Peter Jones: There are few certainties in Brexit debate

Winning the public's confidence is the key to this year's referendum, as it was in the previous vote in 1975. Picture: Getty
Winning the public's confidence is the key to this year's referendum, as it was in the previous vote in 1975. Picture: Getty
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Forget clear-cut platitudes, this referendum is about the balance of probabilities, writes Peter Jones

Should we vote to stay in or get out of the European Union? The choice sounds simple and stark. It is anything but. We need to know an awful lot more about Prime Minister David Cameron’s new deal for British membership and about where Britain would go if we followed Ukip leader Nigel Farage’s advice before we can make an informed choice.

I confess to being old enough to remember the 1975 referendum when Britain voted on the then Prime Minister Harold Wilson’s “reformed” terms of membership of what was then the European Economic Community (EEC). I don’t just remember it; as a student at St Andrews University I campaigned for a Yes vote.

I recall it as a hugely positive and optimistic campaign. It was about the opportunities that would open up for freer travel, more freedom to work in the other eight European countries, maybe even to work in Brussels and help to forge the peaceful and prosperous Europe that would end the possibility of war and destruction on the continent.

Mr Wilson’s Labour Party was hopelessly divided. The party voted by two to one to quit with the majority of big unions and a significant minority of his cabinet opposed to the EEC. In more than an echo of today’s rhetoric, employment minister Michael Foot said he was horrified by high levels of unemployment and wanted the UK government to be free to use every tool it could to shorten the dole queues.

But the optimism that Europe presented a bigger opportunity for more jobs, better incomes, and more security in a world divided by the cold war won the day handsomely, by a margin of two to one. Today, however, there is not much positivity around. Instead, tones on both sides of the debate seem to be dominated by fear. The Out campaign projects fears of being swamped by immigration, by terrorism, and by political impotence if we stay. In supporters raise worries of trade and jobs being lost if we go.

In reality, the choice is a lot less stark. Britain is not going to be struck by poverty and mass unemployment if we leave the EU; neither is it facing unprecedented immigration or being unable to influence our economy if we stay. The political challenge, for both sides, is really to find the positive arguments that convince people one way or the other offers a better future.

This is not easy. We live in a world that is a lot more integrated politically, economically, and even socially than was the case in 1975. Regardless of whether Britain is in the EU or not, any government’s freedom to cut or raise taxes, to increase or slash red tape, to control movement at its frontiers, is severely limited.

That’s because trade and the terms of trade dictated by financial markets are a big leveller. Any country which wants to increase exports to other countries, thereby providing jobs and prosperity to its citizens, has to abide by the rules. That means recognising there are limits to variation of taxes and subsidies that other countries will tolerate, having to comply with other countries’ red tape, and to accept inflows of foreigners in return for freedom of movement for your own people.

Make the wrong decisions, and the markets are swift to judge. Yesterday on the currency markets, the pound sterling faced a sea of red numbers, falling in value against every single currency including the struggling Russian rouble by about 2 per cent. Why? Because those who buy and sell currencies as investments read opinion polls suggesting there is a reasonable chance of an out vote and think that will be bad for the British economy.

If you do not accept that as an obvious signal that an out vote is not a great move, then at least it indicates that any economic gains the out camp think can be made from leaving the EU can be wiped out pretty much instantaneously by financial markets. Equally, there is no guarantee that an EU which we stay a part of won’t be struck by economic turmoil from which we also suffer. In short, this is not a discussion about certainties, but about the balance of probabilities. And to understand more about whether the balance is weighted towards in or out, we need to know more about what the future, in either case, holds.

If we vote to stay in, is the EU going to become more of a political union constraining national sovereignty or does the special status negotiated by Mr Cameron ensure than any moves in that direction won’t affect us? Will there be more freedom to trade, and in more products and services? Will we have more or less economic and fiscal flexibility? How much control over immigration will there really be?

The questions on the Brexit side are even more onerous, as Mr Cameron indicated in his Commons statement yesterday. Would a Britain outside the EU be, like Norway, in the European Economic Area, which entails paying a subscription and accepting free movement of EU nationals? Or would it be like Switzerland, which does not have to pay subscriptions and accept free movement, but does have to negotiate lots of bilateral trade deals?

Getting answers to these questions would help, but only up to a point, the point being that neither side can guarantee anything. In the end, I guess that this will be a matter of confidence, whether people feel more confident about their future one way or the other.

And if the UK does vote to leave, is independence for Scotland inside the EU the slam dunk that the SNP seem to think it is? A look at what Ireland is saying about Brexit tells you that it isn’t. Irish Taoiseach Enda Kenny worries that border controls between Eire and Ulster might have to be reintroduced and that the effect on Irish trade with Britain, its biggest partner, might be disastrous.

These questions must surely apply equally to Scotland. Even though there are 18 weeks before we vote, I rather doubt that hard answers to all, indeed any, of these questions can be provided. Victory, I think, will go to the campaign which can create the most optimism and confidence as it was in 1975. That too is going to be a very hard task.