There is no positive case for staying in the EU
Not once since the Referendum was announced has a positive case been made for staying in the EU or indeed a positive case for the EU itself. With possibly one exception – it is necessary to prevent another European war. I guess you can call this a positive case, although it happens to be wrong: it is NATO not the EU that has prevented a European war for the last 70 years.
Fear and coercion are the only tools open to Remainers
The case for staying has been always been based on fear. The most prominent examples of this were the Project Fear campaigns led by the Treasury under George Osborne (Mark 1) and Philip Hammond (Mark 2). You will remember Osborne introducing IMF Managing Director, Christine Lagarde, in May 2016, a month before the Referendum, who said that leaving the EU would have ‘pretty bad to very, very bad consequences’ for the UK – that could result in a ‘sudden stop’ in money flowing into the finance sector which would drive down the value of the pound and lead to a sharp rise in interest rates, falling house and commercial property prices and the erosion of London’s status as a global financial centre, all of which would lead to a technical recession. None of this materialised, except for the fall in sterling which was good for both exports and tourism.
The case for staying has also been based on exercising a form of coercive control which Yanis Varoufakis in Adults in the Room dubbed the Hotel California effect: you can check out, but you can never leave. Prominent proponents of this form of control are Lord Heseltine – who the day after the Referendum result said, with the absolute confidence of a religious zealot, that Brexit would never happen – through the likes of Blair and Mandelson to the promoters of a second referendum or People’s Vote – who want to give us a second chance of redemption before we enter eternal damnation and spend the rest of time burning in hell. The EU has form here. It keeps getting you to vote again and again until you make the right decision – as it has done in Holland, France and Ireland.
Fear and coercion are precisely what bad religions use to keep the masses under control. Leaving amounts to apostasy which has to be avoided at all costs.
All sense of rational argument has disappeared
Remainers have been allowed to set the language of the Brexit debate and naturally they have come up with hellfire terms like ‘crashing out’, ‘cliff edge’, and ‘leaping into the unknown’. They have even dreamt up distinctions like ‘hard’ and ‘soft’ Brexit to sow further confusion. David Cameron himself said the decision would be ‘in or out’ – nothing could be clearer. There can only ever be one Brexit and that is a clean sovereign Brexit – which is what people voted for, despite being told a million times that they did not understand what they were voting for.
All sense of rational argument has disappeared. The result is an environment in which absurd statements are being taken seriously. Here are a few examples:
- ‘Food prices will rise after Brexit’. The EU has the highest food prices in the world because it imposes an average tariff of 17% on imported food – in the case of some foods, such as chicken, the tariff is above 70%. So, the only way that food prices would rise after Brexit would be if the UK government raised the tariffs on food even further. But one of the key reasons for leaving the EU is to reduce these absurdly high tariffs – which were originally set to protect inefficient French farmers from global competition.
- ‘People will die in hospital because vital drugs will not be imported’ and ‘Brexit will cause 12,000 deaths because of the lack of fruit and vegetables’, according to a study in the British Medical Journal. This would only happen if either the French government prevents the trucks carrying medicines, fruit and vegetables from leaving Calais or the UK government prevents the trucks from landing at Dover. Jean-Marc Puissesseau, the head of the port of Calais, has repeatedly said that ‘there will be no delays’ in Calais.
- ‘Due to the complex supply chains in the automotive manufacturing industry, UK car makers will be forced to move to the continent if the UK leaves the Customs Union’. This is just another manifestation of Project Fear. Equally complex supply chains exist amongst Asian tiger economies and just-in-time delivery of component parts work effectively, without these economies being part of either a single market or a customs union. The same will happen here after Brexit and new more efficient supply chains will also develop.
- ‘The UK must remain in the Custom Union/Single Market/EU to preserve peace in Northern Ireland’. Again this is a non-problem if the Irish and UK government collaborate – as they do now in the case of fuel launderers who remove the dye from low-cost red diesel used in agricultural vehicles to sell on at higher prices as regular fuel. But it has now got completely out of hand as a result of the Prime Minister’s negotiating incompetence. There are endless studies showing that it is a non-problem – including the Smart Border 2.0 report for the European Parliament by Lars Karlsson, a former deputy director of Swedish Customs – but these are all brushed aside as ‘magical thinking’.
Every time one of these absurdities is raised, the Brussels Broadcasting Corporation gives endless opportunities to Remain politicians to spout on about it. So it doesn’t take long for Anna Soubry to get on her soapbox and apologise to the Irish people for ‘what my country has been doing’. Or for Ken Clarke to say the backstop ‘must last for ever’ if not longer. Recently, the EU has announced it will harmonise VAT thresholds for small businesses across Europe and immediately Remain politicians cry out that the people did not vote for this and demand a second referendum.
It’s all completely barking – as these politicians know full well.
But it actually gets even more bizarre. We can have Heseltine stand up at a People’s Vote rally and say that it is Remainers who are the true patriots. Mandelson – with his big EU pension – has also said that he is a patriot, while Leavers are nationalists. And more bizarre still. There are clearly many people who are incandescent at Leavers wanting to be able elect (and fire) the people who decide the laws they have to obey and to choose freely whom they trade with. You only have to read some of the reactions to articles on even the Conservativehome or Daily Telegraph websites. These Remoaners want Brexit – if it happens – to be a total failure. They want to see lorries backed up on the M20. They want to see a big slump in the economy. The want famine and pestilence. They want to be able to say ‘we told you so’. How mad is that!
It’s time to reveal the dirty little secrets behind the cult that the Remainers want to keep us trapped in…
Remainers really do need to know what they’re in for if we remain in the EU. There is an awful lot to be fearful about. As I have discussed elsewhere on Briefings for Brexit, there are very serious political, economic and financial crises brewing. These are the inevitable consequence of the inconsistencies in way the EU was constructed – inconsistencies that can never be resolved.
…the political crisis
At a political level, there is the inconsistency between the member states being independent nations – which is the only basis on which the electorates in each country give legitimacy to the national governments they elect – and those same nations having to cede full sovereignty to the European Commission in Brussels for the EU to work. ‘Ever closer union’ means exactly what it says. The Commission continually grabs more power by stealth. The most notorious example of this is the Lisbon Treaty which introduced an EU constitution – with a single EU presidency, foreign policy, army and anthem – when this had clearly been rejected in national referendums. In the process of this power grab, the EU is becoming increasingly undemocratic and authoritarian.
But it could get much worse if the recommendation of a contributor to a recent panel discussion on the BBC World Service is implemented – I didn’t hear the beginning of the discussion, so didn’t catch his name. The contributor said it was essential for Europe’s future that the European Council was scrapped – leaving only the European Commission and the European Court of Justice (ECJ) as the sole decision makers. This takes away any role for national governments in future policy making in the EU. The real power would therefore rest with unelected bureaucrats at the Commission who propose new laws and with unelected judges at the ECJ who adjudicate on existing laws using the ‘purposive’ method. This allows them to interpret and reinterpret the wording of EU laws in line with the Commission’s (often changing) intentions.
One example of this was the ECJ’s ruling that the European Central Bank’s quantitative easing (QE) programme between 2015 and 2018 was consistent with Article 123 (of the Treaty on the Functioning of the European Union) which prohibits the monetary financing of government budget deficits. But if QE is not the monetary financing of government budget deficits, then nothing is!
A more recent example was the ECJ ruling that Article 50 (of the Treaty on European Union) could be revoked by the UK, when the original intention was that this was not possible, since it allows other member states to threaten to use Article 50 if they do not like what the Commission is proposing.
This very continental, indeed Napoleonic, system of government was justified on the grounds that there were two layers of democracy (i.e., ‘double democracy’) – at the national level (represented by the Council) and at the individual level (represented by the Parliament). So, if our World Service contributor gets his way, the EU would be reduced to a ‘single democracy’. But the risk is that this would soon become a ‘zero democracy’ as very few people know who their MEP is and the vast majority of people do not vote in European elections.
In his 2016 book Against Elections: The Case for Democracy, Belgian historian David Van Reybrouck describes the European Parliament as little better than one of the ‘councils of the people’ in the interwar colonial empires of the Belgium, Holland, Britain, or France – with the real power resting with a distant imperial executive. It is therefore no accident that Bruno Le Maire, the French finance minister, has recently called for Europe to become an empire to challenge superpowers like the US and China. Well you wouldn’t democracy getting in the way of that, would you?
Where does this leave national governments? They also get in the way of the empire builders in Brussels. The EU’s founding fathers have always wanted to turn Europe from a grouping of nation states into a grouping of regions. To be fair to the founding fathers, the nation state has been responsible for causing many of the atrocities in Europe’s recent past. But to believe that the solution to this problem is to turn Europe into a Europe of regions – like Catalonia, Corsica, Scotland and Wallonia – while at the same time expecting national loyalties to be transformed into a higher loyalty to a European Empire, led by a new Napoleon such as Jean-Claude Junker, is to court an even bigger disaster than World War I or World War II. It could ultimately lead to civil war – and as we have seen in Syria, a civil war is far worse than a war between nations.
It is also not the answer to the international challenges that Europe faces – an ultra-nationalist Russia still angry at Europe’s role in breaking up the Soviet Union and millions of people in the Middle East and Africa who see how easy it is with sufficient determination to get into Europe in search of a better life. The EU has shown that it is incapable of securing its own external borders. Some empire.
… the economic crisis
At the economic level, there is the inconsistency between the desires of member states to implement policies that grow their economies and rules at the EU level which introduce a deflationary bias across the EU-wide economy. There are two main explanations for this. The first is the euro. When it started in 1999, Germany joined at too low an exchange rate, while other countries like Italy and Spain joined at too high exchange rates. This gave Germany a competitive advantage which allowed it to build up trade surpluses not only with the rest of the EU, but also with the rest of the world, since the international value of the euro is suppressed by the less competitive members. As a result, Italy and Spain have been in a permanent recession since. And let’s not even mention Greece.
The second is that the EU has no mechanism for using fiscal policy to boost the economies in recession. This would require the fiscal union of EU member states – setting member state budgets and tax rates centrally in Brussels. There are also limits on the size of member state budget deficits – they must not exceed 3% of gross domestic product (GDP) or 2.2% if the member state is also in the eurozone – and national debts – they must not exceed 60% of GDP. These limits prevent the member states themselves using fiscal policy to boost their economies.
…the financial crisis
At the financial level, most eurozone banks are insolvent. There are three main reasons for this. The first is that these banks, especially in the weakest and most indebted economies, hold a substantial proportion of their assets in their own government’s bonds. EU rules assume member state bonds are risk free and so the banks do not have to hold risk capital against these holdings. But these bonds are far from riskless, especially in Italy, Spain and Greece. In times of crisis, the markets drive down the prices of the riskiest bonds and banks must either raise additional capital – which the weakest banks are unable to do – or reduce lending which damages economic growth. This creates a so-called ‘doom loop’, a vicious downward spiral in which the economy weakens, companies default, banks reduce lending and the economy weakens further.
The second reason is contagion. French banks, for example, have made significant loans to Italian banks, so they are also at risk if Italian banks fail. The third reason is capital flight which happens when residents in countries such as Italy, Spain and Greece lose confidence in their banking system and move funds to banks in stronger states, such as Germany. This causes enormous distortions in Europe’s financial markets as Germany becomes flooded with money that it cannot use productively and there is a corresponding dearth of funds for investment in the Mediterranean states. German interest rates have been negative since 2014. A study by Germany’s Postbank estimates that German savers lost interest income worth €125bn between 2011 and 2015 as a result.
Why do Remainers have such blind faith?
Surely Remainers are familiar with at least some of these issues. Perhaps they just do not want to see the fault lines in the dream world created by the EU’s founding fathers. A dream world – built on peace and respect for the environment – which has created a nirvana for both workers and capitalists. This is the only reason I can think of as to why Remainers are such an odd bunch of left and right wingers.
The EU claims to be simultaneously both a worker’s paradise – given the social protections it guarantees to workers – and a capitalist’s heaven – given how effectively businesses can lobby Brussels to raise barriers against cheaper imports from outside the EU. The most striking evidence for this is the support given by the Confederation of British Industry and Institute of Directors for the Labour leader Jeremy Corbyn – someone who has devoted his entire political career to destroying capitalism – in his ambition to keeping the UK in the Customs Union after Brexit. They both can’t be right about the EU.
Let’s do a reality check. Angela Merkel once pointed out that ‘the EU has 10% of the world’s population, 25% of the world’s GDP, and 50% of the world’s welfare benefits’. That GDP figure is a bit out of date, it’s now around 20% and will be closer to 15% of world GDP when the UK leaves, but the EU still has 50% of the world’s welfare benefits. This explains why the EU’s share of global income has declined and will continue to decline. It also explains why, in many parts of the EU, unemployment rates are more than 10% and youth unemployment rates are above 30%. At the same time, Europe’s consumers are paying the world’s highest prices for the goods they buy because of the 13,000 tariffs that European producers get Brussels to impose on imports.
This can’t possibly be sustainable, particularly when you have de facto open borders and the rest of the world wants to get their hands on some of those welfare benefits. The EU just doesn’t add up. There are failures at all levels, political, economic and financial. On any objective measure, the credibility of the EU is in tatters, but Remainers don’t care. They have given it the status of a religious cult and to them it is impervious to criticism. We have young people in the UK going on protest marches and holding up placards which say that the Referendum has ‘stolen their future’. Oddly enough, young people on the continent are now quite hostile to the EU. Perhaps that’s because they can’t find work in the workers’ paradise. So be careful what you wish for.
All this puts Remainers in a state of denial. There are no better examples of this than the Brussels Broadcasting Corporation and my own economics profession.
The BBC gives far more space to Remainers, while endlessly patronising Brexiteers who dare to criticise the EU – as has been pointed out by David Jones MP. It has just been reported that the BBC has received £4.2m in funding from the EU under its Horizon 2020 programme which provides grants for research and development. One of the conditions for receiving such grants is that you don’t criticise the EU. No wonder our national broadcaster is so willing to cover speeches criticising Brexit by people like Guy Verhofstadt, the EU Parliament’s Brexit representative, while refusing to cover those of British MEPs, like Nigel Farage.
Similar language is used by economists: ‘no serious economist believes that leaving the EU will be anything other than an economic disaster for the UK’. Certainly, most economists believe this. Yet they are the same economists who said it would be a disaster if the UK did not join the euro and who said that Osborne’s and Lagarde’s ridiculous predictions about the economy in the case of a no vote were ‘reasonable’. They were wrong then and they are wrong now.
No amount of denial can stop the EU falling apart. And neither can fear and coercion. Staying in the EU will have ‘pretty bad to very, very bad consequences’ for us all. But this is not going to stop Remainers wanting to keep us trapped indefinitely in this religious cult.
And it’s not just Remainers over here who take this view. So does Donald Tusk, the President of the European Council. As he is fond of saying: ‘There is a special place in hell for Brexiteers’.