Bit by bit we shall see key points emerge from the Remain and Leave camps to explain the superiority of their analysis and the better value of their offer. Although this Blog has declared it is for Remain no matter what, I will still unpick the detail of arguments deployed by either side in order to help readers drill down to the core issues which affect them personally and which will inform their choice in the referendum.
Several times in the last few days I have heard Leave enthusiasts assert that the fears about London’s position as a world, actually the world, financial centre are groundless in the event of Brexit and to back this bold claim, they cite City anxiety about not joining the Euro, which turned out not to matter. Maybe not for the City but it did matter for everybody else. Here is why.
By staying out Britain made a huge miscalculation. It failed to see that to be part of a market based on a universal currency from which we excluded ourselves, would place us at a severe disadvantage as an industrial and manufacturing power, because the pound has for most of the time been valued way above the euro, whilst each unit buys roughly the same in its area of circulation. This makes British goods expensive in the Euro market and Euro goods cheap in the British market. So the EU sells us about £50 billion a year more than we sell to it. The last point is often made by Leave, but they fail to make the currency connection to the problem.
Equally unrestricted EU migrant immigration is the trump card of Leave and the big doorstep issue up and down the country. Both the free movement of people and the entitlement to benefits are seen as problems which leaving will somehow resolve. The problem is not caused by benefits, it is caused by the fact that earnings in pounds have a higher value when repatriated to the EU than the euros to which they convert. Had we been in the Euro this would not be happening.
The shortage of housing, excessive housing costs, low wages at the base of the economy, frightening trade deficits, record breaking debt per household are all issues which would be on a far more manageable scale if we had been in the euro. The currency would also have been far better run with a much more assertive system of governance. In a nutshell ordinary people would have been better off. Like in Germany.
So the City was right to lament that we did not join. It was wrong to believe it would be adversely affected. The snags would have to be born, as so often in these things, by the weakest elements of society. The few would be all right Jack. But the many would pay. And will go on paying.