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A talk to Surrey For Europe

 

- A talk given to Surrey For Europe, 19 September 2016 by Jonathan

Hoffman

 

Good evening. Thank you very much for inviting me and thank you all for
coming. I am an economist – one of the experts of whom this country has had enough,
according to Michael Gove. I am not going to go over the nightmare of the referendum.
Suffice it to say, I believe the decision to hold it was the biggest mistake of modern political
history in the UK. The result was won on the basis of serial lies and the failure
of the Remain campaign to respond to them, because David Cameron was sure
of winning and put Conservative Unity above all else. As Lord Mandelson said
in the BBC analysis of the referendum, not to be able to respond to lies from
the other side in a political contest is like taking a spoon to a knife fight.
But we are where we are. The famous Irishman when asked directions, said “I
wouldn’t start from here”. But of course we have no choice!
There have been more models talked about for the UK outside the EU than you
can find on the stage for Miss World. The Swiss model, the Norwegian model,
the Canadian model, the Albanian model... 

 

- A talk given to Surrey For Europe, 19 September 2016 by Jonathan

Hoffman

 

Good evening. Thank you very much for inviting me and thank you all for
coming. I am an economist – one of the experts of whom this country has had enough,
according to Michael Gove. I am not going to go over the nightmare of the referendum.
Suffice it to say, I believe the decision to hold it was the biggest mistake of modern political
history in the UK. The result was won on the basis of serial lies and the failure
of the Remain campaign to respond to them, because David Cameron was sure
of winning and put Conservative Unity above all else. As Lord Mandelson said
in the BBC analysis of the referendum, not to be able to respond to lies from
the other side in a political contest is like taking a spoon to a knife fight.
But we are where we are. The famous Irishman when asked directions, said “I
wouldn’t start from here”. But of course we have no choice!
There have been more models talked about for the UK outside the EU than you
can find on the stage for Miss World. The Swiss model, the Norwegian model,
the Canadian model, the Albanian model …. But the point is that none of
these models can touch the model we already have … being in the EU but
with optouts from Schengen and the euro (by the way don’t believe the Leave
2
side when they say the euro has been a disaster, it has been a great success, it
is the second most popular currency in central bank reserves and central banks
would not hold a failed currency. Yes - Greece should never have been a
member, with the benefit of hindsight - but you cannot blame the Commission
for that. Blame Greek governments and Goldmans which helped Greece
massage its convergence data).
However …. It is clear that Conservative MPs have gone to ground. With the
exception of Ken Clarke and Peter Bottomley – who signed EDM 269
demanding a vote in Parliament – all Conservative MPs have fallen in behind
the Prime Minister. But if the status quo is better than all the alternatives, it has to be worth
fighting for. In truth it is so much better that even if there is only a 25%
chance of keeping the status quo, it is still worth fighting for.
So how should we best go about fighting for it? Before I get into specifics I want to emphasise that this is a long game.
It’s very much a Marathon and not a sprint. Why do I say that? Because I believe there
are two things that above all will turn public opinion against leaving. The first is
the economy. Before the vote, 88% of economists surveyed said that leaving
the EU would damage the economy, relative to the status quo. The Bank of
England is predicting a rise of 250,000 in unemployment. In early August it cut
its 2017 growth forecast to 0.8 percent from its previous forecast of 2.3
percent. That is the biggest cut in a growth forecast that the Bank has ever
made. And for the first time its QE programme will include purchases of
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corporate debt. The Bank has always fought shy of buying corporate debt,
because it could be accused of favouring some companies above others. The
fact that it is doing this for the first time, shows how concerned the MPC is
about the impact of the referendum vote.
But it is going to take time for the economic data to go sour. As opposed to the
forward looking survey data which have already slumped – in July the
Purchasing Managers Index, fell sharply to its lowest level since early 2009.
After all the unemployment data which were released last week covered the
May-July period. So even though we are nearly three months on from the
referendum, we still do not really have data that show the impact of the vote.
And it takes time for companies to lay off workers. The earliest that we will be
able to discern the impact of the referendum on the economic data will
probably not be until the first half of 2017. But supposing Nissan decides to
shift production away from Sunderland? That will surely have an impact on
public opinion. So far the polls have not shifted but when the Leave voters
start to lose their jobs, they might realise the mistake they have made.
Obviously I am not suggesting we should WELCOME a downturn in the
economy. And I completely refute the Leavers’ charge that we are ‘creating a
self-fulfilling prophecy’. But when a nation decides to leaves a Single Market of
750 million people and there is uncertainty about what comes next, adverse
economic consequences are almost certain.
Note there is not a lot we – the Remain campaigners – can do -- except wait
for the numbers to go sour. And of course call the Leave campaigners out
when they suggest that the economic Armageddon that we supposedly
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predicted to take place on 24 June is not happening. That includes much of the
Press – the Express in particular but also the Mail, Sun and Telegraph. (I have
complained four times to IPSO about ‘booming Britain’ stories in the Express –
all complaints were rejected).
The second factor which will turn public opinion is the likely outbreak of open
warfare in the Cabinet and with the other 27 EU Member States. Take the
Cabinet first. Apart from the three Brexit Ministers – Johnson, David and Fox –
most of the rest of the Cabinet was in favour of Remaining in the EU. Theresa
May only made one speech in the campaign but it was pro-Remain. Amber
Rudd the Home Secretary was strongly Remain. So was Philip Hammond when
he was Foreign Secretary. For the moment Theresa May is saying “we are not
going to give a running commentary” on the negotiations. But sooner or later it
will become clear that the ‘Hard Brexit’ which the Leave campaigners wanted –
complete withdrawal from the Single Market plus the same controls on
immigration from the EU as we have on immigration from the non-EU – is
simply not going to happen. There will be bloodletting in the Cabinet and
within Conservative MPs and it will be public.
Now the other 27 Member States.
They cannot afford to give the UK a ‘sweetheart’ deal even if they wanted to –
which is doubtful. Because that opens up moral hazard - other countries will
want the same deal. When the gulf between what the UK is asking for and
what the EU is prepared to offer becomes clear, that will also turn UK public
opinion against leaving.
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A couple of comments here ……..
First again notice there is not a lot we campaigners can do to advance the bad
economic data or the political dislocation I am forecasting.
Second - you can see that the timing is important. Will the economy and the
politics go sour before Article 50 is triggered? In fact here we are in uncharted
legal waters. If Article 50 is triggered and then public opinion turns, can it be
reversed? At least one constitutional lawyer thinks it can be. It seems that
Article 50 is like a Decree Nisi in a divorce. Not a Decree Absolute. If all parties
agree – and why would the EU27 not agree – it can be reversed.
Now let’s look at three events which might possibly be important in enabling
the UK to stay in the EU.
What about the legal case?
Gina Miller is bringing a case against the government. She says that the Royal
Prerogative cannot be used to trigger Article 50 and that Parliament must vote.
Gina is supported by Mishcon de Reya. The case will be heard in October (13
and 17 October) and is expected to progress quickly to the Supreme Court
where it will be heard by the end of the year, accelerated due to its
importance. A number of actions will be joined to the Mishcon action including
by a group of UK expatriates.
From what I hear, the action could delay the triggering of Article 50 but is
unlikely to stop it.
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The second possible enabler to Remain is a Swiss referendum in 2017.
Switzerland negotiated a free trade agreement with the EU. It took years and it
is basically a collection of legal agreements. But a condition is that Switzerland
allows EU nationals to live and work there. However a referendum in February
2014 narrowly vetoed free movement (50.3%). The legal agreements expire in
February 2017 (ironically at the time when Article 50 might be triggered).
To understand what is happening in Switzerland needs some history.
Switzerland was a member of EFTA (European Free Trade Association) in 1960,
along with the UK. EFTA was basically a UK-driven project as an alternative to
the Common Market (EEC). But in 1973 the UK left EFTA and joined the EEC.
This left just four countries in EFTA including Switzerland. However as time
moved on, the four countries came increasingly to recognise that they needed
a better relationship with the European Union (as the EEC became). They
moved in the EEA (European Economic Area) in 1994. But a Swiss referendum
vetoed membership of the EEA, leaving Switzerland is somewhat of a
quandary. Hence the tortuous process of agreeing a plethora of legal
agreements with the EU.
However it became ever more clear after the Lisbon Treaty gave the European
Parliament co-decision powers with the Council that the structure of bilateral
treaties with Switzerland was unrealistic (eg it was not able to take on board
modifications of EU legislation over time). So the Council declared in December
2012 that Switzerland and the EU had to agree a new legal framework similar
to the EEA. Following the February 2014 Swiss referendum, the Council
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hardened its position, declaring that there must be a ‘comprehensive
assessment’ of EU-Swiss relations before arriving at any conclusions on the
institutional arrangements for Swiss participation in the Single Market.
It is likely then that Switzerland will have a second referendum on free
movement from the EU. And this time the stakes are higher. If free movement
is not approved, there will be no EU agreement
Note that the UK’s Brexit vote has hardened attitudes in Brussels. The EU
cannot be seen to be softening towards Switzerland, or else the UK and maybe
other EU Members will want the same deal.
A second referendum in Switzerland - which reverses the result in the first
referendum - would of course strengthen the case for a second referendum in
the UK, when the terms of the UK’s EU agreement are known.
The third possible enabler to Remain concerns Scotland. Even if Parliament is
denied a vote on Brexit, in order to make Brexit happen the Prime Minister is
going to have to ask the Queen to sign a law repealing the European
Communities Act (1972). But to ask her to do that is tantamount to asking her
to risk signing away the Union (because it will make a Scottish Referendum and
a vote to secede) much more likely. Would any Prime Minister ever want to
put the Queen in such a constitutionally awkward position?
But - again – where do we - the Remain campaigners fit in? What can we
possibly do except bite our fingernails and wait?
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Well there are things we can do. It is really important to keep the Remain case
in the public eye and in the eyes of MPs. We haven’t gone away. Leave
campaigners spent 43 years trying to get what they wanted. We are not going
quiet after three months.
So the two Marches in London were important. Keep writing to MPs and
newspapers. Keep talking to Leave voters. Two weeks ago I was the spokesman
outside the Royal Albert Hall for the “Flags” campaign which was a great
success. Last week Britain for Europe facilitated the Open Letter signed by
many grass roots groups that went to the Slovak Presidency ahead of the
Council (minus UK) in Bratislava. It was translated into 27 languages and sent
to all the heads of government, European journalists and the five EU
Presidents.
It’s about visibility. Particularly important as we are up against a largely
hostile Press.
The Witney by-election will be on 20 October. Daniel Hannan is looking for his
next job. Candidate will be announced on Friday. Witney is in West Oxfordshire
local authority which voted 53.7% Remain. There is talk of tactical voting
around the candidate most committed to Remain.
There are lots of ideas.
We need to be proposing a Migrant Impact Fund – to take the sting from the
Leave campaigners.
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We need to support the victims of the outbreak of racist incidents since 23
June – for example in the Polish community.
We need to campaign for transparency in the negotiations. The Prime
Minister’s mantra of ‘No Running Commentary’ cannot be a figleaf for “No
Information”. Businesses need to know what European environment they will
be facing.
What about a second referendum? I would not support this in the short term.
But into the Article 50 process – say, around Autumn 2018 - there should be a
rough shape of the future trade deal with the EU. A second referendum on the
outline of the terms would be perfectly democratic.
Finally a word about Britain For Europe, the grassroots group with which I am
affiliated. We have 3 core aims:
 To Stay in the EU – we will fight to prevent the triggering of Article 50
 To Stay Connected to the EU – If Article 50 is triggered we will fight to
stay connected and promote an open and connected UK. The UK must
be a rule maker not a rule taker.
 To Promote the EU – We will promote a pro-EU stance if the UK does
leave and make the case for rejoining.
We are one of the few groups that has national coverage, across the UK. And
we are truly cross-party. We owe allegiance to no political Party so we are
completely free to campaign for what we think is in the best interests of the
UK.
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We will work with all groups who share our aims. We suspect that even groups
like Open Britain who at present are not campaigning to Remain will, over
time, come closer to what we are seeking.
Check us out at britainforeurope.eu
Thanks for listening. Now I’ll take a few questions and we also have time after
the three speakers for discussion.
Jonathan Hoffman
Britain For Europe
Thanks to Hugo Dixon and Graham Bishop for invaluable comments on a draft
of this talk.