Brexit vote inevitable but not good says leading economist

Europe is paying special interest to this UK general election as it could spell the beginning of a Brexit if certain parties get their way


European CEO speaks with Vicky Pryce and Peter Urwin authors of It’s the Economy Stupid on what a Brexit would mean for the UK and Europe

European CEO: Europe is paying special interest to this UK general election, as it could spell the beginning of a Brexit if our very own Syriza, UKIP, gets their way. 

So Peter, I might start with you, do you think it would be a good thing if we had a Brexit?

Peter Urwin: No, is the starting point. I think the problem we have with the idea of Britain’s place in Europe is that I think eventually we will have to have some kind of vote, almost like Scottish independence. There is a buildup of pressure to have some kind of referendum, so a lot of the discussion has been focusing on, which I completely agree with, the idea that this brings an amount of instability.

So if you know that there is going to be a referendum in two or three years, however long depending on who gets voted in, this is not good. And actually, the Britain coming out of Europe, costs and benefits again basically, the costs definitely outweigh the benefits.

Vicky Pryce: I think referendums are very very dangerous things to have, because they could come with all sorts of weird results, mainly because the nature of our media here, which actually tends to be rather Eurosceptic, and some of the facts and figure will be explained, but at the end of the day people could tell them in an emotional fashion rather than necessarily in a logical fashion. We could leave by accident, really, which is terribly dangerous. And it would be very bad for us.

We made some calculations in my company, CBR, that some four million jobs are linked in the UK to our relationship with Europe, to our membership of Europe. It doesn’t mean they’re all going to be lost if we are no longer members of it, we could have some sort of arrangement like Norway and Switzerland, but it will cost us a lot to be members, we won’t have any say in terms of influence, and of course we’re going to lose quite a lot of inward investment and other investment which until now looks at us as a gateway into Europe.

Businesses of course complain about regulation, but we would probably have that regulations anyway. And they benefit also from regulation that establishes standards so we don’t have to do different things for different countries. In fact, the UK has benefitted hugely from standards directly, so there have been a lot of studies that show this is the case.

Overall, we benefit from being members and it would be pretty hard going if we’re not. We won’t be able to influence anything. And there is another area of course, which is the whole trade side. Not only because we sell some 50 percent of our goods to Europe, which is an important aspect in itself, and again won’t lose all that, but also because we’re no longer having world trade negotiations because they’re so broken down, so we depend on bilateral deals.

European CEO: So what sort of economic impact would you say it would have on Europe if there was a Brexit?

Vicky Pryce: I think this is an issue too, in terms of the continuation of the single market as we have it and Europe as we have it, because the UK is quite an important member of it, and it has a political influence in terms of balancing things out.

We do know that a number of the big countries would like us to be there because we are sort of linking up with them against some of the others and have a quite [4m02s] in many ways, and of course we have the City which is hugely important for Europe. If the City wasn’t Europe’s centre, it woudn’t be Frankfurt or Paris, it would be New York, so companies would find it much much harder.

European CEO: Peter, do you agree?

Peter Urwin: I mean Europe is 220 million people, so the UK in terms of its economic population impact is not enormous, but I agree with Vicky that Britain tends to be a kind of voice for change in the EU, which rallies a few other voices who want a kind of more free market, a less dirigiste kind of approach to economics in particular.

It’s slightly condescending to say Europe would lose if Britain left, but I think it would. I think Britain should be part of Europe and I think it would be a terrible shame.