I’ve been asked a few times recently “what will happen to my money if we leave the EU?” so I thought I would put here any facts (and there aren’t many) that I know about plus a few assumptions (there are lots of those flying about!). Also, in case you’re interested, I’ve told you what I personally think at the end.
Frankly there are few ‘definites’ about staying in or leaving the EU, other than the fact that there will be a lot of uncertainty if we leave, quite a lot of upheaval and probably all sorts of odd things – good and bad – coming out of the woodwork that no one could have predicted.
So here are the facts and educated guesses I have gleaned while researching this contentious issue.
- What will happen to the pound if we leave the EU?
- What will happen to jobs if we leave the EU?
- What will happen to prices if we leave the EU?
- What will happen to the economy if we leave the EU?
- If we vote to leave, will we actually leave the EU?
- Where can I find more facts about leaving the EU?
- Do I think we should stay in the EU?
The pound is likely to drop pretty significantly if we leave the EU, and will stay low for a couple of years, in my opinion. This is simply because
- No one likes uncertainty, and investors and banks in particular hate uncertainty.
- If we decide to leave the EU there will be hundreds (literally) of issues to deal with that will take international lawyers years (one barrister friend of mine has estimated it at about ten years) to unravel. Having said that, the official timeframe announced for extricating ourselves has been set at two years and the Leave campaign say that the EU will be so keen to keep our custom they will manage it in less time than that.
- Also there will be the uncertainty over whether we really would be able to cut good deals with other, non-EU countries.
If the pound does drop hard that will be bad for…
- Our spending money when we go on holiday abroad (not just EU countries but other countries as Sterling will drop against other currencies too).
- The price of goods in the shops as we import more than we export.
but it will be good for…
- Exports because the lower our currency, the cheaper our goods will be for foreign countries to buy. Therefore it would be good for our economy and for jobs as we would sell more goods abroad…assuming we manage to cut a good deal with EU countries (that could take a few years to sort out though).
Frankly no one really knows.
According to the Leave campaign:
- The Leave campaign argue that being out of the EU will mean that we won’t have Europeans over here doing jobs that Brits would do. That should make more jobs available and, if there is less competition for these jobs, the wages will have to go up to attract British workers.
- The Leave campaign also say that although some companies might leave Britain after Brexit, most of them won’t because Britain is such an important economy. Also they say that others from other countries will set up offices to replace them because it will be more attractive for them to do business here.
- They say that we will still be able to trade with EU countries because we are so important to them as importers that they will do anything to keep us as customers. This will mean that companies won’t go bust.
According to the Remain campaign:
- Once out, if we want to continue to trade with the EU countries then we will be required to accept movement of labour (i.e. Europeans coming here to work) and we will have a lot less of a say over who comes and what we can do with them than we do now. They cite the example of Norway which trades with the EU but has to accept immigrants from the EU area as part of the deal. A Norwegian government study on the impacts of its deal with the EU, published in 2012 declared that: “the basic democratic problem with the whole construction is a lack of Norwegian representation and access to decision-making processes that also impact Norway and Norwegian citizens and companies… In practice, Norway has committed itself to adopting new policies and laws from the EU — without any real possibility to influence these.”
- Also, as many jobs in this country are done by immigrants because British people either don’t want to do them or don’t have the qualifications to do them, we will still have to have just as many foreign workers anyway. The NHS, the trains, the underground transport system and most of the caring professions are held up by foreign workers – many of them from outside the EU area – and coming out of the EU wouldn’t reduce our need for them.
- They say that a lot of international companies will gradually move their offices and possibly their factories out of Britain, taking their jobs with them. There’s no hard evidence for this although many of the large banks have said they have made contingency plans.
Immigration seems to be the subject that creates most of the anger in this ‘debate’ just as it is increasingly in many Western countries.
The Leave campaigners say
- Outside of the EU we would be able to go back to deciding ourselves which workers we wanted from which countries.
- We would be able to have Aussies, Kiwis and Saffas (South Africans) again which would be marvellous as they are excellent workers and have similar cultures to ours
- We could set our own quotas and decide for ourselves which workers we accept and which we don’t.
The Remain campaigners say
- If we were no longer part of the EU, France would see no need to continue to stop immigrants at Calais and protect the British border. They would simply open the gates and let us do our best to police the English Channel and ports and decide what to do with the people who have trekked across Europe to come to this country.
- As explained above, if we wanted to continue to trade with EU countries we would have to accept immigrants from the EU area as part of the deal, as other non-EU European countries do, and this time we would have a lot less control over who comes and what they are allowed to do here.
Again, no one really knows although both sides have come up with ridiculous figures based on nothing very much.
Much of it would hang on the value of Sterling (see above) because we import more than we export so if the pound goes down generally – not just against the Euro but also against other currencies as well, which is likely to happen after Brexit – then food, petrol, clothes and more are likely to go up, at least in the short term.
However, the other argument is that we would be able to choose where we buy more of our goods from across the world, including more New Zealand lamb and dairy products, for example.
Again, no one really knows. It’s a huge question with lots of imponderables.
Obviously the Leave campaign say the economy would improve out of the EU and the Remain campaigners say it would be worse.
It all hinges on
- Our ability to retain businesses already based here, particularly big financial companies in the City and manufacturing companies that have factories here
- Our ability to renegotiate good trade deals with EU countries
- Our ability to persuade businesses from non-EU countries to come and set up here
- Our ability to persuade the world that we are, and will continue to be, an economic force to be reckoned with even though we are no longer part of the EU club
Well there’s a good question (you’re full of them aren’t you?).
Many in the ‘Leave’ campaign say that if we actually did decide we would leave then the powers that be in the EU will be so appalled and scared that they would be willing to change rules and bend others just to keep us in the union. It would put us in a wonderful bargaining position.
The argument is that we are such a big economy, so important to other EU countries because of our imports from them and so crucial to the future of the EU, that they will do anything to persuade us to stay. It was Boris Johnson’s point when he first came out for Brexit – he said that a Leave vote would trigger a fresh round of negotiations and we could stay after all.
But there’s no provision in the act that set up the referendum for another referendum to follow. A vote to leave is a vote to leave – that’s it.
The government has said it would invoke Article 50 of the Lisbon Treaty, which covers countries leaving the EU, within days of the vote, and that just starts a 2-year process leading to exit, not a negotiation to avoid it.
Also many others in the Leave campaign are absolutely serious about leaving whatever happens so if the EU did try to negotiate we might get another internal fight with the Leaves and the Negotiates slugging it out in yet another ugly political battle, this time probably between Boris Johnson (likely to be the new Prime Minister) and his fans and Nigel Farage and his club.
Well….there are very few actual facts when it comes to the Brexit debate. Much of it is speculation on both sides.
Also, FullFact has fact checked claims about immigration, how well the EU is run, what the costs and benefits of Brexit would be and more here.
The Guardian has an article that has links to a load of other sites, including academic ones, that provide as many facts as they can muster.
Also, find out more facts and figures from the political journalist Paul Osborne in my Ask Jasmine podcast here:
And I’m not saying this because I love the EU and its offices.
In fact, I get very angry with the EU. The organisation drives me nuts!
- I can’t bear the way they tinker with things they shouldn’t mess with: like how hard our vacuum cleaners suck or what shape our fruit should be.
- They have done very badly – and continue to do badly – with the Greek crisis and the whole organisation is way bigger and messier than it should be.
- It’s a big gravy train and I’d like there to be a lot more transparency over their costs.
But in many of the important elements, the EU actually works, has worked for us and will work for us in the future, particularly if we take more, not less, of a part in it.
Here are the main reasons why I want to Remain:
- We have done very well so far being part of the union. It’s no coincidence that we are the fifth largest economy in the world. It’s not all our work, much of it is because of our position in the EU.
- We currently have a really sweet deal with the EU. We’re not in the Euro and don’t have to be until we say so (which may be never); we have a big say in what we do with immigrant workers (which we wouldn’t have if we were out of the EU but wanted to trade with it)
- We need to be part of a big organisation to compete globally – things are moving very fast in the world and big corporations (Google, Facebook, Apple and more) are already overtaking countries in their size, influence and GDP. Increasingly it will be the big fish that survive and prosper while the small fish will be eaten up, I consider.
- I personally think business and jobs would be badly affected – Britain would lose a lot of its attractiveness to foreign companies and also the EU would make it very difficult for us to continue to trade with them in the way we want to. They will want to make an example of us so that other countries don’t leave so they will make life difficult for us. Think about it – if it were France or Germany threatening to leave, wouldn’t we want to make life tough for them if they did?
- I also think that prices would go up and that we would have less money – definitely in the short term as Sterling tanks (as I believe it will) but also in the long-term as our economy gradually sinks and the pound stays low.
- The people leading the Leave campaign are people I would definitely NOT want running the country – you think Cameron and Osborne are right-wing toffs who don’t understand ordinary people? Try Boris, Michael Gove, Neil Hamilton and their cronies. Awful thought.
- There’s a genuine threat of war. I do think that if we left the EU the whole area would be in much more danger of another big war. It is likely to weaken Europe – something that Vladimir Putin is desperate for – and will probably lead to other countries leaving and the break-up of the union entirely. Those who are old enough to have experienced something of the miseries of WWII and its aftermath, like the actor Patrick Stewart, tend to be in the Remain camp. The view is that if we are banded together in one big trade body we are unlikely to fight. And indeed we haven’t for the forty-odd years we’ve been in it.
Essentially, my feeling is that we have done well being part of the union for the last forty years and, given that there are no hard facts coming from the Leave campaign to show us that we would definitely be better off out of it, we should stick with what we know has been good rather than take a leap into the – potentially dangerous – unknown.
It’s such a big step that unless we have solid facts and figures to guarantee us a better time out of the EU, we should not take that leap.
We are in a good position now. We must not ruin it.