At present, we are days away from Britain’s decision to stay within the EU or to leave it. The polls are forecasting a very close result, with Leave and Remain camps very close to one another in terms of overall support. As I write this, surveys from three major surveyors, ORB, ICM and YouGov, show the Leave campaign opening up a margin over Remain.
The Brexit debate is already affecting Ireland’s borrowing costs. The gap between Irish and German ten-year bond yields widened to almost 100 basis points this week, while this week, yields recorded their biggest daily jump since January — up 12 basis points at 0.95 per cent.
The markets are pricing in just how hard they think we’ll get whacked if the British vote to leave the European Union. The best case scenario would see Irish GDP fall by 1 per cent, with the worst case scenario seeing a 3 per cent drop.
That’s a huge drop in growth and living standards for Ireland, just when the economy looks like it is righting itself, with taxation revenues coming into line with expenditure, and a normalisation of spending patterns across the main areas of the economy, most households, firms, the government and the rest of the world. Only the banks remain impaired now, after their restructuring.
In Britain, the key variable separating each camp seems to be education. Those with more education are overwhelmingly for remaining, while those less educated are overwhelmingly for leaving the EU.
Pro-Brexit voters are twice as likely to deny the influence of man-made climate change, for example.
That a very significant proportion of the population of Britain can have their decisions mapped so easily is a large worry and a huge problem for the education system, which seems to have produced two almost totally different cohorts of people, who listen to totally different sources for guidance, and who consume very different types of media.
It’s the Sun versus the Guardian. The campaign illustrates the divisions within British society, not to mention its regions. The interests of Northern Ireland and Wales, for example, do not coincide, not to mention Scotland and England.
The entire debate has been about the past. It is not so much a referendum on immigration or border control as whether you can use nostalgia as a policy instrument. You can, by the way.
Those smiling at the last sentence need to understand that Ireland’s use of the Angelus by the national broadcaster, or its support for the Irish language, are policies based entirely on nostalgia. But let’s leave those bun fights for another day.
The Leave campaigners have absolutely no plan for the day after a vote to leave passes the post. Their arguments have been entirely about the past.
When asked about the institutional arrangements that would need to evolve in the years after Brexit, the Leave campaign starts talking about how much fearmongering is going on.
This is not a good thing. If an even vaguely credible plan existed, they would have used it by now. It’s all boiling down to fear.
We do have the spectacle of George Osborne, the British chancellor of the exchequer, threatening to impose further austerity on Britain in an emergency budget, should Brexit happen, on the order of nearly 2 per cent of GDP.
This is madness, as the last thing you do when your economy has suffered a sharp negative shock is to cut back on government spending unless you have to.
In fact, during the last big shock, the 2008 recession, his predecessor Alistair Darling did exactly what he should have done and used the state to buttress the economy against the shock.
Britain has a current account deficit of 7 per cent of GDP, meaning it is borrowing to stay in the position it is in, and is vulnerable to sudden stops on those inflows of cash.
Despite all the noise, the truth is, no one knows what the EU or Britain would look like after a leave vote. It will be a fundamental realignment of the terms along which the European continent has evolved since 1945.
The EU is routinely abused as an unelected and unaccountable bureaucracy concerned with nest-lining and banana-straightening, but its actual mission is to stop wars, to curb centuries of violence, and to promote dialogue between peoples.
It is also important to separate out the 18-member euro from the 28 member eurozone. The euro has been an unmitigated disaster. The European project has been an unfettered success. Free trade, free movement of people, goods, and capital, generally makes everyone better off, most of the time.
The EU has been a massive success for Ireland. The euro? Not so much. It helped fuel the credit growth which proved our undoing in 2008, then forced a deflation of the economy through wages and austerity while protecting the very wealthiest.
Brexit would be a large negative shock for Ireland, and would permanently alter the growth path of Britain, harming its household welfare as a result.
The Brexit campaign is also unprecedented, in that we have the Irish head of government, his ministers, and his ambassadors all actively seeking to influence British voters with an Irish connection on a domestic issue.
The tragic death of MP Jo Cox will change the character of this debate. The pro-Remain MP was killed by someone who allegedly shouted “Britain first” while attacking her. The debate has been polarised by the media and by a host of commentators seeking to make as much noise as possible, and each side has been able to capitalise on this polarisation, and Ms Cox’s death may be used by both sides.
Whether that affects the end result is anyone’s guess,just like the end result itself. The benefits of a Brexit are illusory. The costs are real. This is more about the past than the future, but the future is exactly what will be affected by a vote to leave.