Article by Manuela Andaloro, contribution by Laura Prina Cerai, Senior Investment Advisor, Altrafin AG
It’s an autumn afternoon in 2008, in London. I am sitting in a car next to Jeff, the CFO of the company I work for. I am part of the management team of an international financial services company with offices in London and Singapore. We are going to a meeting not far from London. We are near Maidenhead, a thriving residential town near the more industrial Slough, or the more well-known Windsor, north-west of the capital of the United Kingdom. Jeff is British, fair, calm, competent and empathic. We have a good working relationship. We talk about life in the city centre, Bayswater and Notting Hill, the area I live in, an Italian in her thirties with a ten-year career under her belt. We also talk about life outside London, where Jeff resides with his family; he’s a middle-aged man with almost teenage children.
London, cosmopolitan city. Over 300 languages are currently spoken in London schools.
“London is a truly cosmopolitan city, there is a great social integration, something to be proud of”, I comment at some point. “True that, but I think this is something people rarely see in us. Brits are not often recognised the merits of being open and welcoming towards immigration. I mean, there are different kinds of migrants. All this welcoming and open attitude…. I am afraid that at some point it may come back to haunt us”, answers Jeff with an emphasis that makes me now understand some of Brexit’s roots. I ask what he means by that. “You see, we don’t all really feel European, for starters, we drive on the right side of the road!”. Jeff is laughing but I catch some frustration in his tone. I have many thoughts in my mind, but we suddenly change the subject and go back talking about the client we’re about to visit.
This conversation came back to my mind the day after the referendum on Brexit, on 24th of June, 2016, in a moment of surprise for an unexpected result. I am reading one of the most precise reports ever written about the “unseen” London, “the stories you never hear, the people you never see” (ed. “This is London” by Ben Judah). “This is London in the eyes of its beggars, bankers, coppers, gangsters, carers, witch-doctors and sex workers. This is London in the voices of Arabs, Afghans, Nigerians, Poles, Romanians and Russians”. A work that sheds light upon a reality that I have not fully grasped during my 5 years in London. I have been caught up in my business life, or private life in the picturesque Notting Hill, between conferences and client meetings in the City, awards dinner in Park Lane and business trips. Like me, millions and millions of people are not fully aware of this reality.
The Eastern Europe immigration policies allowed by Cameron come back to my mind, along with the stories, the lives that we hardly notice, but actually have a vital impact on the culture and politics of a country.
Immigration has been leveraged as a hot topic and a sore point in “Leave” campaigns; the ONS (the Office of National Statistics), ranked it as the main concern of the British people in the spring of 2016.
Leave campaigns have encouraged that vision, by declaring that staying in the EU would mean 5.23 million more immigrants entering the country. This allegation was later found to be false.
In the weeks leading up to the referendum, politicians in favour of Brexit, such as Penny Mordaunt and Michael Gove, claimed (once again, falsely) that Britain would be exposed to a Muslim wave of immigration from Turkey should this latter become part of the EU.
The Committee on the Elimination of Racial Discrimination, a UN body, accused British politicians of fuelling racial hatred and a sharp increase in racist crimes during and after the referendum campaign.
In the 2018 book “Ctrl Alt Delete: How Politics and the Media Crashed Our Democracy”, Gove told the author, Tom Baldwin, that if it had been just up to him, the referendum campaign would have been different. Really?
In 2017, Theresa May promised to drastically reduce immigrants by “tens of thousands” and to suspend the freedom of movement – the right of European citizens living in the EU to move to other member states. Eventually, any such intention was abandoned during the negotiations.
But in the middle of 2018, the sore point was no longer immigration. With Brexit around the corner, more serious problems were drawing all the attention. According to the ONS statistics of the spring of 2018, the new concerns of the British were housing, the cost of living, health and social security.
Every medal has two sides.
The “Remain” party was no less mistaken in terms of predictions. When the “Leave” campaign prevailed, Prime Minister David Cameron resigned, after having stated for months that he would remain.
Former Chancellor George Osborne said a victory of the “Leave” coalition would have lead to an “immediate and profound shock to our economy”. That shock would have caused an immediate recession and led to the loss of half a million jobs. Eventually, the economy did not fall sharply and the level of unemployment remained unchanged.
Other predictions, such as those of the Bank of England, the International Monetary Fund, the Organisation for Economic Cooperation and Development and the Institute for Fiscal Studies, accurately predicted slower growth, in line with the other rich G7 countries.
Around the end of 2018, the British economy reached the decade’s record low, and by then the pound had lost over 14% of the value it had before the referendum.
To date, many multinational companies have moved abroad or are in the process of doing so and various businesses and sectors are beginning to struggle.
Maybe not exactly an apocalypse, yet not even a signal that Britain is experiencing what Boris Johnson predicted it would be a “titanic success” with Brexit. (“Titanic success”, by Boris Johnson).
Between predictions and confusion, one thing is beyond doubt: if Brexit does happen, it will be all but the vision that was originally sold to the electorate who had requested it.
The state of affairs shows that, as in many other countries, the “Remainers” and “Leavers” represent different elements of the same country, two sides of the same medal. Sometimes war is fought within one’s self.
The major public debate of the last two years has separated families and broken friendships, but it has also brought to light the bonds that create and rule a country.
The use of history
“Brexiteers” have often referred to the concept – and the dream – of “Independence”. It is a noble, commendable dream, indeed. It is founded on Britain’s historic role as a proud nation that has repeatedly fought for its freedom. In the 18th century Britain resisted the Bourbon dream of European hegemony. At the beginning of the 19th century, the British people helped liberate Europe from the Napoleonic domination, they confronted Nazism in Germany in 1940.
But this is not 1939 or the Battle of Waterloo in 1815. History is always in the making.
The European Union is not a dictatorship, as was that of Napoleonic France. Nor can it be compared to Nazism, an irresponsible, superficial analogy that has become a bad cliché and shows an unforgivable lack of understanding of the true horror of recent European history.
Is such a language acceptable today, when all European partners are democracies and none of them represents the least threat to take up arms against Great Britain?
The political class and the global order
Where are today personalities like Churchill and Thatcher? Where are the statesmen and stateswomen who made the United Kingdom great? The British political class of today is offering a disheartening scenario: we are witnessing the decline of the elite of a nation that once dominated a vast empire from Canada to Australia. And the consequences can involve all of Europe.
The Brexit agreement reached between Theresa May and the EU in Westminster was rejected three times, and so did all the suggestions and hypotheses of an alternative. It was a No to a soft Brexit, No to its revocation, No to a second referendum, but also a No to the no deal option (leaving without any agreement).
At the beginning of the negotiations, Theresa May laid out some guidelines she later could not comply with and ended up trapped into them. Brexit means the end of the single market, the customs union, freedom of movement, European jurisdiction, she said: but she did not explain to the country the necessary trade-off between sovereignty and prosperity.
The more one gains in terms of political independence, the more one loses in terms of economic integration.
Jeremy Corbyn’s labourists struggled and failed to present any credible alternatives in the last two and a half years. Corbyn’s contradictions on Brexit are due to an electorate so vast and diverse that it ranges from liberal metropolitan voters who eat an avocado toast in London cafes to workers in the north who live with frowned-upon immigrants, often less educated. Unfortunately, from the point of view of the Remainer labourists, nothing was accomplished.
The problem is perhaps wider and has its roots in the changes of the ruling classes. In the past, in Britain, as in many first world countries, the most brilliant members of the wealthiest families embraced the political career, something that was considered very prestigious up to a few years ago. But in recent decades those who had a choice clearly preferred to dedicate themselves to finance, large companies, the corporate world and entrepreneurship.
The lesson that Britain has learnt over the last two years is that the country works much better inside the EU than outside. Within the Union, the UK is highly respected – it was British politicians, for example, the ones who set the rules of the single market – and has a say in any reform, certainly more than as a hostile neighbour.
This is perhaps one of the most important virtues of the EU, in an age in which we regard with concern the new forces that lead towards the frightening collapse of the global order that was reached after the devastating world wars. The emergency before the eyes of everyone is that of an aggressive system of protectionist sectors.
Under these new alarming circumstance, it is very dangerous to rely solely on the World Trade Organization (WTO). Yet the WTO is fundamental to the economic model advocated by the Brexiteers. The WTO is losing its ability to ensure a free market for goods and services finding itself under the attack of Trump’s America and Xi Jinping’s China.
In the age of Trump and Xi, relying on the WTO to ensure free trade is comparable to relying solely on the United Nations to protect human rights: they both can provide well-intentioned resolutions but, alone, they are powerless.
The promoters of the “Leave” campaign said that Brexit would be “quick and easy”. They said trade agreements with all EU countries would be ready before leaving the Union. As Liam Fox put it, “the free trade agreement that we will have to do with the European Union should be one of the easiest in human history”.
Nothing seems to be easy today.
They made exaggerated and false declarations about Britain’s post-Brexit finances, using methods that were later proven illegal, using obscure funding.
Perhaps we should go back to a simple, quiet and humble proposal, as common sense often is. Perhaps we should pause Brexit and take a break for reflection.
We are talking about one of the most important decisions ever made, with the biggest long-term consequences that the British government has ever experienced since the Second World War.
A decision that will affect the lives of future generations in a profound way.
Any psychologist would agree on what the worst time to make important decisions is: the one in which one suffers from an emotional collapse or a breakdown, that is exactly the state in which many British politicians are at the moment.
The decision on Brexit, now that all the cards were laid on the table, must be made with absolute and thoughtful calm.
Brexit in a snapshot.
The roots of Brexit are to be found in the traditional British resentment towards Europe. Not surprisingly, one of the most famous quotations of the legendary Prime Minister Winston Churchill is: “Every time we have to decide between Europe and the open sea, it is always the open sea we shall choose”. Recently, the reasons for Brexit lie in a general dissatisfaction that’s spreading throughout the majority of the population, along with a good dose of new nationalism, flanked by unscrupulous populists with demonstrably false recriminations and manipulation of the social media and local press, which is more than a business for journalists.
In the United Kingdom, the deep disagreements between the population and the parliament have led to a political stalemate, precisely when England and the rest of Europe need courageous reforms in many areas. Economists have long warned about the social and political effects of the “new economy”, low interest rates and globalisation. But until now, European politics has lagged behind without adapting to change, trapped by populist propaganda looking back to bygone times. But the world does not wait, while Europe withdraws on itself. The consequences are dramatic: the old continent is lagging behind the US economy and emerging markets because of its archaic economic structures.
At present, June 2019, conservative candidate Boris Johnson seems to be the favourite for the top job, even after his recent domestic drama, but world investors are being forced to ask what this means for the only form of Brexit that could quickly disrupt the economy and frighten the markets — a disorderly Brexit on October 31, Halloween.
Mr Johnson has failed to give a categorical guarantee that the UK will leave on that date, saying only that it is “eminently feasible”. However, he has said unequivocally: “If it comes to a choice between no deal, and no Brexit, I would have to back no deal”. (BORIS JOHNSON, BBC WEBSITE, JUNE 19, 2019).
His rival Jeremy Hunt, who might become prime minister by default if Mr Johnson were to drop out, has been more nuanced. Like Mr Johnson, he prefers no deal to no Brexit, but has emphasised the importance of achieving Brexit through a “good deal”, adding: “I would not pursue no deal, with all the risks it involves, if there was the chance of a good deal.” (JEREMY HUNT, BBC WEBSITE, JUNE 19, 2019).
The risks of political miscalculation before October 31 certainly seem larger than they were in the run-up to the initial Brexit date of March 29. Then, parliament was ready and able to exert its natural majority to prevent a no-deal Brexit. Furthermore, both prime minister Theresa May and the EU were willing to accept a long postponement of Brexit. None of these safety valves seems to be in place this time. The markets are reluctant to accept that the next deadline on October 31 might be the real one.
Manuela Andaloro
(info@smartbizhub.com)
As published in Focus ON’s “on deep” story, May 2019, download original article in Italian here.
