I’d like to run a straw poll to help inform some thoughts I’m having on currency.
So imagine you are in charge of the newly reformed indyref2 campaign. You’ve been asked to direct the currency question strategy. What’s your preferred “Plan A” going into the campaign?
Poll now closed – Results below. Thank you for voting.
Feel more than free to expand on your thoughts in the comments below.
(If it’s your first time commenting on this blog you may end up in a moderation queue. I’ll approve as quickly as I can)
Well that’s that then. Votes cast and counted and the UK, by a margin of 51.9% to 48.1% have voted to Leave the European Union. The long, fractious and never really embracing journey that the UK has been on shall now enter a new phase. I can only guess as to where it’ll end up.
You may have heard by now though that the vote across the nations and regions of our “One Nation” was not homogeneous.
England and Wales voted to Leave. Scotland and Northern Ireland voted to Remain. It represents yet another rejection by Scotland of “UK” politics and I believe that, as previously stated, a second independence referendum is now inevitable. The First Minister has herself confirmed this morning that the Scottish Government is now going to actively pursue one whilst also seeking to negotiate directly with the EU to try to preserve and protect our relationship. I do not believe that we will find that door to be particularly tightly closed.
As for Leave, once they’ve dealt with the resignation of David Cameron, probably a few key allies too, and have taken over the Tory party they’ll have to get into the grit of actually disengaging with the EU.
The EU Commission has already made it clear, understandably, that they would prefer Article 50 to be triggered as soon as possible so that they can get the whole business done and dusted. Leave, however, are still trying to be cagey. Some of the talking heads in the media today are still even hinting at an “alternative” plan like a Vienna Convention type disengagement. The big problem with that idea is that, even if it’s possible, it can be vetoed by any of the remaining 27 states. If the EU insists that Article 50 and a formal discussion is the way to go then it can indeed insist that it shall be.
It’s still very far from certain what the UK’s future relationship with Europe will actually be once all is done and dusted.
Indeed, there’s an outside chance that a Brexit may not yet happen. It could be that the Tory leadership changeover results in a General Election…which the Tories then lose. Labour, especially one which actively campaigned on the point, could well ignore the referendum result. At this point I wouldn’t discount any possibility, no matter how unlikely.
Assuming though that Boris Johnson and chums take the reigns and we go through Article 50 and Brexit happens, there’s still several possibilities (ranging from EFTA, through a set of Swiss style biateral treaties, through a CETA/TTIP type deal and out to the “default” WTO regulations only) which I outlined here.
I’m particularly disturbed by some of the rhetoric which stuck. Lord Ashcroft’s on-the-day polling found a solid correlation between likelihood of voting Leave and support for the argument that it would help “Take Back Control”.
I mentioned in my article on sovereignty that countries which pin themselves to the idea of national level politics, especially to the point of it becoming a geas, can bind themselves into the Globalisation Trilemma. If, as I suspect they will, Leave use their win to forge towards turning the UK into some kind of Free Market paradise then the concept of democratic politics could find itself severely compromised.
Speaking of the Free Market, it was in the financial world that the most “excitement” of election night was to be found. The polls, public and private, in the days running up to voting day had starting indicating a Remain vote. This had pushed the value of the GBP up significantly as traders started “buying the rumour“. When the Sunderland vote came in though it was the first indication that things were not going to go well for Remain. That one result caused a panic sell in the markets which did not improve as the night went on. By morning, the “Great” British pound had fallen to the weakest point seen since 1985 and, after a morning-after retracement, had lost 8% of its value. This is the worst single day hit that the pound has ever taken, twice as deep as plunge as 1992’s “Black Wednesday” and the third deepest single day hit ANY major currency has taken in modern times. History books shall be written on this point alone.
It should be of very careful note that against the Euro, the Pound lost about 10% of its value compared to 2015. This is important because the UK had a trade deficit with the EU of about £68 billion in 2015. Assuming all things other than currency being equal then that trade deficit could be expected to rise to £75 billion simply because it’s now more expensive to import goods and services from Europe.
This difference in trade, around £7 billion, represents almost exactly the amount that Leave claimed that we’d “save” in net contributions to the EU. There may well be no gains, no money for the NHS or anything else that was promised. I hope I’m wrong. Because if I’m not, the areas which most voted Leave are also the areas most likely to be dependent on the EU for trade. They will be the areas most reliant on a good deal and/or economic plan for what comes after.
As for Scotland, it’s looking now almost inevitable that this result will hasten another go at an independence referendum and, this time, not only will it not be called until we’re ready but it’s looking rather like a lot of former No voters who had been promised that their vote would ensure their EU membership have now seen that whisked away. It has been enough to convince many that independence is now the best option ahead of Scotland. If you happen to be one of them, Welcome.
The Greens and the SNP, will now be exploring all options to protect and preserve our EU relationship. We’re in very uncertain times now with few precedents to guide us so what form this will all take is a matter of pure speculation.
My own preferred option could take the form of direct negotiations between the Scottish Government and the EU resulting in some kind of deal whereby if an independence referendum is held and won in the period before formal Brexit then a newly independent Scotland could “inherit” the UK’s old seat with no loss of continuity. Of course, this would require the co-operation of the Westminster government to allow such negotiations to take place or to even acknowledge that the result in Scotland is significant. It would be a tragedy of democracy if we were simply ignored.
I’ve got no easy answers for the next few months, or years. I’m as much an unwilling passenger as everyone else who voted Remain yesterday. I’ll try my best to work out where we’re going just as soon as it becomes apparent though. And who knows. Maybe, just maybe, we’ll get off early.
As said from the outset and throughout this series I’ve noted my severe disappointment in both “Official” campaigns. In a way, I’m not all that surprised. Not only has the entire debate been played from the outset as a debate on the future ideological direction of the Conservative party more than it has been about the future of the UK’s involvement with the rest of Europe it’s quite clear that I, like very many others, have simply not been within the target demographic for either campaign. When it comes to voting on Thursday, my vote shall be cast rather despite the “Official” campaigns rather than because of it. I can offer a few final thoughts and observations on both result predictions and the potential aftermaths of them.
Qualifier: The following article shall cite political views which represent, to the best of my understanding, the positions of the Official Remain and Leave campaigns. As such they may not necessarily represent the views held by myself or by any organisations or political parties of which I am a member. My own views shall be indicated throughout.
Likely to be one of the “softer” issues in this debate as unlike immigration and unlike the economy it’s one that doesn’t render down so easily into simply numbers. This doesn’t mean it’s any less important. How we feel about the concept of “Europe” plays a very large part both in what we will want out of that relationship, what we will want Europe to become and what we want ourselves to become either within or outwith the Union. It also tells us a lot about how we see our relationship with our governments which means that the result on Thursday may well have deeper ramifications on how the United Kingdom itself is governed. Sovereignty, who controls the locus of power and where it resides, is a policy on which your position may well lie in how you define it.
This is just a quick side note to my Are EU In or Out? series as a response to Vote Leave‘s recently published Leaving Framework, their plans for what comes after a Leave vote. If you will, it’s their White Paper moment. You can read it here (or here).
Qualifier: The following article shall cite political views which represent, to the best of my understanding, the positions of the Official Remain and Leave campaigns. As such they may not necessarily represent the views held by myself or by any organisations or political parties of which I am a member. My own views shall be indicated throughout.
Are EU In or Out? – Part 1: What is The EU? can be read here
Are EU In or Out? – Part 2: A Brief History of Brexit can be read here
Are EU In or Out? – Part 3: The Issues – Immigration can be read here
Are EU In or Out? – Part 4: The Issues – Trade, Economy and Finance can be read here
Brexit Negotiations
One of the more contentious moments of the 2014 Scottish Independence campaign came about within the discussions over “what comes next?”. The post-vote negotiations over the unstitching of Scotland from the rest of the UK would have represented challenge at least on par with the separation of Ireland or the decolonisation process, if not greater. This may not have been helped by the fact that the British Union does not contain a formal legal mechanism for constituent member nations to leave, the Edinburgh Agreement and all that came after was essentially invented ad hoc. In contrast, the European Union does have a formal leaving mechanism in the form of Article 50 of the Treaty of the European Union, albeit that this mechanism has not been put into practice and was drafted only after the experience of Greenland’s process of leaving the European Communities in 1985. As this paper points out though, the comparison between Greenland and any UK leaving process is unlikely to be more than superficially similar as Greenland’s economic and political interaction with the EC at the time revolved very substantially around their fishing industry whereas the UK is far more economically and politically integrated.
The polls are tight. Neck-and-neck, even. Far too close to call and we’re only a couple of weeks away now. I think we owe it to ourselves to consider the possibility of a Brexit vote and to ask just what the Official Leave campaign wants to get out of their desired result, whether or not it’d be easy – or even possible – to achieve and if it actually chimes with the desires of many of their voters.
Qualifier: The following article shall cite political views which represent, to the best of my understanding, the positions of the Official Remain and Leave campaigns. As such they may not necessarily represent the views held by myself or by any organisations or political parties of which I am a member. My own views shall be indicated throughout.
Are EU In or Out? – Part 1: What is The EU? can be read here
Are EU In or Out? – Part 2: A Brief History of Brexit can be read here
Are EU In or Out? – Part 3: The Issues – Immigration can be read here
Active, Pending and Proposed Free Trade Agreements involving the EU
Trade, Economy and Finance
If immigration has been the big push card for Leave then the Economy has been the same for the official Remain campaign. Once again, as in the 2014 Scottish Independence Campaign, nothing says “Project Fear” like that Great Leap into the Unknown that comes with trying to predict the state of the economy after a shock event like Brexit (Little tip. In this era of rampant financial speculation, if anyone could actuallypredict the economy, there wouldn’t be one because that person would now have ALL the money). Similarly, Leave, whilst fighting a much weaker campaign in this respect, are promoting the fear of overburdening and uncontrollable regulation which is holding the UK back from its true potential. Of course, the parallels with the 2014 indyref abound on both sides. It certainly shall be interesting if and when a second indyref comes round and the words spoken by several prominent figureheads involved in this current campaign end up held against them (of course, this may well happen to unwary activists on our side too)
Qualifier: The following article shall cite political views which represent, to the best of my understanding, the positions of the Official Remain and Leave campaigns. As such they may not necessarily represent the views held by myself or by any organisations or political parties of which I am a member. My own views shall be indicated throughout.
Are EU In or Out? – Part 1: What is The EU? can be read here
Are EU In or Out? – Part 2: A Brief History of Brexit can be read here
The EU Referendum Issues
I’ll say again that I believe that the “Official” Remain and Leave campaigns in this referendum are almost as dreary and dire as the other. It’s rather depressing how we’re witnessing something as momentous as the potential future of Europe being used as leverage for something as petty as an internal debate about the future leader of the Conservative party. Worse than that though is the attitude towards the issues. It’s almost as if BOTH sides looked at “Project Fear” – the 2014 Scottish anti-independence campaign which, through unrelenting negativity and naesaying, managed to turn a 30 point lead into a 10 point lead and ravaged public trust in both their member political parties (Labour in particular) and in the media which reported for them – and took the very worst aspects of it into their hearts.
It’s been left to the “Unofficial” campaign to speak not only to and for the Scottish dimension (as typified by “The Wee BlEU Book” by Alyn Smith MEP and Ian Hudghton MEP and which I consider to be required reading before the vote) but also for Green and Left voters (as typified by groups such as Another Europe is Possible and DiEM25 which recently held an excellent conference on the Left case for Remain).
This series of articles began as a response to someone I know who was asking for as balanced a case as I could write on the debate. I find that I cannot, given the campaign and my place in it, give a strictly neutral view but I can do as follows. I shall take the primary issues as encountered in the media and shall attempt to lay out the “Official” position on that issue by Leave and Remain. I shall then add my own commentary on that issue. This may result in my agreeing with one or other of the “Official” campaigns or it may have me disagreeing with both and offering an alternative path.
Are EU In or Out? – Part 1: What is The EU? can be read here.
A Brief History of Brexit
It’s fair to say that the UK has never been as fully engaged with the European project as, say, our neighbours in France and Germany. The country wasn’t an initial signatory of the 1957 Treaty of Rome which formed the European Economic Community (EEC). The UK hadn’t initially wanted to engage, citing reasons such as the economic turmoil of WWII, the transition of the UK from Global Empire to secondary power to the USA and the transition of the Commonwealth from a network of colonies and dependencies to a family of fully independent nations in their own right which had led to the UK being rather distracted from affairs on the continent.
The aftermath of the Suez Crisis, though, convinced many that the UK could no longer act as a unilateral power and views began to shift towards co-operation. Entry as a founding member was twice blocked by the veto of French President Charles de Gaulle (whose post-war relationship with the UK was infamously frosty).
It’s worth noting that through this period, the comparatively high per capita spend in post-war UK from the European Recovery Program (the “Marshall Plan”) compared to the countries of the continent linked into the UK’s pivotal position within the Bretton Woods currency management program (which together mandated freer trade between the European nations and the US) probably also served to shift the UK’s cultural focus rather away from the continent and rather more towards the USA.
As a kind of compromise, in 1960 the UK led efforts along with Austria, Denmark, Norway, Portugal, Sweden and Switzerland to form an alternative, though complementary, network to the “Inner Six” (France, West Germany, Italy, Belgium, Luxembourg, and the Netherlands) of the EEC known as the European Free Trade Association (EFTA).
Come the early 1970’s, de Gaulle had departed and the objections from outside to the UK’s integration with Europe had departed with him allowing the UK to began again to petition the EEC ultimately joining in 1973. The decision was a fractious one, especially within the Labour party, and the February 1974 General election returned the minority Labour government under Harold Wilson based, in part, on the promise of a consultative referendum on the continued membership of the EEC. This promise was later strengthened to a promise of a binding referendum during the October 1974 General Election campaign which returned Labour with a narrow majority. The bill to hold such a referendum (the first in the modern era of UK politics and the only one to be held in the 20th century) was passed only with Tory support and the vote itself held on the 5th June 1975. With a turnout of 65% and a vote of 67% in favour of remaining within the EEC the course was set and the matter settled…for two years until the talks on the formation of the European Parliament and the formulation of the political integration which would become the EU…
The 1980’s brought in a change in UK political ideology, in the form of Thatcher’s Conservatives. Whilst the party of this era had supported the continuing membership of the EEC whilst in opposition and, indeed, was considered far less Eurosceptic than it is nowadays, the political direction with regard to Europe remained mixed. On one hand, the program of privatisation, the push towards indirect consumption taxes rather than indirect wealth and income tax greatly mirrored the movements in America under Reagan. On the other, the macroeconomic shocks of the mid 1980’s through the 1985 Plaza Accord and the 1987 Louvre Accord saw the UK switch the peg on the Pound’s exchange rate from the US Dollar to the West German Deutsche Mark which served to greatly stabilise the UK’s balance of trade with Europe (at the cost of increased volatility with regard to the US) at a time when European industry was increasing rapidly. The increasing employment opportunities in West Germany coupled with the catastrophic deindustrialisation of the UK was highlighted and typified at the time by the now classic comedy-drama Auf Wiedersehen, Pet which saw a group of British construction workers from various parts of England take advantage of the rapidly freeing of movement of labour throughout the EEC to find work in Germany.
Other satire of the time, such as Yes Minister, lampooned both the perception of increasing “meddling” of the EEC in the trade market as well as the UK’s own attempts to meddle back.
Thatcher’s era also saw a series of renegotiations of the UK’s terms of membership with the EU beginning with a topic at the front of the lips of many within euro circles to this day. The Rebate.
The Thatcher government felt that the UK had gotten a raw deal out of the Common Agricultural Policy negotiations. The UK was one of the richer members of the EEC and therefore one of the larger contributors to it but, unlike other nations, particularly France and Portugal, we had a disproportionately small agricultural sector meaning that, as a percentage of EEC expenditure, the UK got back in grants and development funds a fair bit less than it put in even as a proportional share. Thatcher (with a cry of “I want my money back”) therefore negotiated a cash rebate on our membership fee paid directly to Westminster coffers.
This rebate was not without cost though. The rebate is paid for by an increase in the membership costs of the other EU nations (and we can imagine how we would feel about that if the situation were to be reversed) and has increased feeling among continental EU citizens (particularly in France and Germany although I have noted similar sentiment during my travels in Italy and Austria and even in Switzerland too) of Britain either getting “special treatment” or simply that Britain is insufficiently invested in the EU project.
Financially, the rebate has been rather less beneficial to some parts of the UK than to others. Whilst the UK as a whole is less agricultural than the EU average, Scotland is particularly devoted to agriculture (71% of Scotland’s land area is agricultural and we produce substantially above our 8% population “share” of UK agricultural produce (even despite the severe depopulation and underuse of the Highlands). Between the rebate and deliberate mismanagement of EU development funding by Westminster (including the diversion of funds specifically designated for Scottish farmers) Scotland receives some of the lowest levels of CAP payments per hectare in Europe. The rebate was also bought by the concession that Britain drop objections to the entry of Spain and Portugal into the Common Fisheries Policy, in line with the UK Government’s view that Scottish fisheries were “expendable“.
Come 1990 and the transition to the Major government and the UK got involved in the next struggle with European integration. Shifting macroeconomic focus further back towards Europe brought the agenda of formally joining the Exchange Rate Mechanism, a formal currency peg with, chiefly, the Deutsche Mark came back to the fore. This proved to be a disaster for the UK whose economy struggled to convergence to stability with the currency arrangements especially once the new tranche of financial speculators, born from and encouraged by a decade of Thatcher’s monetarist policies and infamously led by George Soros, saw an opening and began widely speculating on the pound. Despite throwing large amounts of public money into the stability mechanisms, the UK Government was unable to keep up with the speculators and the pound crashed out of the ERM on Black Wednesday in 1992. This cost the public purse some £2.4 billion and signaled the end of the ability for governments to exercise true control over the finances of an economy against the will of “The Market”.
(See especially from 40 min)
Whether or not this represented a fundamental failure of the structures of the ERM (or the Euro) itself (no other country has been crashed out of it in quite the same way although Greece appears to have only Pyrrhicly avoided it) it certainly poisoned the UK’s view of it although, almost perversely, our government’s view of the financial industry has continued rather more positively and both the official Remain and Leave campaigns have argued that their position would best help protect the City.
This would be best displayed five years later when Gordon Brown devised the “Five Economic Tests” which would need to be fulfilled before the UK considered joining the Euro. Joining criteria are important (again, looking at Greece there) and the euro itself has its own convergence criteria (which the UK currently fails to meet) but the Brown tests were set up less as a target to meet before joining the Euro and more as a barrier to excuse not even trying. Nevertheless, even if it could be shown that the UK would benefit as part of the euro, I rather doubt there would be the political and popular will to actually go forward with it.
The 2004 and 2007 enlargements of the EU provided the latest point of contention between the Union and the UK. These enlargements brought in many Eastern European nations and with them gave freedom of movement for many nations that were significantly poorer than the western nations. Immediately, whilst not vetoing the entry of these nations directly, the UK slapped many of them with temporary restrictions on those new member nations.
Anti-immigration sentiment, fueled by certain factions in the print media, is fairly on the rise even at the possible expense of a certain amount of cognitive dissonance among those who are quite proud of their own freedom to move around the EU.
The run up to 2010 UK General Elections saw Nick Griffin and the BNP rise as the media’s pet anti-immigrant, anti-establishment, right-wing “alternative” though it was sharply checked by Griffin’s humiliation on the BBC’s Question Time. Casting for an alternative, alternative the media turned to Nigel Farage and UKIP and their disproportionate appearances in the media since then has undoubtedly played a part in their current rising tide.
(I would note, even as an objector to almost everything that they stand for, that UKIP as a party are far from the irrational xenophobia of all things unBritish as portrayed by the BNP. Indeed, until fairly recently they were full proponents of the idea of free movement of people. Just that it is to be free movement within the Commonwealth, not the EU).
The rise of UKIP and the strain within the Conservative party as many of their members and backbenchers were tempted to convert to them forced David Cameron to act. His 2015 Manifesto promised the referendum on EU membership that UKIP had long been demanding in exchange for his majority victory in the elections and, seeing the obvious mathematics, UKIP supporters voted for Cameron (or tactically voted UKIP instead of Labour) in numbers significant enough to swing the election against the predictions of many of the pundits at the time. Cameron saved his party and won his government but has now been placed in a very difficult position as the referendum looms and his party threatens to tear itself asunder in the process. This is why the actual campaign has been so dismal compared to the 2014 Scottish independence referendum. It’s playing so much more as a Conservative internal party meeting and leadership contest than it is a debate on the future of Europe and the UK within or outwith it. Which way voters see things, whether we embrace the EU, reject it entirely or simply continue on with the one-foot-in approach that we’ve had more or less since inception remains very much to be seen.
Finally. After all that seriousness. A short educational video about EU stereotypes.
The Common Green 
