Jeff Salway: ‘Don’t care’ Leave voters will be made to care

Hung Tran, of the Institute of International Finance,said Brexit would have a more significant long-term impact on global growth than the collapse of Lehman Brothers in September 2008.
Hung Tran, of the Institute of International Finance,said Brexit would have a more significant long-term impact on global growth than the collapse of Lehman Brothers in September 2008.
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For all the comparisons drawn between the campaign for Scottish independence and that for the UK to leave the EU, there is one key difference.

It is that this time only one side is attempting to set out an argument based on economic and financial consequences.

If so-called “project fear” was decisive in the Scottish referendum, it was largely because the Yes camp couldn’t set out a convincing case for the economic benefits of independence. The White Paper was optimistic, with a serious credibility deficit. It tried to answer the questions, and failed.

In contrast, the Brexit campaign hasn’t even bothered trying to answer the questions. They know the economic argument in favour of leaving the EU is so flimsy that there’s simply no point in pretending otherwise. Instead they’ve left people to imagine a world in which Brexit somehow isn’t economic idiocy.

They’ve chosen to ignore the ball and play the man, even if the “man” is a combined force of institutions ranging from the Bank of England, the IMF and the OECD to the Institute of Fiscal Studies and the CBI.

The consensus on the economic consequences of Brexit has been startling and unprecedented. The only real disagreement among the UK, European and global experts has been on the degree and nature of the post-Brexit fallout. They are unanimous that leaving the EU will cause grievous damage to our economy.

Hung Tran, of the Institute of International Finance, last week told Bloomberg that Brexit would have a more significant long-term impact on global growth than the collapse of Lehman Brothers in September 2008.

The immediate problem for the UK would be uncertainty, loss of confidence, decline in investment and an even more pronounced slump in productivity.

Does it matter what the longer-term implications might be when the immediate consequences are likely to cause damage from which it will take years to recover? Would you voluntarily go through the financial crisis once again?

But the warnings don’t seem to be making much difference. Why are the areas with the most to lose from leaving the most likely to vote in favour of it? That household finances would suffer is almost universally accepted (even by pro-leave economists), yet people will vote to leave even when they know they’ll be worse off.

There are myriad reasons for this, including the success of the Leave campaign’s grim playing of the immigration card and a lack of trust in politicians and institutions.

It’s also because of the economic backdrop. Why would you be worried about lower house prices when you need them to come down? Why would you worry about the impact on the welfare state when the Tories are already dismantling it; or about another fall in living standards when they’ve been slipping for so long; or the effect on financial security if you no longer have any?

For many people it’s clear the economy isn’t working in their favour, but it’s equally clear that Brexit would only make matters worse.

Like Better Together, the Remain campaign has squandered its advantage by resorting to fear-mongering and hyperbole when it simply isn’t necessary. The case should be sufficiently compelling to make the difference come polling day, however. Ultimately it still is about “the economy, stupid”.