Last month Vince gave a lecture to the Institute of Commonwealth Studies on the subject of Brexit and how it would affect the Commonwealth.

You know how you get Tory Brexiteers looking to the Commonwealth as a whole new opportunity for us? Well, the commonwealth leaders themselves would prefer we stayed in. Vince pointed out:

The first thing that struck me as I started looking through some of the comments on BREXIT and the Commonwealth was the enormous contrast between the tone of the comments coming from the UK, and particularly from the advocates of BREXIT, and those coming from the Commonwealth governments themselves. I think Patricia Scotland summarised the debate on this subject by saying that most of the Commonwealth leaders were hoping that Britain would stay in. It was very clear, that statement. I suspect she understated the argument but there was a very clear preference that most Commonwealth countries have more influence as a result of being in the European Union than being outside. I contrast that with a strangely, almost euphoric attitude of a lot of people in the UK who see the Commonwealth in terms of a big new opportunity opening up.

So why are commonwealth countries so anxious?

The first is the direct hit on Commonwealth countries which export to Britain if Britain underperforms economically. Again, there’s a range of possible outcomes. The metaphor I tend to use is that we’re faced with a choice between a slow puncture and a blow out. I personally think the slow puncture is more likely but they both lead to flat tyres. But whichever metaphor you use, the assumption is that as a result of BREXIT, Britain is a smaller economy than it otherwise would be, and one that’s growing less rapidly. What would the impact of that be on Commonwealth exporters? There are some countries who export more than 10% of their exports to the UK and one would assume that they would be disproportionately hit. Botswana, Seychelle; Belize and Mauritius – that’s mainly sugar; for Bangladesh and Sri Lanka, I think, mainly garments into the British retailing network. But by contrast, most Commonwealth countries now have really quite a small economic engagement with the UK, and it represents quite a small share of their exports. For India, it’s only 3%; in Australia it’s only 1.5%. It’s a very distant connection these days. There is the direct hit from exporting to a slower growing economy. That’s one set of impacts.

I think a second is probably more important, which is through the exchange rate. I think most people assume that when BREXIT happens, if BREXIT happens, and particularly if it is of a rather negative form, a hard BREXIT, that the exchange rate would fall, possibly quite substantially. To some extent, that’s already happened; it’s already priced into the market. But I think one might expect rather more and if that happens there are two significant implications for Commonwealth countries, one of which is that quite a lot of Commonwealth countries have major remittances from the UK from expatriates and diaspora who live here. We are talking about $12 billion or something of that order, which would be substantially devalued. There would also be a significant impact on tourism. Britain becomes a more expensive place to visit and countries in the Caribbean, Maldives, Malta would be affected by all of that. However, that impact effect is probably not what most people are talking about when they talk about the economic opportunities of the Commonwealth. They’re taking about future trading agreements, deals of various kinds. I just want to deconstruct as best I can what that whole argument is about. Because when people talk about new trade opportunities – and I mean ‘trade’ in a broad sense, including investment flows and to some extent, service trade which is people. When people talk about trade opportunities, they’re mixing up very often several different things.

First, Of course a lot of trade has got nothing to do with politicians; it’s got nothing to do with deals. It’s to do with commerce and economic opportunities. Business will either take them on or leave them. nothing to do with politics and nothing to do with BREXIT directly. Secondly, there is trade diplomacy, which is ministers wondering around the world saying “Please buy more of our stuff. “ I spent five years doing that, frequently going to Commonwealth countries in the process. One can argue that it helps but it doesn’t make a great deal of difference. Theresa May has been doing a lot of that recently in Africa, for example, and then there are trade agreements, so-called deals designed to secure preferential access for inputs particularly.

You can read the transcript here and listen the podcast here.