The PMI (purchasing manager index) is not an economic outcome, but a forward-looking indicator of economic sentiment. Still, today’s figures* from the UK and the Euro Area are the first indication that predictions that the June 23 Brexit outcome will have serious short-run costs for Britain, but not so much for the Euro Area, are likely to be borne out.
I recall many years ago discussing an industrial conflict with someone who is now a senior trade union leader. Sure I can get our people “up a palm tree”, he said. But then I have to know how to get them back down again afterwards. This common sense advice was not taken by the Brexiteers. They and their media friends whipped up British citizens into an apoplexy over the EU and immigration, suggesting that if they vote Leave all the things they dislike about the EU (and maybe about modern life more generally) will disappear, while all they like can be retained. And they won a small but clear majority in the referendum.
It is exhilarating to win: to sit up in the palm tree, survey the turmoil below and feel a sense of empowerment. After a while though, a palm tree is in uncomfortable place. It’s easy to poke holes in the status quo. It’s easy to promise people the moon (assuming one has the requisite pragmatic attitude to telling the truth). But now the Leave camp must lead both its supporters and the British people as a whole down from the palm tree. The problem is there is no ladder. More fundamentally there is no clarity whether to go North, South, East or West of the tree.
So far all the Bexiteers have managed to do is to own up that many promises will remain unfilled. But that will have to change soon. [Read more…]
It’s EU referendum day in the UK. Before the results become known, it is a good time to reflect on the campaign and think about the consequences – legal, political and economic – of different possible outcomes, both for the UK and the EU.
Referendum number two
More than forty years after holding a referendum that overwhelmingly confirmed the its membership of the then European Community (“Common Market”), today the UK is holding another plebiscite, on whether to reverse that decision and leave the European Union, as it has now become. The referendum was an election promise by Conservative PM David Cameron to suppress the vote of the anti-EU UKIP party and keep his Eurosceptic backbenchers on side. The political constellation is roughly the same as forty years ago: the centre right and left – the Establishment if you so will – against the right and left fringes. However, one thing is certain: today’s outcome will be much closer than the 2:1 majority for In in 1975. [Read more…]