‘Project Fear’, as it was dubbed, backfired on the Remain campaign in the referendum. Even when audiences laughed at the Prime Minister’s warnings live on television, the pro-EU campaign banked on the assumption that people would scorn the warnings in public but heed them in the privacy of the ballot box. No doubt one reason they believed this to be the case was the reassuring polling from Lord Cooper and Populus, which told them they were still in the lead – and which turned out to be badly wrong.
As a result, they ran a Chicken Licken campaign – the sky was about to fall in in terms of economic collapse, an end to trade with the EU and beyond, and even war.
Unlike the eponymous Licken, whose gullible nature led him to be eaten by Fox-lox before he could discover that the acorn which had struck him was not in fact a symptom of the end of days, we’ve had a chance to see whether those dire predictions – and in some cases threats – have turned out to be true.
Some who believed all the claims have been awaiting their occurrence with indecent glee, but most are genuinely fearful of the consequences of a Leave vote.
So, 11 days after the vote, what’s the state of play?
I’m pleased to report that the apocalyptic horse is still securely in its stable. France and Germany are still getting on fine, Belgium and Poland remain inviolate, and the EU itself has shown no signs of sending an expeditionary force across the Channel. It was never wise to suggest otherwise – the reason we do not make war on one another is that we are allies, and even more importantly we are democratic allies. As I wrote at the time:
“The very idea is not only an insult to voters’ intelligence, it is an insult to the very friends and allies whom his speech purports to represent. Happily, Europe’s peace and civilisation hangs by much stronger threads than the existence of a British EU Commissioner – and it would continue without him. Our European neighbours are perfectly capable of living peacefully without British membership of the EU.”
More seriously, NATO remains intact and intelligence sharing between the UK and her allies continues. Neither has been harmed or threatened with disruption for the very good reason that continuing our security relationships is mutually beneficial. If anything, our role in the transatlantic alliance has been strengthened by avoiding the risk, laid out by Lord Guthrie when he switched from Remain to Leave, that the EU’s push for a European Army would disrupt NATO.
The ‘punishment budget’
Shortly before the referendum, George Osborne and Alistair Darling jointly published what came to be known as the ‘punishment budget’, an emergency programme which they claimed would need to be implemented within ‘a couple of months’ of a Leave vote. At the heart of the threatened plan were £15 billion of spending cuts and £15 billion of tax rises, caused by Brexit plunging Britain into penury.
In reality, we have heard a rather different plan from the Chancellor in recent days. It’s true that he has abandoned his aim of abolishing the deficit by 2019/20. However, given his record of missing every other deficit target to date (and the decision in the Autumn Statement to use money discovered down the back of the OBR’s sofa to cancel planned cuts rather than reduce borrowing), it’s fair to say that the referendum is his excuse, rather his reason, for doing so.
Today we learned a bit more, via an interview with the FT. For a start, apparently there isn’t going to be an emergency budget after all:
‘He is now striking a more cautious note, awaiting official forecasts before announcing any new measures in the Autumn Statement.’
And the talk of higher taxes and lower spending – which never seemed like a plausible response to the recession that was being predicted – has vanished as well. Instead, Osborne is planning tax cuts – specifically a further reduction of Corporation Tax from 20 per cent to 15 per cent.
The market collapse
As the economic disaster of a Leave vote unfolded, we were told to expect a collapse in the markets. However, that hasn’t quite occurred.
The FTSE 100 is currently trading at a higher value than at any point since August 2015. Various commentators are keen to point out that it features a disproportionate of multinationals and also that it is aided by the fall in the value of sterling, meaning it isn’t the perfect measure of the strength of the UK economy. That’s true – although plenty of those same voices were happy to cite it as a dire indicator when it dipped immediately after the result, so it’s a bit rich to try to have it both ways. Whatever your view, it’s a fact that it isn’t doing too badly right now.
The FTSE 250, we are told, is a better measure altogether, featuring as it does more UK companies. It’s down on the steady level it held during most of the referendum campaign, undeniably. However, it’s still currently above the level it held through much of February, which was not a notable time of economic disaster.
To put recent market movements into context, here are the charts of each FTSE index over the last five years:
You may still think the changes we’ve seen in the last few days are negative – but neither of those charts bears out the dire warnings of economic collapse following hot on the heals of a Leave vote.
The final way in which we were told Brexit would be disastrous was in terms of trade. We would be ignored by the world if we weren’t in the EU, and the EU itself would set out to punish us in order to discourage its remaining members from following the same route. (Remarkably, Wolfgang Schäuble, the German Finance Minister, has now confirmed on the record that it was Osborne who encouraged him to issue such warnings.)
These, too, have not come to pass. For a start, we have at least two years until we actually leave the EU, so for now everything stays the same. As we reported last week, in the US – Britain’s single biggest trading partner – there is growing pressure for a swift trade deal with Britain. Australia, South Korea, India and New Zealand are already reported to be keen on striking deals with us, too. The reason for this is simple – we are still a major economy, and we are about to regain the freedom to arrange our own trade relationships, to mutual benefit.
The gloomy forecasts of punitive behaviour by the EU itself also appear to be retreating into the distance, too. While Juncker and the Brussels establishment have tried to talk tough, there are growing signs that they will be reined in, others – including Merkel and Schäuble himself – now speak of pragmatism. The troubles of the EU have always been due to the insistence that political goals should override economic and democratic requirements. Given the disastrous experience of the Euro, the migrant crisis and now the loss of the UK, there’s every possibility that balance will be reversed – to our benefit and to theirs.