My Case Against Brexit: Why The Arguments To Leave The European Union Are Flawed

By Friso Buker on March 21, 2016 — 15 mins read

“£20 billion a year. Too many immigrants. We want our sovereignty back.”

A little bit simplistic, but strip away all of Daniel Hannan’s admittedly eloquent and slightly floral verbiage – as well as the pompous and presumptive aspects of Nigel Farage’s rhetoric – and what those intending to vote for Britain to leave the European Union are left with is three key points relating to the financial cost of EU membership, the difficulty they are having controlling their own borders and the apparent democratic weaknesses of the EU itself:

“£20 billion a year. Too many immigrants. We want our sovereignty back.”

These three points seem to be the arguments that resonate with the British public the most. And – based on recent polling data – these points seem to be doing the trick for the ‘Leave’ campaigners.

Ok. Fair enough. When it comes to deciding whether or not Britain should leave the EU, these pronouncements at least go some way – maybe even a long way – towards expressing the general discontent that the British public seem to have regarding the close relationship with their European neighbours and the form that the relationship currently takes. While people may disagree as to how profound these problems are, they are worthwhile issues that should constitute part of the overall discussions in this debate.

But are these the only issues that should be looked at when deciding possibly the most important economic and political decision of our lifetime?

Having spent hours browsing the web, reading editorials and watching more than my fair share of Youtube videos published by Euro-sceptics, I get the very strong impression that these are the main pillars – or maybe the only pillars- on which the ‘Leave’ camp are arguing their points. And while these pillars have offered the Brexit campaigners a veritable cornucopia of dog-whistle political taglines to bolster the troops and generate a healthy head of steam three months before the referendum itself, the same ‘Leave’ camp are prevaricating when it comes to answering some other questions which many – including myself – consider equally important in this complex debate.

Here’s an issue that I’d like to hear about from the ‘Leave’ camp: exports.

According to the FedEx Great British Export Report 2015, 53% of companies categorized as SMEs (small to medium sized enterprises, i.e. those companies that employ between 10 and 250 people) export their wares to other countries. Of that 53%, almost all (96%) export to the EU. France is the number one export market for British SMEs – 57% of SMEs who export, export into France. Germany is the second biggest market (49%) followed by Spain (37%).

SMEs export so much that they have provided a positive contribution to the UK’s trade balance. This is obviously a good thing.

But the continuing success of UK SMEs depends a great deal on the resulting negotiations after a vote to leave the EU.

If the UK leaves the EU and the trade negotiations don’t go as well as planned, what impact will that action have on revenues for these companies? Even if negotiations go relatively well, is a Brexit likely to improve business opportunities for these companies or not? Will the level of trade and the positive contribution that it has on the UK’s trade balance remain unchanged or will it have a negative impact? Do you know which industry sectors are most likely to be impacted by leaving the EU? What knock-on effect will that have on the other 47% of companies that do not trade with the EU? How big will the short-to-medium term job losses be after a vote to leave?

Jobs. That’s another topic that seems to be a point of confusion for both sides but that still requires a bit more clarity before the referendum. Some people say that leaving the EU would be a disaster for jobs and businesses in general; others say that it will hardly make a difference at all.

Peter Wilding of British Influence recently wrote about a study undertaken by the eurosceptic group Business for Britain:

On page 16 of the poll is the conclusion that over 50,000 businesses would close if the UK left Europe – putting 1.5 million jobs at high-risk. Those 5% of small businesses, 8% of medium-sized ones and 9% of large ones, which said they would close, equates to 1,501,040 jobs – according to figures worked out by British Influence with the help of a professional statistician. The Department for Business, Innovation and Skills works this out at around 50,000 small, 2,500 medium and 500 large companies at risk of closure. Worse still, these figures for business closures and job losses could also more than double, since 7% of all businesses surveyed would be “unsure” about their future if Britain left the EU after a referendum.

Is this information correct? If it is correct, does the fact that the study was commissioned by a Eurosceptic group make it more or less believable? Has someone got their facts mixed up? If so, how can we tell who is right and who is wrong?

Precisely how many jobs are dependent upon relatively unfettered access to the EU? And what impact will a Brexit have on these jobs and people’s general standard of living? Other than the information above, is there any other (preferably unbiased) source of information that you used to come to the conclusion regarding jobs related to trade with the EU?

Foreign Direct Investment (FDI). Now there’s a topic that both sides can really get their teeth into.

According to Ernst & Young’s 2015 UK attractiveness survey, the UK is the EU’s top destination for FDI, with a market share of slightly over 20% of overall EU FDI in 2014 and which includes substantial investments from India, Canada, Japan, the US and Australia. Much of this success in attracting outside investment – half of which comes from the EU – is down to a wide range of factors including a well-educated labour force, quality of life, language advantages, stable legal and political framework, a good transport & technology infrastructure and comparatively low company taxes. Between 2008 and 2013, FDI inflows into the UK reached almost US $350 billion. Not too shabby.

But the E&Y report also goes on to state that:

Stability and political predictability feature prominently in the list of desirable attributes mentioned by investors, and the UK has traditionally scored very well in this respect. The UK Government is committed to a referendum on the future of the UK’s membership of the EU. With 72% of investors citing access to the European single market as important to the UK’s attractiveness, the referendum has the potential to change perceptions of the UK dramatically, posing a major risk to FDI. Our survey indicates that 31% of investors will either freeze or reduce investment until the outcome is known.

Does anyone have any alternative idea as to what a Brexit will mean in terms of overall investment levels in the UK, both in the short & medium term? If you do have an idea, maybe you can let me know how you came to your conclusion.

Come to think of it, what proportion of this FDI is down to the UK’s attractive business characteristics listed above and what proportion is down to the fact that it is an EU member state? What do you think the ratio is? 4 to 1? 9 to 1? If you know, how did you figure it out when no-one else seems to be able to? It’s an important question, given that just over 31,000 jobs benefit from this FDI directly with who knows how many more benefiting indirectly.

Do you think that UK FDI levels will continue to be this good in the long term even if investors realise that their investment may not give them the type of access to the EU’s market of 440 million people (excluding the UK) that they may have preferred, or do you think FDI levels are likely to fall over the same period?

Let’s take the UK car industry as an example of a sector that has benefited from FDI. According to the Society of Motor Manufacturers and Traders (SMMT), the industry is currently going great guns throughout the country, with almost 1.6 million cars built in 2015 which is the highest number since 2005. A recent Financial Times article stated:

Factories were driven by a 3% rise in exports to 1.2m, the highest total on record. The UK’s carmakers — now almost exclusively foreign-owned businesses — export nearly four out of every five cars they produce.

However, the article also went on to say:

But the figures will raise fears over the industry’s increasing reliance on mainland Europe ahead of a referendum on the UK’s membership of the EU. The bloc accounted for 57.5% of all British car exports last year, versus 53% in 2014.

Car buyers on the continent, where car sales are finally in solid recovery, played an important role last year in helping the UK’s car manufacturers offset sharply falling vehicle exports to China — down by more than a third in 2015 — and Russia, which fell by almost 70%.

“Europe is our biggest trading partner and the UK’s membership of the European Union is vital for the automotive sector in order to secure future growth and jobs,” said Mike Hawes, chief executive of the SMMT.

What do you think is going to happen to car export levels to the EU after a vote to leave? Will it increase, remain unchanged or fall? The aforementioned article says that Toyota is committed to remaining in the UK regardless of the result of the upcoming referendum. Nissan, Honda, Ford and BMW have been slightly less positive about the consequences of a Brexit.

Now I guess you could say that the naysayers are just touting a line to improve their chances of retaining the status quo. You could say that all those threatening to leave the UK if the vote to remain part of the EU loses are just full of hot air and they’ll stick with the UK regardless.

But this kind of “should we stay or should we go” rhetoric is not exclusive to the car industry. Other participants in the financial, manufacturing and engineering sectors have all played this game and I can’t tell who’s serious and who isn’t. Can you? If so, how?

Here’s another problem. Does anyone know what will happen to the UK’s financial services industry after the public vote to leave the EU? Do you think that the EU Commission (or whoever will be opposite the UK at the negotiation table) will accept the heart of Europe’s financial industry being located outside the European Union itself? How much of that business will relocate to the continent? 30%? 20%? Maybe even a low as 10%?

How much of the City of London’s success as a world financial centre is due to the organisation’s long and proud tradition of providing banking and investment services and expertise, and how much of it is down to the fact that is located within the world’s largest trading bloc?

These are really important questions, given the fact that London’s financial industry alone generated £66.5 billion in taxes during the last financial year, the highest level since before the banking crisis. That’s about 11% of all the UK government’s tax receipts. Will any of that business and subsequent taxes be lost, and how much of an impact will that loss have on the proposed £20 billion savings from the UK’s cancelled payments to the EU after a Brexit? Do you know?

Maybe other major financial centres like Frankfurt and Paris (and maybe even smaller financial players like Amsterdam, Madrid and Milan) are currently salivating over the prospect of taking some business away from the City of London. After years of operating at a competitive disadvantage against their British rivals, maybe they’ll decide that asking the EU negotiators to negotiate some of  that filthy lucre their way is their best chance to generate extra business. You’ve got to admit, it would be tempting for them to lobby their European representatives for just that purpose.

When all is said and done, I don’t have any answers to most of these questions, and I’m convinced you don’t either. Neither of us have a crystal ball that can reveal the future, and I’m pretty sure that both the ‘Leave’ and ‘Stay’ camps have actively avoided some of the more awkward questions that they don’t have an answer to or that don’t support their positions.

But I have gotten the very strong impression that the ‘Leave’ camp has been particularly guilty  of not giving the answers that the public needs to calmly & rationally make an educated decision to one of the most important national choices in the history of both the EU and the UK.

Daniel Hannan – a high profile member of the ‘Leave’ camp – is one of the most erudite and eloquent speakers in politics today. Many of his speeches are rousing and inspiring, and he has the uncanny ability to use his words like a sniper uses a bullet when he chooses. But a relatively brief internet search shows that he has a tendency to use statistics like a drunk uses a lamppost, i.e. for support rather than illumination. In addition, others have fact-checked Hannan to the point where I simply wouldn’t trust his interpretation of any data he quoted. I don’t think he does it deliberately; he just seems to play fast & loose with the facts because it’s either convenient or because he honestly just doesn’t think the listening public will understand.

Nigel Farage is more of a “full-on” anti-EU polemicist and rarely pulls his punches when you see him debating. But I have yet to hear him refer to data and/or statistics to really support his position in any meaningful way. He seems to be a man so sure of his position and so committed to his cause that he simply doesn’t care what the truth is. He gives the impression of a man who searches for inconvenient facts like a car thief searches for the police.

Neither of them seem capable of giving a clear vision of what the UK would look like after exiting the EU. Instead of a description of the potential economic and political consequences of a Brexit, we get hyperbole. Instead of an open discussion of the risks and rewards of either staying in or leaving the EU, we get obfuscation. Instead of attempting to address the concerns of people who are seriously worried for their own living standards, we get platitudes and cheap, unsubstantiated populism.

And what the hell is it with them constantly proclaiming that they want to destroy the European Union because they love Europe? How disingenuous is that…..

Look, I get it. The subject is complicated. The facts are dull. The sources of information are seen by many as biased or incorrect.

But to not even try to approach the aforementioned issues – as well as many other pertinent issues – is both insulting to many of the voting public who want to base their decision on something at least approaching a clear understanding of the consequences of their vote and demeaning to those who feel compelled to cast their vote based purely on semi-tribal politics, empty rhetoric and glory-filled visions of the future.

In short, asking people to vote in the referendum in one direction or the other without informing them of the reasonable, rational consequences of that vote is like asking people to leap over a brick wall but only giving them a vague description of what’s on the other side, all the while telling them that everything is going to be fine when they get there. It’s not particularly convincing and it’s not particularly reassuring.

Sorry, Brexit campaigners, but that isn’t enough for me. And it shouldn’t be enough for anyone else either.

My suggestion? Keep an open mind before you commit to your decision. Actively search for the facts. Try and gain an understanding of what the referendum result will lead to. Ignore the bombastic, unsubstantiated rhetoric. Make a clear, rational, logical & educated decision based on information from a wide range of different objective sources. If you do, you will end up better prepared to both make your decision and to defend it. Who knows, you may even make the right decision.

In case you haven’t realised already, if I were to choose between the two sides, I would most probably lend my support to the side campaigning to remain in the European Union. I wouldn’t do it because of any great love for the EU or its political institutions, nor would I even dream about denying that  the EU – both democratically and economically -has got problems.

I would do it because no-one in the ‘Leave’ campaign has given me a realistic vision of what the United Kingdom will become or what will happen to it once the decision to exit the EU has been made. After researching this topic for the past few weeks from a variety of different angles, I have yet to come across any overwhelmingly compelling reason why the UK’s success as an EU member state should be jeopardised by leaving a trading bloc that may have contributed more to that success than we know.

For a while now, the British public have taken for granted the benefits of EU membership so much that they have become almost blind to them (if they ever saw them at all). Over the past few decades, the UK economy has become so integrated with the continental European economy that the public can no longer tell whether the UK’s economic successes are due to “us” or “them”. And neither camps are making it easier for referendum voters to identify the actual truth.

But despite all this, the ‘Leave’ campaign are still peddling the line that remains the core of their position:

“£20 billion a year. Too many immigrants. We want our sovereignty back.”

Despite their claims otherwise, they really don’t know how everything will turn out after a Brexit, but they seem to be pretty damn sure that -for the most part – it’ll work out for the best.

This is far too presumptive and nonchalant to be the basis of a vote to leave the European Union. By all means, rail against the prevailing EU power structures to change their ways. Form alliances with other European nations to promote democratic change. Question anything and everything that the EU Commission and European Council does.

But don’t be tempted to support the ‘Leave’ campaign just because they’ve told you that everything will be OK. Don’t accept casual assurances. Ask the difficult questions, and if you don’t consistently get clear answers that can be checked and substantiated, you might be listening to the wrong people.

To quote a warning from Mark Twain:

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

Thanks for reading my first blog post. I hope to write many more in the future.

Posted in: EU Referendum

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