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EU Referendum - considerations for voters

The EU Referendum – please think carefully, then vote

If you haven't decided please read on

Options for voting in the EU Referendum

Editorial Introduction

At lymington.com we don’t normally comment at all on political matters - nor really on any issues upon which opinions are very divided.  

But our remit is all about promoting the positive and we are increasingly disturbed at the turn the Referendum debate is taking with each side exaggerating, scaremongering and personally attacking the other.  

 

So forgive this rare stray into contentious territory.  

 

The issues at stake - evaluating the choices 

 

Nobody can be in any doubt that the outcome of the EU referendum vote on 23rd June has the most profound implications for us, our children and our children’s children. The consequences are potentially enormous for the UK, but also very substantial for the rest of Europe, and even beyond.

 

Amid the loud exchanges of accusations and insults which have lately characterized the debate, many have cried, with some justification, “Give us the facts”. 

 

It's not a straightforward choice, the outcomes are uncertain

 

But the question of whether we remain or leave is not a straightforward one of evaluating between two, clear, hard-edged choices.

 

Weighing up the risks - assessing uncertain outcomes

 

To properly consider how we vote we are called upon to exercise skills of risk assessment about uncertain outcomes. Recently Sir Ben Ainslie made a similar point in a short article, “Why throw everything overboard? It isn’t worth the risk”

 

To some extent, we also all have to weigh things which are incomparable – to compare apples and oranges. While the question may require a binary “yes” or “no”, “remain” or “leave” answer, to reach that conclusion we have to weigh up several different issues, each in itself complex affecting the economy, trade, employment, immigration, sovereignty, peace and security, culture, travel, and so on.


So, nobody should kid themselves, or be kidded by simplified soundbites and hackneyed headlines, into thinking that the decision is simple.


I feel for the large number of undecided voters, but (and I apologise if this sounds preachy or patronising) it is incredibly important that all those eligible to vote use their vote on the 23rd. And before placing that so very important vote (and of course in a referendum, every vote really does count – this is not about first-past-the-post in each constituency), please take the time to check out the issues and think for yourself.


For myself, I have listened to both sides, and while all the public campaigners get increasingly frenzied in their pronouncements, I have found recently three pieces which help a lot to marshal my thoughts.


I encourage everyone to read all three, or do some research and check out the issues for yourself.

 

5 minute video sums up the issues 

 

If you can’t do that, then at least watch this short video (less than 5 mins) with Martin Wolf from the Financial Times which sums up most of the issues quite nicely in my view.  

 

Factoring risk - when nobody knows what will happen 


The first piece is the article by Sir Ben Ainslie. As he points out, all decisions have an element of risk, and factoring risk is an important part of decision-making. But a major change of direction or strategy requires an acceptable understanding of the likely gain from making that change. As Sir Ben says, the risk is “just not worth it” when “nobody actually knows” what will happen.

 

Well written articles for those seeking detail


The second and third pieces are longer, but highly articulate and with the detail that many are seeking. They are both worth the small investment in time to read and consider what they say.

 

In a very detailed post on Facebook, Nick Carter-Lando presents a passionate, but very well researched and referenced analysis of the argument around immigration, our public services, the costs of EU membership, the economy, and jobs.

 

Please read it in full if you have time, but here are some key points in summary:


Immigration : in the EU, our population after 10 years would probably rise by 1 in 82 (ie 1.2%) as compared to being out of the EU. “Even under extreme assumptions the impact on our overall population just isn’t very large”. EU migrants pay more in taxes than they receive from public services, which means extra tax revenue for public services.
EU membership costs : it is probable that the downward effect of Brexit on the size of the UK economy would outweigh the savings in EU membership costs.
Economy and jobs : no one can seriously doubt the risks of Brexit. One major bank estimates a 20% devaluation of the pound. Seven “highly respected independent economic organisations” have concluded “that the economic damage caused by Brexit would more than offset the saving from our EU contribution”.
Public services (ie NHS, schools, etc) : “best estimates suggest the Government would have between £20bn and £40bn less to spend” (out of the EU)…..”than if we remain in the EU”.

 

Risks of Brexit


For a drier, but perhaps even more authoritative assessment of the risks of Brexit, see this blog by the London School of Economics’ Professor of Public Economics Nicholas Barr. Again, I advise reading it in full. As he says, “we can’t predict the future with certainty” (no matter what the loudest protagonists proclaim) but we can weigh the evidence and make up our own minds about the most likely outcomes. Here’s my summary of Nicholas Barr’s main points:


On the economy:


o “There is little dispute that leaving would create short-term losses”.
o Austerity would be extended by another one or two years.
o Leaving would reduce economic growth over the longer term, and “the loss could be large”.
o The losses would be uneven – eg on particular regions, by sector (farming), where foreign-owned car plants are sited, etc.


On the cost of EU membership:


o Nets to £136M/week, not the £350M/week often quoted.
o This is about 30p per person per day. “The reduction in tax revenues from even a small reduction in growth rates after leaving would dwarf any saving in our net EU contribution”.


On immigration:


o Research shows that immigration from the EU does not harm wages, jobs or public services.
o Even outside the EU, reducing immigration would not be easy.


On democracy:


o The EU is not perfect, and the concern that the elected European Parliament does not have sufficient oversight over EU officials is a legitimate one. But is that by itself a reason to quit?

 

On regulation or “red tape”:


o OECD studies show that the UK is one of the least regulated markets for labour and product.
o There are some bad regulations but not all of them are from the EU, and not of themselves a strong enough reason for leaving.

 

Foreign Direct Investment

 

There is one area which I don’t think has been highlighted enough. One of the bright spots in the UK economy over the last few years has been our record in attracting Foreign Direct Investment. We out-perform all the other European economies in attracting investments from overseas in sectors including car making, advanced manufacturing and engineering, off-shore power generation, creative industries, information technology, infrastructure, electronics, life sciences, financial services and others. In 2014/2015 alone, FDI projects created some 85,000 new jobs.


Think about the car industry as an example. It seems incredible that we have a car industry at all when you consider the history of British car firms over the last 40 years or so. But in 2015 UK based manufacturers built some 1.6 million vehicles, of which 77% were for export. Over 57% of exports were to Europe. Here is a list of the five largest car manufacturers in the UK, that between them manufacture over 90% of cars built in the UK:


1. Jaguar Land Rover (a subsidiary of Tata Motors)
2. Nissan
3. MINI (of BMW)
4. Toyota
5. Honda.


The car manufacturers account for 158,000 direct jobs, plus another 78,000 in the supply chain according to the Society of Motor Manufacturers and Traders (in total the automotive sector employs 799,000 including sales, service, etc). As well as the large manufacturers, there are more than 2,000 automotive suppliers in the UK.
Why have overseas investors had such confidence in the UK? According to the EY report 2015 UK Attractiveness Survey, “Stability and political predictability feature prominently in the list of desirable attributes”, yet 72% of investors cited access to the European single market as important and 31% said they would freeze or reduce investment until the outcome of the EU referendum is known.


Which stands to reason. If you were considering an investment of hundreds of millions to site a factory, would you put it in a market of 742 million people (the population of the EU), or 64 million (the population of the UK)?


The same applies to all the other sectors including services, but if we can maintain the UK as an attractive place for investment, does this present us with a very interesting opportunity for the UK to re-balance its economy toward manufacturing, reduce its heavy relative reliance on services and, even improve its ability to generate exports?

 

 

europe flag 1332945 1280If you have read all of this, thank you. I imagine it is pretty obvious what I think is the right way to vote in the referendum.

 

 

For me it is very clear.

 

 

But there are a lot of “probables” and “maybes” and as I suggested at the start, we each have to decide whether whatever concern we have about the EU is great enough to forego the opportunities of staying in, and risk the big uncertainties of quitting. I just ask you to make that decision very carefully.

 

Bill Porter, June 2016

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