come, then the economic shock could be very real and very deep.
I have recently made the point (here and here) that the plan has no plan. Sadly, this has recently been confirmed by Nigel Farage. Is it possible then that the negotiation process will not be a success? Many months ago I argued that Germany’s Wolfgang Schauble is not the power behind the throne, but he is the throne and to prove that he is a believer in democracy, he said a few days ago that out is out.
In a straight out contest between Wolfgang and Boris, I’d bet on the German every time.
During last year’s vote, it was quite clear that all sides wanted Scotland to remain within the EU. And importantly, EU membership was a very important element of Alex Salmond’s argument.
There has already been speculation that should the UK vote to leave the EU that another Scottish vote will be pushed for. Clearly this would not happen immediately and it should sensibly wait until Britain’s position is clear. However, it might not need to if things turn bad enough quickly enough.
Scotland has it’s own reliance on financial services and there would likely be significant internal political pressure to jump ship and renegotiate their way back in.
A precedent is a precedent. Nobody is thinking about this, but if the British economy really is going through the wringer, and Scotland is heading out of the Union, why not Wales? Why not Northern Ireland? Both have their own assemblies and ongoing commitments from David Cameron to devolve more power and authority. The process might not be moving quickly, but it is underway.
There probably would not even need to be a vote to join Europe, just an in-out vote for remaining a part of the UK. If things really are going badly, then it would be obvious to apply for membership to the Europe Union.
Setting up a central bank and all that entails would be a lot of effort. It might make sense to join the Euro! Just think of the impact on the Scottish and Welsh economies of those 1% and under interest rates – imagine the growth!
By this point, Messers Johnson, Farage and Gove will have moved away from the UK because they will be sick of the grief they get. They can’t even go to the supermarket to buy some milk without someone complaining about losing their job… As we know, Boris has an American passport and Nigel is married to a German, so they ought to be able to leave the UK and settle elsewhere, even though their voters no longer have the level of freedom they once did.
With Scotland and Wales now “in” controlling migration to the British Isles will be impossible for England. It will not be easy to build a wall across the Brecon Beacons…
Just imagine the outcome if Wales or Scotland decides to be part of Schengen!
Many of those well educated, ambitious and hard working Europeans that had settled in the UK have gradually been forced to leave or chosen to do so when they could find a good opportunity elsewhere. Losing a couple of million skilled workers that the country did not pay to educate will hit an economy very hard, and make it difficult to sell into and serve markets across Europe. To British readers, how many normal Brits do you know that have a working fluency in Slovakian or Polish? Those jobs and companies will need to relocate to the continent.
With a broken Kingdom, will it make sense for England to remain outside in the cold? Since the UK has been operating under WTO rules for more than a decade as the major European nations slow their negotiations to a crawl (all that financial services business has to be given an incentive to leave London, after all).
The civil unrest in the provinces will be very un-English, but still it continues. Reference will be made relentlessly in the media about the warnings from people like Erna Solberg who warned that the UK population would not like to have to implement Brussels legislation without having any say in it, and they don’t.
By this point, all voters will have forgotten who they voted for and why and level responsibility at the feet of UKIP. It might not even be a decision that requires a vote of the people, it is just that obvious to go back in.
Four more EU member states where once there was a United Kingdom? How far fetched is it really?Author : financialguy