An IN Vote Could Be Just as Destabilising as an OUT Vote

Don’t worry, Shirley

If you listened to Baroness Shirley Williams you’d buy shares in removers like Pickford’s or Berwin & Berwin (both sadly private companies, mind you). Or you’d buy shares in stolid but boring container truckers like the Swiss firm Kühne und Nagel (VTX:KNIN).

Lady Williams tells us[i] that if the British people vote for Brexit on 23 June then one million British citizens will have to leave Spain like Syrian refugees but with Samsonite luggage and head back to Blighty. Where, Lady Williams says, they will become an additional burden on our failing National Health Service.

I do hope that, the next time Lady Williams dodders into the House of Lords, one of the kindly old buffers will take her to one side and put her right.

Shirley, love – don’t worry. There are about half a million Russians living in Spain for all or part of the year and, the last time we looked, Russia wasn’t even an EU member. Actually, Shirl, if they buy a Spanish property worth €250,000 or more, the Ruskies get a Spanish residency permit thrown in for free. So it’s very unlikely that, come 24 June, our Spanish friends will instruct the Brits to get on their bikes. In fact, if they did that, whole villages would have to close. And the fire-sale of gaudily-painted villas would precipitate another Spanish property collapse. This, by the way, would plunge the Spanish banking system back into crisis – probably requiring another European bail-out…

Last November I wrote about another wonderful EU country close to British hearts[ii] – Cyprus. There, the authorities have been compensating unfortunate Russian residents who lost money in the Bank of Cyprus 2013 bail-in… with Cypriot passports. The idea that Cyprus – a land where Cricket is played – would hustle pensioned and rentier Brits out of their nice villas because we had had the temerity to vote OUT is about as likely as ex-President Dilma Rousseff winning gold in Rio this summer for body-popping. (No doubt to the thumping tune of Get Lucky.)

Plus ça change

On another matter, the fictive prospect of our exclusion from the Single Market and the necessity to renegotiate trade agreements with all our trading partners – including America (back of the queue, remember?) – is breathtakingly facile. Recently, the IMF warned that any new trade deal between Britain and the EU would require the unanimous consent of all EU countries thus posing “considerable political risks”. And it is surely true that some EU states would play hardball – probably France amongst them, not least because the French ruling elite is already aggrieved at how much ground it has lost in controlling the European agenda to the Germans. But a French attempt to lock the UK out of access to the Single Market would most likely be resisted by the Germans, who have most to lose by such an outcome.

As Mr Farage never ceases to tell us, Britain is always asked to leave the room during discussions with our major trading partners – as are the other 27 EU Member States – because these have been conducted for the last three decades or more at the level of the EU itself. The IMF report implied that commercial arrangements between the UK and all the EU’s 60 or so counterparts which have signed trade deals would somehow lapse. When, in fact, what would happen most logically is that a carbon copy of the existing arrangements would be deemed to exist between the UK and those counterparties until such time as new deals were required (if ever). This is what the lawyers call a presumption of continuity which is fundamental to international law. For example, when the Soviet Union collapsed into 15 or so component states in December 1991, within days it was declared by all that the Russian Federation was the successor state and would be subject to all pre-existing treaty obligations between the Soviet Union and its partners.

Indeed, the idea that America will stop trading with the UK until such time as a back of the queue deal is signed and sealed is as absurd, as the idea that the Germans will walk away from the largest external market for their cars. But, okay, let’s just contemplate the worst-case scenario: that the EU imposes tariffs on our manufactures (knowing that we would naturally retaliate). Lord Lawson has pointed out[iii] that the weighted average external tariff imposed by the EU on non-EU trade partners is 3 percent. That’s less than the average monthly Pound-Euro exchange rate fluctuation – in fact, imperceptible.

Admittedly, non-tariff barriers are potentially more problematic than tariffs themselves. We can expect to play mind-games with the French for some time. Plus ça change, plus c’est la même chose.

So the US President, the Treasury, the OECD, the Bank of England and the IMF – and now Lady Williams – have all raised wagging fingers, threatening the great British people with the naughty step if we do not heed their warnings. Quake ye not!

Lies, Damn Lies, and Statistics

Lady Shirley’s casual misinformation is as of one with general tenor of the REMAIN campaign. Indeed, I am one of many disaffected natural Tories who think that REMAIN’s economy with the truth would make the Third Reich’s Propaganda Minister, Dr Joseph Goebbels, blush. If REMAIN wins, which the bookies believe is likely, this acute discomfiture will only intensify. There is trouble ahead for the Tory Party.

First of all, the OUTs already feel aggrieved at the way the INs have campaigned – with good reason. But more importantly, second, as the Eurozone inevitably presses for closer fiscal integration the pressure for further treaty change will build.

There is a parallel with the recent Scottish experience here. In September 2014 Scots voted 55:45 to remain a part of the UK. But the Scottish National Party swept the board in the UK general election of May 2015. This was no doubt partly because Scots who had been too cautious to vote for separation could now indulge their patriotism without fear of stepping into the unknown. I predict that, if REMAIN triumphs, UKIP will be the beneficiary of a similar surge in the post-referendum British political landscape. Millions of Tories who voted OUT and were thwarted will move to a party that they feel better reflects their instincts and values. The more so because, with the deterioration of conditions in the Eurozone and the roll-out of Mr Osbornes’ Living Wage, EU immigration to the UK is likely to accelerate – with all its attendant consequences.

It is ironic that Mr Cameron sought to offer the British people a referendum in order to settle the issue once and for all and to bring back Tory defectors to UKIP. Instead, he may have split the Tory party between two factions with irreconcilable visions of Britain’s future.

Why I’m backing the Removal Men

If I am right, the political uncertainty after an IN victory will be just as discombobulating to the London stock and gilt markets as an OUT vote would have been. A fragmented Tory party will never again win a majority in the House of Commons – but neither will Leftist Labour. That pre-figures European-style permanent coalitions in the future. But then, was our recent experience of coalition so bad? The Lib-Con Coalition Government of 2010-15 had more focus and coherence than the present Tory government, and was more successful in its stated aim of fiscal discipline. I have shared elsewhere my pearl that the 2010-15 government was Tory – but this one is, at heart, Liberal-Democrat.

I am advising friends that the old adage of Sell in May and Go Away may be doubly pertinent this year. But I’m still scouring the market for removal men. For the removal van is the enduring icon of British democracy. Prime Ministers gain a short-term tenancy on Number 10 Downing Street: the British people own the freehold. I am old enough to remember images of Ted Heath’s grand piano being unceremoniously bundled into a seemingly too small wagon: a poignant symbol of a failed premiership.

I doubt if Mr Cameron has a grand piano. But I shall applaud the removal men anyway, especially as they’ll certainly offer a two-for-the-price-of-one deal: Numbers 10 and 11 cleared in a day. No problem, mate.

[i] In conversation with Paddy O’Connell on BBC R4’s Broadcasting House, Sunday 29 May 2016.

[ii] Postcard from Cyprus, available at: http://masterinvestor.co.uk/economics/post-card-from-cyprus/

[iii] Interview with Decca Aitkenhead in The Guardian, 02 April 2016, available at: http://www.theguardian.com/politics/2016/apr/02/nigel-lawson-on-brexit-i-love-europe-but-eu-has-no-purpose