Sore Losers and Economic Uncertainty

Last Monday we gave a short presentation to the Middle East and Migration Conference organised by the Initiatives of Change and Next Century Foundation.

It was challenging because although it was not about Brexit, it was quickly interpreted as about Brexit to an audience almost certainly committed to the Remain option. And yet it was well received because the same audience clearly understood a truth - that no matter how bad the conditions for migrants, the working and lower middle class populations of the host countries felt equally neglected by their elites.

Although we thought we would see a marginal Remain victory, when Arron Banks told us that his polling predicted a 52:48 margin for Leave against all other predictions at 9.00PM on Thursday night, we were inclined to think it more than possible and so it proved to be. If you strip Scotland and London out of the game, the Anglo-Welsh commitment to leaving the European Union was overwhelming, more than 52%, and, as we had predicted, the West Midlands proved critical to the final result.

Serious politicians accept the implication of this - that Brexit must now go forward with as little damage as possible to economic stability in the national interest. Perhaps there may be a revisiting of the issue eventually but only after Brexit has been achieved and a General Election has given a clear mandate to a Party whose manifesto includes re-entry into the European Union (assuming it will even have the UK back). The crisis has now precipitated the Labour Party into a civil war that will decide eventually whether Labour will be prepared to take that political risk.

Unfortunately for the country, radical Remainers refuse to lie down and a surge of what can only be called hysteria has flooded social media, claiming foul play, calling for a second referendum now, suggesting MPs and Lords block the necessary legislation and perpetrating a whole series of myths about the winning side. These include the destructive and untrue narratives used by Remain that the economy is collapsing and that Leave was a win for racists and xenophobes. The Leave campaigners have remained relatively silent, a little awe-struck, certainly not triumphalist.

Why is this important? Not because there is any serious likelihood of the result being over-turned but because it maintains an air of political instability that feeds into economic uncertainty, especially in the perceptions of overseas investors. It risks harming the process of adjustment from one state of sovereignty to another. Hysteria has flowed back into the UK on social media from the US (where it becomes confused with the Donald Trump narrative) and from Europe (where it gets confused with narratives about national populism). These narratives are simply ignorant.

The British economy is fundamentally sound regardless of EU membership. Chancellor Osborne was acting thoroughly irresponsibly in gambling its reputation to win his vote. It is the Eurozone that is troubled (which presents a risk factor in itself), As for accusations of racism and xenophobia, these are simply absurd, even insulting. They threaten to create a monster that is not there. There are racists and xenophobes in Britain as elsewhere (Scots ones in Remain) but these are a small minority of voters in comparison to European cases. Remain has now become the economic problem.