Marcus Lippold
Marcus Lippold

Having recently returned to the UK after a good 30 years spent living and working in other countries in Europe and beyond,  it is interesting to see how little has changed in respect to some basic beliefs and attitudes, all of which are strongly coming to the fore in the current Brexit debate(s).

Now as back then, if I look at the media topics and news items covered, the focus is still very much on the Commonwealth countries and the USA. Continental Europe rarely gets a mention, and if it does, it’s seldom positive. In general, the continent still seems quite far away mentally. This is also true for the arts, music or politics. Whether it is about actors, musicians or politicians, there seems to be a higher level of interest among continental European countries than from the UK vis-a-vis the continent. All in all, splendid isolation has survived better than some people would like to admit. The only exception are popular holiday destinations like France, Spain or Portugal .

Ever since joining the EU in 1973 under Edward Heath (now one of the most unpopular Prime Ministers in recent UK history) and the last referendum under Labour Prime Minister Harold Wilson on Britain’s membership in 1975 (about 66% voted yes – to stay in the European Community), the only real interest in the European project for the UK has been the common market. Even after that first referendum, the country has been very ambivalent regarding its role in the EU.

I still remember London in the late 70’s, in the in-between period of a growing North Sea oil success story and a not yet globally successful  financial center. A city in modest decline living off its glorious past, riddled with strike action, with rubbish piled high in the streets,  Thames Water on strike together with many other service sectors, and London’s overall population declining.The city was regarded as cool though, with the punk movement and other anti-establishment drives blossoming, not dissimilar to Berlin’s current  ‘broke but sexy’ self-evaluation.

London was already expensive then, partially because the country is so centralised. Significant economic activity was concentrated in London while traditional industries in the rest of the country were failing. However, many neighbourhoods were still quite affordable. Certainly, Brixton, Bethnal Green, Hoxton etc. were not very much en vogue back then.

Since then London has undergone a remarkable transformation.  It has had 35 years of uninterrupted economic growth. Downriver from Tower Bridge an entire new city has been added. The South Bank has been rejuvenated and you will not find affordable living in Hoxton anymore. The population has grown from just under seven million to about 8.6 million now and is expected to grow to 11 million by 2050. Of course, the reforms introduced under Prime Minister Thatcher helped a lot (notably wrestling power back from the unions and deregulating the financial sector), but I would argue that having become part of the EU has also been a significant boon to the country’s development, especially London’s.

The UK and especially London have effectively become the bridgehead into Europe for many companies benefitting from the ‘passporting’ system of the EU, which allows non-European companies registered in at least one of the block’s 28 jurisdictions to access the single market and provide products and services in all other EU countries. The significant and highly professional foreign workforce in London nowadays is a testament to this (but also in Manchester and other parts of the country). London with its roughly 400.000 French residents has effectively become the 6th biggest French city.

Interestingly though, people in London or the rest of the country have never much associated or linked this economic success to being partially also the result of being a member of the EU and the single market, but rather London’s success as a global city and the countries past well-established ties with the rest of the world, i.e. the Commonwealth countries and the US, despite about 50% of the UK’s exports going to continental Europe now.

The UK media has not helped over the last 40 years in the country’s perception of the EU, especially the view of Brussels, which is seen as overbearing, corrupt, non- transparent, wasteful and undemocratic. Brussels nowadays is blamed for almost everything that can go wrong in peoples’ lives.

An interesting case to look at in this regard is  the region of Cornwall in the south-west, one of the UK’s most economically depressed regions, though a lovely tourist destination with a gorgeous countryside and  beautiful landscapes. Although by far the biggest UK beneficiary of EU money spent per capita on regional development (from renovating port infrastructure to promoting R+D and setting up a local university campus), the latest polls show about 70-80 % of the Cornish wanting to leave the EU. Money can’t buy love, it seems.

So it is not astonishing to see now how the Remain camp under Prime Minister Cameron is struggling to convince people that leaving the EU is not in their interest. It seems sufficient for the Brexit camp under Boris Johnson and Michael Gove to play up the immigration threat and highlight the fact that the UK is a net contributor to the EU budget to the tune of 8-10 billion EUR p.a.  Many Britons’s reflex is a rhetorical question: ‘Well, what’s the EU ever done for me?’, they say.

Sterling has become a very good indicator of where the debate currently stands. Whenever the Out camp is seen as advancing, the UK’s currency dips against the EURO and USD, so at least financial markets seem to have a clear view on Brexit. The latest polls see the Out camp slightly in the lead. Cameron’s government is getting more and more agitated as it seems unable to convince more people of the benefits of staying in. This is all the more true as it has already deployed its strongest arguments, i.e. the economy.

Despite the BoE governor, the OECD, the IMF, the World Bank, President Obama, President Xi Jinping, Prime Minister Modi all having come out in favour of the UK to stay in the EU, along with the government’s own economic analysis, people’s opinions have not really shifted. In fact, voters seem to become more resistant to the government’s perceived ‘project fear’, not wanting to be patronised in their decision making. It doesn’t help that  government and labour internally are deeply divided on the issue, with political infighting becoming increasingly bitter and personal. A lot of the parties’ current dysfunctionalities caused by the referendum will actually persist well beyond the June 23rd referendum, independent of where the result will fall.

Also, several business sectors are far less unified in their opinions than one might think. The banking sector that one would expect to largely be ‘in’ actually is not. This has left banker friends of mine being very concerned. Some of them are even privately staging high street initiatives trying to convince people to vote for staying in.

So what can be expected on June 23rd (actually about 20% of people have already registered and cast their vote by now)? : Along very rough lines,

  • People aged 60+ tend to lean more towards out
  • Under 30’s tend to vote in, but are not expected to turn out to vote in large numbers
  • About 1.5 million Britons living abroad are not allowed to vote
  • About 1.2 million Londoners (non-UK citizens) working and paying taxes and wanting to stay in, are not eligible to vote
  • A significant part of the 30-60 year olds are undecided.

However, regarding the last category, for many of the undecided the default option seems to be out (the arguments put forward are too complicated, don’t trust government etc.), rather than in (minimise risk and stay with what is known). My own little survey talking to people resulted in about 65% voting for leave. I thus think that there is a very realistic chance of the UK actually voting to leave the EU, despite what the bookies currently tell you.

What may still really tip the balance in favour of Remain  is the fear that UK and especially London real estate will take a serious dive if the the country leaves the EU. The real estate market underpins a lot of the economy, and people are literally obsessed by it. Real estate is the dominant form of investment/ asset class for many people and directly touches people’s financial capabilities.

I personally do not really want to contemplate the UK leaving the EU. This would be detrimental for both sides with Scotland potentially leaving Britain for the EU, and a UK leave potentially paving an exit route that other EU countries could follow (though I think a net EU budget contributor leaving is different from a net recipient, the latter might think twice or thrice about it).

Other EU net contributor countries will be more than reluctant to fill the 8-10 Billion Euro budget gap left by Brexit. This means that countries in Central and Southern Europe are likely to be directly affected by cuts in their money transfers. The slight economic growth they currently still experience is predominantly due to EU financed projects still being executed in their countries (e.g. infrastructure/ renovation projects). Any cuts could stall growth alltogether.

One thing is fairly sure: if the vote is out, London will survive in the long run. Britain and the EU in its current form might not, but this would only be a small consolation.

Maybe I should join my banker friends in the high street next week and try to convince more people that staying in makes sense…

Marcus Lippold works with Saudi Petroleum Overseas Ltd in London. He is a personal member of United Europe.