Mario Draghi, the president of the European Central Bank (ECB), has said many times that the ECB has scenarios prepared for any eventuality which might occur after a Brexit.
This week, at a financial summit in Italy, ECB executive member (he’s the Governor of the Bank of France, trained at ENA, France’s elite government luminaries school) Francois Villeroy de Galhau spelled out some more what Draghi meant: if a Brexit causes serious disruption in financial markets (and an overwhelming majority of experts predict just that), the ECB and EMU governments will do all they can to fend off and stop such disruption in its tracks. Mind you: that means EMU will dig in hard, without consideration towards non-members, not to mention people walking out of the EU in a huff. The UK will within days feel what “splendid isolation” from EMU does to the London City, even before the JP Morgan mass transfer of jobs has started. It is not for nothing that Draghi is insisting it would be wiser for Britain to remain in the EU.
Top executives like the CEO of Emirates Airlines, Tim Clark, who has to deal with exchange rates on a daily basis, predicts economic insecurity and a “free-falling Euro” all over Europe in case of a Brexit, which will affect air travel (at the start of the summer holiday season: scarcity of seats; price hikes for tourists). That’s what he told an IATA summit in Ireland on Friday. Such a steep lowering of the Euro will result in ECB hitting the brakes blindly: “Save the EMU/Euro first, and worry about ‘collateral damage’ later”. No easing out of Europe gradually, like the Brexiteers are dreaming about.
And The Economist this weekend points out that new “troubles” are brewing in Northern Ireland. The Nationalists (Sinn Fein, SDLP) and farmers generally won’t take kindly to a closing of the border with Ireland (and 26 EU countries will demand something of the sort) and the Unionists won’t accept that, if the Irish border remains somewhat open, passport controls will be necessary for anybody traveling directly from Ulster to the rest of the UK (via Dublin it will be unavoidable).
Are the Tories prepared to give Dublin a more formal role in the self-government of Northern Ireland, to keep the Nationalists happy? And it won’t be the compliant, pragmatic Cameronites deciding that; it will be the “Turkish invasion of our NHS-A&E” hardliners and fact-ignorers like Mr. Gove.
Letting Dublin have a say is NOT “taking back control”, however Mr. Gove of Mr. Boris Johnson would like to frame it.
* Dr. Bernard Aris is a historian, a D66 parliamentary researcher and a LibDem supporting member.
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12 Comments
Bernard, I agree that everyone has been working on their contingency plans for a Leave vote.
For instance I reckon that the UK civil service already has a worked up option for exploiting its membership of the EEA. See here for some of the arguments developed along those lines on this site : https://www.libdemvoice.org/nick-clegg-being-in-europe-has-not-held-us-back-it-has-thrust-us-forward-50821.html#comment-404931
Given that a Britain as EEA member would accept the four freedoms of movement that constitute the single market, I am not sure that we would see immediate flight from London. And EU member countries and employees of the ECB would need to be very careful not to violate Article 3 of the EU’s Lisbon Treaty which says the union will uphold “free and fair trade” with the rest of the world ie which would then include the UK.
Far more likely is the fact that those wanting UK’s continued membership will threaten and bully in the way you suggest up until close of polls. At which point, should there be a vote to leave, all players will have already rehearsed, co-ordinated and choreographed sane and sensible reactions that calm markets.
One could well imagine – based on the day after polling in 2010 and the day after the Parliamentary defeat over Syria that Cameron and Osborne will come forward with a statement and perhaps sharing a platform with Gove and Johnson saying that they are immediately (a la at the time of the break up of Yugoslavia and later Czechoslovakia) filing at the United Nations under the “presumption of continuity” so that trade continues + plus declaring that the Conservative cabinet intends to bring forward proposals to exercise their contractual membership of the EEA, unifying their party and ditching UKIP. Could we or Labour vote against that?
Just a pity that Liberals in this country were not taking a lead on this during the campaign.
I can quite agree with the Conservatives ditching UKIP. They did that with us last year. They will use anybody to get what they want and then ditch them.
I don’t know if the British parliament has emergency procedures to meet and legislate inside a couple of days when the Euro falls off a cliff after Brexit (I believe a practical man like the Emirates CEO, speaking from experience in the currency exchanges, on that one); the jitters on currency markets are already apparent with whom (Leave of Remain) appears to have the upper side in polls and other measurments of opinion (political stock exchanges; betting shops) at any given moment.
Even if a re-united Tory government (how credible is that if the present civil war in Downing street continues) puts forward EEA legislation, it will take some time to process it to become law. The Brexit-camp of the Tories will have to pledge not to mount a leadership election for a year to make that legislation credible.
I worry that the time needed to legislate and implement pre-prepared scenarios from Whitehall will see currency market swings which will make other, more improvised policies necessary. When Cameron was working as a Treasury advisor when the Pound crashed out of the ERM, how soon were things stabilized after that? Because when you get in (to please a Tory party conference crowd), you prepare scenarios about getting or being forced out…
Did the Brexit Tories ditch all of UKIP, both Farage (in one Brexit campaign) and its sole MP (in another, the leading Brexit campaign)? Or just the Farage wing after his awfull remarks about Cologne-like attacks from muslim immigrants if Britain votes to remain? Farage ignores the fact that most Cologne felons and gropers weren’t out to get German or EU Passports, they were just Maghrebi criminals masquerading as foreign workers (with plenty of crimes in Germany allready on their records), so the EU passport bit is nonsense for starters! They wanted to stay here a while, get rich from crime, and go home… That is something that happens even with so-called closed borders; just ask American citizens north of the Rio Grande and its present wall beside it…
Unionists won’t accept that, if the Irish border remains somewhat open, passport controls will be necessary for anybody traveling directly from Ulster to the rest of the UK
Why would that be necessary? The Republic of Ireland isn’t in the Schengen zone, so there would be no need to do checks at the border, or between Ireland and the mainland; they could just continue to be done, as they are now, on entry to Ireland from other countries.
That’s how the Common Travel Area works, and it is entirely independent of the EU, pre-dating not only the two countries joining the EEC, but the Treaty of Rome itself.
This article takes scaremongering, to a whole new ‘Freddy Krueger, with a chainsaw’ level. Markets being caught unawares by a USA led sub-prime crisis is one thing, but if I told you, with 10 months notice, that there would be a binary option,.. either Brexit or No-Brexit, and you were in charge of a pension or investment fund of £5 billion or so,.. would you leave it till market opening on the morning of June 24th to decide your options.? You will already be ‘hedged’ for both eventualities. Yes for sure, markets will ‘twitch’, on the Friday 24th, maybe even through to Tuesday, but *money*, will have already factored in, and hedged as much risk as possible from both eventualities.
As for Mario Draghi and the ECB? The EU’s finances are already so dire, they are like a cartoon pressure vessel with steel plates buckling and rivets popping, so Draghi frankly, doesn’t have the luxury of choosing who to trample on, to save himself and the ECB. Let’s not forget that Greece was/is a member, but a fat lot of good it did them in the face of a panic stricken ECB?
Mario’s real issue in the event of Brexit, will be Germany. Germany, the UK and France (in that order), are the three keystones jointly holding up the EU ‘arch’. If we stop sending our UK ‘subs’, Germany and France will have to decide fairly rapidly, whether they can support the EU on their own.? Are Germany ready to be the bank of last resort for the whole of a bankrupt Southern Europe? I think not. German *money*, will look after itself , even if it means swapping its Euros for brand new, freshly printed Deutschmarks. Could that perhaps, be another consequence of Brexit not yet considered?
Don’t worry about Mario getting all stroppy, he’s already very busy.
But we won’t stop sending our money. Access to the single market will require a continued payment of similar or greater amounts, plus free movement of people. I can’t see how, even after a Brexit vote, very much would change except that the UK would no longer have a voice in the EU debates.
The political car crash at Westminster will be much fun to watch.
Tim, I agree, closing our border with the Republic of Ireland isn’t necessary. But it does appear to be the main theme of the Brexit campaign – to take control of our border with the (rest of the) EU.
This is our one open border, as it happens open under a separate agreement with Ireland. Nobody would benefit from closing it. It’s all complete madness. Welcome to Brexit.
Any sensible government post-Brexit would want to maintain the agreement and keep the border open. But the people of the UK would have just voted for a closed border with the EU.
But the people of the UK would have just voted for a closed border with the EU.
Um, are you confusing border controls and immigration policy? Because it looks a lot like you are.
Anyway, point is, post-Brexit, there’s no reason why the British border checks couldn’t happen at Cork and Shannon, thus enabling the CTA to continue undisturbed.
The Republic, which knows which side its bread is buttered economically, has even more to lose from a closed border than the UK does, so would have every incentive to co-operate with us in running border checks at its ports in accordance with UK border policy (as, indeed, it currently does).
Would Ireland have the same border controls as a post-Brexit UK? Seems unlikely they would comply with EU freedoms, Schengen area or not.
Would Ireland have the same border controls as a post-Brexit UK? Seems unlikely they would comply with EU freedoms, Schengen area or not.
What do you mean?
Dav,
It was in reference to your prospect of British border checks at Cork and Shannon. I was unclear how Ireland could restrict the travel of EU citizens within the EU even if Ireland was to see the benefits of it.
(My apologies for not responding to your question earlier, I got called away.)
I was unclear how Ireland could restrict the travel of EU citizens within the EU even if Ireland was to see the benefits of it
Why would it need to restrict the travel of EU citizens within the EU?
For a start, nobody has suggested that post-leaving, EU citizens will not be able to travel to the UK. It has been suggested removing their automatic right to live permanently, work and claim benefits in the UK, but nobody has suggested stopping them visiting for holidays, or for business meetings — like the visa waiver scheme the US operates, for example.
Secondly, say the Irish Republic does contain people with no right to even travel to the UK. Well, that is no different to the situation today: a non-EU citizen with an Irish visa does not thereby have the right to travel to the UK (unless it’s a specific type of joint British-Irish visa issued to nationals of some countries).
So there are currently some people in Ireland who do not have the right to travel to the UK, and that hasn’t led to an abandonment of the CTA. So why would the same situation in the future lead to such an outcome?
In summary, there is no reason why the CTA couldn’t continue to exist even if the Reublic was in the EU and the UK wasn’t.
To suggest that leaving the EU would mean immediately re-establishing border controls at Newry and Strabane, and guards checking passports at Holyhead and Stranraer, is just scaremongering.