Monday, 18 April 2016

The feedback loop from a Brexit vote will come back to haunt us

Two things really worry me about the EU referendum.

The first is the incoherent messages emanating from ‘remain’ supporters because of Labour’s determination to separate itself from the mainstream campaign fronted by David Cameron and George Osborne.  
Following the vote on Scottish independence, there has been an impression that any connection with the Tories is an electoral liability for Labour. South of the border, I very much doubt this is the case, even in the context of the recent string of PR disasters for the government.

Nevertheless, Corbyn insists on putting his own spin on the issues.

He proclaimed last week a ‘socialist’ argument for the EU, which seemed only designed to shore up the support of people on the far left who have yet to embrace their leader’s remarkable and Damascene conversion after 35 years of anti-European rhetoric. The Conservatives focus on the financial cost of quitting the trading bloc, while Labour talks of some imaginary world in which the EU transforms itself into a workers’ paradise.
My second concern is over the engagement of younger people. The polling evidence is that they may be less likely to vote, despite being broadly more pro-European than their parents and grandparents. As someone who teaches and trains a great many people who early in their professional careers, I can confirm that this nightmare scenario is borne out anecdotally. Chatting to people who were born in the early 90s, I sense only a vague awareness of the issues and a general sense of apathy.

It may be that the campaign will come to life in the coming weeks, but at the moment, I feel it is far more an obsession of the media elite than it is a preoccupation of ordinary people on the ground. How many posters are in windows and how many conversations are happening in pubs, gyms, supermarkets and around the kitchen table?

At this point, I don’t think we can discount the possibility of a narrow win for the Brexiters, particularly if the turnout doesn’t head far north of 50%. So it’s time to start preparing for the consequences – not just for the UK, but also for the EU as a whole.
One of the weirder aspects of the debate, whether we’re listening to ‘Remain’ or ‘Leave’, is the belief that the June 23rd referendum is really just a matter for us.

It’s not.
If the UK voted to quit, the seismic shock to the wider union would clearly be at the upper end of the political Richter scale.

First and foremost, it would reignite the debate over the future of the Eurozone. If it’s possible for a major nation state to leave the EU as a whole, why should any country feel obliged to remain a part of the struggling (albeit moderately stabilised) single currency? The danger would move from the so-called ‘peripheral’ countries of Portugal, Ireland and Greece, which managed to hang on to Euro membership by the skin of their teeth, to major powers such as France, Italy and Germany, where there has been increasing disillusionment with the European project.
We may end up with a domino effect, as anti-EU factions of both left and right continue to gain ground across Europe. And while the initial clashes might be over the membership and operation of the single currency, it would all too quickly spill over into a discussion of EU membership as a whole.

The UK would be diminished internationally by a choice to exit the EU (particularly in the eyes of the world’s biggest economic powers, the USA and China), but the EU would itself be diminished by losing the UK. The world’s fifth largest economy abandoning the trading bloc is a monumental blow, no matter how good any subsequent bilateral deals.
So where might this leave us by, say, 2020?

The Eurozone is still precarious and any attempt by members to extricate themselves would almost certainly signal huge market shocks and the collapse of the currency. The recession that followed any disintegration would impact not just the members of the Euro, but also all the EU’s trading partners.  
Meanwhile, an increasingly incoherent and dysfunctional EU would find it harder to deal with the cross-border issues of terrorism, migration, climate change and financial regulation.

There’s a feedback loop here, which will become largely uncontrollable. The UK quits the EU with a view to being notionally in control of its own destiny. But in the process, it may hasten the demise of the EU itself. When that happens, we’ll find that we’ve set in motion a chain of events which will prove exactly how interlocked we are with our neighbours. Trying to forge new bilateral trading relations with countries mired in recession and grappling with nationalism and internal conflict will not be easy. Particularly when our own foolhardiness has played no small part in provoking the situation in which they find themselves.



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