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16 June 2016

The Brexit crisis

The referendum debate has been long on polemic and short on facts.

By George Eaton

It is parliamentary sovereignty that opponents of the European Union revere. But on 23 June the people will be sovereign. It is a momentous decision: unlike in a general election, the outcome cannot be reversed in five years’ time. Whether the UK votes to Remain or Leave will shape its economy, its immigration policy and its foreign policy for decades.

“Now, what I want is, Facts . . . Facts alone are wanted in life,” declared Thomas Gradgrind in Charles Dickens’s Hard Times. Voters express similar sentiments. The “facts”, however, frequently depend on whom you ask. Amid the relentless cycle of claims and counterclaims, many voters have grown ever more confused.

Both sides have deployed misleading figures, the Leave campaign most egregiously so. The claim emblazoned on its battle bus, that the UK gives the EU £350m each week, excludes the budget rebate and grants to public and private-sector institutions. Britain’s true contribution, the Institute for Fiscal Studies calculated, is £150m weekly. “The continued use of a gross figure in contexts that imply it is a net figure is misleading and undermines trust in official statistics,” warned the UK Statistics Authority.

The Leave campaign’s related boast that Brexit would liberate resources for the NHS has been similarly rebutted. As the IFS noted, “even a small negative effect of just 0.6 per cent on national income from leaving the EU” would wipe out the £8bn saving. “There is virtual unanimity among economic forecasters that the negative economic effect of leaving the EU would be greater than that,” it added. “[Brexit] would leave us spending less on public services, or taxing more, or borrowing more.”

The Remain campaign has avoided this level of deception, but it is not guilt-free. George Osborne’s suggestion that “families would be £4,300 worse off” post-Brexit was more subtly misleading. As the Treasury select committee stated: “This is not what the main Treasury analysis found – the average impact on household disposable incomes would be considerably smaller than this number, which refers to the impact on GDP per household. It may have left many readers thinking that the figures refer to the effect of leaving the EU on household disposable income, which they do not.”

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The imperative of victory has compromised both sides’ commitment to probity. In the pages that follow, we offer answers to the questions most commonly asked by voters: how many EU migrants claim benefits? How much of our law is made in Brussels? And what would be the UK’s status outside the EU?

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The level of certainty that swing voters crave cannot be provided. No member state has ever left the European Union (though the autonomous Danish region of Greenland withdrew in 1985) and the UK’s fate would depend on multiple variables.

A Leave vote would likely be followed by David Cameron’s resignation, with his successor as prime minister chosen by Conservative members. The new Tory leader, almost certainly a Brexiter, would have to contend with an overwhelmingly pro-Remain parliament (454 MPs to 147). EU supporters have threatened to use their majority to prevent the UK leaving the single market. The Out campaign has backed withdrawal in order to end the free movement of people and UK contributions to the European budget (see “What’s the Alternative?”, right). A new Tory leader might seek an early general election in order to win an unambiguous mandate for this stance.

A further consequence of a Leave vote could be a second referendum on Scottish independence. The Scottish National Party’s 2016 Holyrood manifesto called for a new vote to be permitted if there is “a significant and material change . . . such as Scotland being taken out of the EU against our will”. Most predict that, in these circumstances, the Scots would not decline another chance to secede. Before it has completed EU withdrawal, Westminster could be forced to manage the break-up of another union.

Though less obviously fraught, there are also risks and uncertainties attached to remaining. Polls have shown that England could vote Out while the UK as a whole votes In, creating an immediate grievance for Ukip and Tory MPs to exploit. By backing Remain, Britain would also accept continued free movement of people, no matter how high the level of immigration (though Europe at present accounts for just under half the number of long-term incomers).

The future shape of the EU is yet to be determined. The question of whether a political and fiscal union will be formed to underpin monetary union will not be resolved until after the German and French elections in 2017 (and probably not even then). For this reason, some contend that the referendum is premature. Eurosceptics warn that the UK’s interests will be overridden permanently once the threat of withdrawal has been lifted. Europhiles counter that Britain will earn the right to lead by committing to membership.

Rather than settling the European question, the referendum may make it more acute. It was just six years after Britain voted in 1975 to remain in the European Economic Community (by 67 per cent to 33) that Labour endorsed withdrawal. A narrow victory for Remain, secured by ruthless means, would encourage Brexiters to begin campaigning at once for a second referendum (as Scottish nationalists have done). The coming Conservative leadership contest may well be won by the candidate who adopts this demand. A large Tory majority, which some regard as the likeliest outcome of the next general election, would enable another referendum to be held in the near future.

On 23 June, as they make their way to the polling booths, many voters will echo David Cameron’s original desire for politicians to stop “banging on about Europe”. Their wish is unlikely to be granted. 

This article appears in the 14 Jun 2016 issue of the New Statesman, Britain on the brink