Brexit and be gone: The Empire won’t strike back….

Life, at times, is like looking into a crystal ball. I know my job in the bank is some times. At the moment, trading and dealing on the financial markets is, too. Therefore, right now a yogibanker trying to forecast the result of the referendum on the UK’s continued EU-membership is fraught with uncertainty.

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Brexit?!

However, there is one saying in life that continues to resonate with me and has proven its worth over many defining moments in political (and constitutional) history:

“if it ain’t broke, don’t fix it”.

This phrase speaks so clearly when there is so much to give up. So I say (with a hand over my heart) that the current debate of the UK’s continued EU-membership has got to be one of the biggest own goals that this country has ever kicked. Initially announced to appease a deeply divided Conservative party, it has now turned into a full-on modern day brawldividing friends into foes, setting foes against enemies…

Emotional motives are never the right basis for making a rational decision. Who hasn’t sent off an angry work email only to regret it later? I know I have, and it was one of the early lessons in my working career. Hold back before firing one-off, and think again. What, then, is really driving this debate to whip up the emotions of millions of Brits into cursing  immigration, thinking that they will be “free from the shackles of Brussels bureaucracy” etc… and all the other illusory benefits of sovereignty that Brexit will bring? This week a colleague of mine, who is quite educated and originally from Kenya herself, said exactly as much. I was gobsmacked.

Granted, there are always rules that people do not like or find unwieldy, but that itself pervades every modern society.  I am told that UK planning laws can be quite onerous. Who hasn’t dealt with their local council to experience that! There is a raft of UK laws with historical roots (some dating back to the 11thcentury) that we still have to live with. “Leasehold” v “Freehold”, anyone??

However, what is really driving this debate?   A leading hedge fund manager in London was quoted in the FT this week as saying:

“Europe turns us into a colony and we are used to an empire. We are not used to obeying rules we haven’t set.”

 

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Empire – those were the days….
Fear, loathing and “leaving Las Brussels”. That’s it. Besieged by paranoia, the British psyche is forever tormented by the end of its empire.  It manifests itself in many areas of British life, from sports to politics. Self-pity and castigation often prevail in times of sporting failure: “we invented all these sports, now everyone beats us at them…” is often heard in the hallways and offices of corporate Britain. Nostalgia pines for sporting successes long gone, and it seems that defeat is almost expected, yet the poor victim is properly vilified by the media, simply for representing his or her country, irrespective of whether he or she actually tried.

In the political arena, the debate regarding Brexit is now a manifestation of this. The irony is that, just like Donald Trump, who wants to make “America great again”, the Brexit debate has resulted in the herd mentality with the desire to make Britain small (but not again).   What is left then is “Little Britain” but with no one to rule over. Of course, it is the Conservative party which seems to have this problem, because conservatism itself is steeped in the past.

It comes as no surprise then that the “Commonwealth” has been wheeled out by some commentators as Britain’s future economic saviour in the case of leaving the single market. Yes, that’s right – the Commonwealth. That loose collection of countries all around the world who were former colonies of Grand Britannia and who now have barely any meaningful trade with the UK and will stride to its rescue in the event of Brexit…. So, I think enough is said about that. The genie that is “the illusion of empire” well and truly needs to go back into the bottle and its top be tightly screwed on.

So, what do the real world and the greatest barometer of all think about this?  What exactly are the foreign exchange markets pricing in at the moment? The collapse of the currency. Sterling is now below $1.40 (24th February, 2016). A historical benchmark I am told, levels not reached since 2009. Collapsing currencies mean an increase in inflation, higher interest rates, reduced general rates of economic growth and overall standards of living. That’s a fact. It’s also totally unnecessary. Whilst the market has predicted 9 out of the last 5 recessions, it has clearly voted with its feet that it doesn’t like the prospect of Brexit, unleashing a wave of epic wealth destruction at the same time.

The case for Brexit is an emotional one. There are times in life when you need to face your fear and move forward. However, being stuck in the distant memory of former glories and nostalgia is not a basis for sensible decision-making. It is also downright reckless. As Simon Giles notes in his beautifully written article in today’s FT, to leave the EU would be quite counter-intuitive:

“[Brexit]…would mean the country would have to pay an entry fee, [still] accept free movement of people, regulation set in Brussels and pooled sovereignty”

As F. Scott Fitzgerald beautifully wrote in his epic novel, the “Great” Gatsby, being nostalgic and longing for the past ultimately is a very lonely existence. “Great” Britain beware!

YB

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