A month ahead of the so-called Brexit (Britain to Exit the EU) referendum, pretty much every reasonable opinion poll appears to find in favor of Remain over Leave; so much so that if this were any reasonable gambling endeavor, the results would have been called already. The risks of the Leave camp winning though may be greater than what they appear at first glance; and the Remain camp could well become complacent enough to lose the battle. It is thus plausible if not probable that UK voters would choose to Leave; but one certainly hopes they do not.

Despite all the polls, why would anyone consider the risks of Leave to be anything more than an mathematical improbability?

  1. Opinion polls have been wrong before: It is no small matter of smug satisfaction that many opinion polls around the world have simply been wrong for the past 10 years, much to the chagrin of anyone believing in the practice of psephology as a science. That statistical formulations often go wrong at the altar of incorrect sample sizes, voter fatigue and just asking the wrong question in the wrong tone has all been documented extensively as reasons for polls going wrong. On an emotive issue such as voting to Remain or Leave, it is hard to under-estimate the potential statistical errors (especially the repeating ones) that could underpin faulty findings.
  2. Leaders and characters: If one watches the debates and discussions, it quickly becomes obvious that the Remain camp is led by the most bromide of politicians who perhaps habitually put their own most ardent supporters to sleep barely two minutes into any speech. David Cameron, George Osbourne, Jeremy Corbyn and Alastair Darling (perhaps the best campaigner for Remain, which is saying a lot) are all not only boring, but also seem a trifle half-hearted if not downright complacent. On the other hand, leaders of the Leave camp form are almost entirely real characters – former London mayor Boris Johnson (or “BoJo” as he is referred to) leading a pack that comprises Michael Gove, Nigel Farage all helped by the very thoughtful Daniel Hannan. That’s the reason people are likely to shift to Leave increasingly – we are much in the era of ‘sound bite politics’ and in this, Remain camp has been left behind
  3. Fear can backfire: The primary strategy of the Remain camp may also be incurably faulty. Everything from them has been about manufacturing fear, be it talk of falling economic growth and rising unemployment, to talk of house prices decline. The last of course is aimed at British middle class voters who are considered (perhaps for very good reasons) to be romantically attached to the market value of their properties. From my perspective, given the number of very British friends I have, this strategy could backfire spectacularly – the British after all do have it in their DNA to re-enact the Charge of the Light Brigade from time to time.
  4. The classical Greek question: It is no particular secret that British voters have been watching the EU’s antics on Greek debt restructuring, a drama that has spawned a number of sub-plots from the rise of the ultra-left Syriza to handling of the refugee crisis (and with it, a very un-European deal with Turkey) and the obstinacy of German politicians ahead of their own elections. All of this has fed the natural suspicions of the British that the European project remains at its heart a fiercely German endeavor and while it may all be well and good when the Germans feel kind to the French, it is also equally difficult to tell when that may change. Privately, many senior British politicians blame the German government for mishandling relations with Russia, with Berlin accused of kowtowing at the drop of a hat (if Putin’s shenanigans could have anything to do with hats).
  5. The Irish question: Many people in the UK have close links with Ireland, therefore the economic travails of that country are well documented and commented upon in the English press. Even with the stunning turnaround effected by the Enda Kenny government since the financial crisis, the overwhelming opinion has been that Ireland was punished severely due to a lack of its own currency and freedom on fiscal policy (see “(F)Ire and Ice” dated November 20, 2010). In the event the government pushed through with its austerity programs long enough to secure a turnaround; but the cost in terms of livelihoods and living standards have been nothing short of usurious.
  6. The Scottish question: This may be the most controversial line of thinking, but since it has been mentioned a few times, I would posit another supporting piece of emotional reasoning. Since the Scottish referendum voted to remain inside the UK two years ago, the Scottish Nationalists have surged to becoming the biggest opposition party and recently won the Scottish parliament elections as well. To say that many British people find the SNP’s antics more than a tiny bit aggravating is putting things mildly. Another referendum will very likely be tabled (and won) by the SNP should the UK decide to vote Leave. The notion of divorcing the EU and getting as a free gift the riddance of highly subsidized Scottish people isn’t altogether unwelcome in many quarters. This could well be a significant piece of reverse psychology at work in favor of Leave.
  7. Everyone hates bankers: A substantial portion of the Remain camp’s arguments have been around London losing its status as a key financial center and with it, thousands of banking jobs. Once again, I rather fear this could actually motivate people to vote Leave rather than the intended effects. To say that bankers aren’t though of very highly by middle class Britain would be classified the understatement of the century. In addition to their role in the global financial crisis, local bankers are also blamed for various other scandals including LIBOR fixing and the Payments Protection Insurance (PPI) scam. Losing a few thousand bankers, like losing a few million Scots, may be no bad thing in the mind of the average British voter.
  8. What hurts the market most: Thanks in part to the opinion poll findings, and also perhaps the natural complacency that market participants adopt in the face of overwhelming data to one end of the spectrum (i.e. the mispricing of risk), it is now fairly evident across currency, equity, bond and volatility markets that a victory for Leave has simply been discounted out of existence. When we consider the sheer number of times opinion polls have been wrong recently, it is clear that markets have underpriced risks.   

Why the Leave vote shouldn’t win

There are some good reasons besides the Fear evoked by the Remain camp that should persuade a number of people otherwise predisposed towards Leave to reconsider.

  1. Leave has no real plan: It is not much of an exaggeration to say that the Leave camp doesn’t have much of a plan should they win. For example, David Cameron would likely resign as Prime Minister and BoJo would likely throw his hat into the ring (many people suspect this is the ulterior motive for BoJo to project himself as a keen supporter of Leave); but it is not clear that the now-split Conservatives will retain their majority in Parliament for any amount of time, thereby necessitating fresh national elections (and a Scottish referendum to boot)
  2. UK needs immigration: Alone amongst European economies, the UK has shown significant employment growth along with reasonable economic fundamentals thanks primarily to immigration which just as in the case of the US, has helped provide a new base of taxpayers and consumers in an otherwise ageing economy. Since the primary plank of the Leave camp centers around cutting back sharply on immigration, longer-term risks maybe more pronounced than is currently being acknowledged by the Leave camp
  3. Narrowing economic base and the risks this brings: Outside of Europe, the new UK could well have a more volatile economy that depends much more on a series of short-term measures to retain a respectable economic trajectory. For example, a real estate market over dependent on Russian and Chinese buyers may necessitate rollbacks of punitive stamp duties recently imposed by the government; in turn risking necessary funding for welfare, health and education. The lack of policy alternatives isn’t a comfortable place to be in, especially when you are led by people without a plan
  4. The “I wouldn’t start from here” conundrum: As the old British joke about motoring goes, when a driver who is lost and wandering far away from the main highway stops a farmer to ask for directions to get back, the classic response is a wild shake of the head followed with “I wouldn’t start from here though.” Similarly, whatever the longer-term objectives of the Leave camp, there is simply too much left to chance on a wild leap into the unknown; carrying with it substantial political and economic risks that have simply not been fleshed out or even discussed seriously.

The time may yet arise when leaving the EU would be the best course of action for the UK; however a month from now I do hope that the Remain camp wins if for nothing else because whatever the romantic notions of being free and independent of the marauding Brussels bureaucrats, the reality of being part of a bigger state is simply better than the alternative.

The opinions expressed in this column are the author’s own and do not necessarily reflect the view of Asia Times.

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