In referendum, Britons assert that they are not xenophobic, but do not want to be deprived from taking pride in their identity as a nation-State that aspires for more
Brexit literally means exit of Britain from the European Union. Yet, it is not as simple as that. Those against Brexit have unleashed their angst saying Brexit is anti-liberalism, anti-immigrants, anti-collectivism, anti-globalisation, and anti-feminism. Those for Brexit say it is a revolution to establish a new world order where nationalism reigns supreme and national interests are not sacrificed at the altar of internationalism. Truth of course, is somewhere in the middle. Brexit and its aftermath are touted as a fight between the rich versus the poor, the Irish elite versus the British elite, the young versus the old, the native versus the outsider, the xenophobe versus the neo-liberal, David Cameron versus Boris Johnson, Boris Johnson versus Michael Gove, Michael Gove versus Theresa May, liberals versus Conservatives, Cameron & Corbyn versus Nigel Farage, Theresa May versus Andrea leadsom, David Beckham, Elton John & Daniel Craig from the “Remain” camp versus Elizabeth Hurley, Perry McCarthy & Ian Botham from the “leave” camp, Scots versus the Welsh, Birmingham & Cumbria versus london & Glasgow, london versus rest of England and so on. Whew! It is another matter that finally Theresa May trumped the rest to 10 Downing Street.
Before proceeding any further, a few myths need to be dispelled. Is Brexit about anger against the EU in generalIJ No. The EU is UK’s largest trading partner accounting for 44 per cent of its exports and 53 per cent of its imports. In fact, Britain had access to EU’s large single market virtually unfettered sans borders, encouraging free flow of labour & capital, even without converting the pound into euro! Interestingly, Wales & Cornwall are two regions that get the maximum funds and subsidies from the EU, yet they chose to leave. So, money matters clearly did not matter on June 23, day of the referendum.
Is Brexit about XenophobiaIJ No. Data shows, most of those who voted for “leave” are those who stood against Nazism, Fascism, apartheid in their life-time and helped refugees generously with money and supplies even when the French Government failed 6,000 refugees in the town of Calais in Northern France. Is Brexit about a confused mob as the renowned Barrister Robertson would have you believeIJ No. A 72 per cent turnout on the day of the referendum with over 30 million voters, of which 17.4 million voted for leave, cannot be termed a mob.
Is Brexit about rising economic chasm between the rich and the impoverishedIJ No. Older people largely voted for leave and a recent study reveals a quarter of people aged between 55 and 64 years live in households with more than £1m of assets, compared with only 4 per cent of 25 to 34-year-olds. Also, the average wealth of those near or above retirement age stands at a robust 6,00,000 pounds. If economic disparities were indeed the reason, then it is the younger generation that should have voted for leave, not the older. On June 23, however, younger voted for Remain, and older
for leave.
Is Brexit about an anti-immigration wave spreading like wildfire across much of EuropeIJ No. Studies show, Poland and the other nine countries that joined the EU in 2004 have contributed almost £5 billion more to UK’s economy than they used in benefits and public services. leading researcher Christian Dustmann says immigrants contributed 64 per cent more to the British exchequer by way of taxes than they took by way of state benefits, and immigrants from Central and Eastern Europe contributed 12 per cent more. Also, between 1995 and 2011, negative contribution to State exchequer by native Britons stood at an embarassing 591 billion pounds. So clearly, the anti-immigration theory is not supported by numbers.
Is Brexit about de-industrialisation of Great Britain that started with severe job cuts by Ford Motors in the latter half of 20th century, which resulted in UK’s manufacturing sector shrinking by a whopping 67 per cent in the last 30 yrsIJ No. UK’s economy has done pretty well in the last few years, with net public borrowing (annual deficit) falling to just 90 billion pounds from 150 billion pounds in 2009. Unemployment rate at 5.1 per cent is the lowest since 2006 and employment rate has hit fresh highs of about 74 per cent, with John Hawksworth of PWC saying “Britain is now a remarkable job creating machine.” Brexit, therefore, is not about any illusory economic misery of the Britons. Interestingly, if Brexit does crystalise, UK’s economy could lose 2.2 per cent of GDP but only by 2030. On the contrary, if the UK negotiates a new Free Trade Agreement with Europe by pursuing ambitious de-regulation, British economy could actually gain to the tune of 1.6 per cent of GDP in the next 5-7 years.
Also, let’s face it. Europe needs Britain due to the power it wields by being member of the NATO and the UNSC. France and Britain are, in fact, the only two European members at the UN Security Council, and Britain is, of course, the fifth biggest defence spender globally, if that helps. So, this was never about economics, as is being peddled, as both Britain and the EU need and feed off each other.
From India’s perspective, the UK has cumulatively added $22bn to India’s FDI kitty in the last 15 years, accounting for 8 per cent of inward FDI flows into India, third highest, after Mauritius and Singapore. India’s pharma exports to the EU are 12 per cent of total exports with the UK accounting for 3.5 per cent. In IT services, the corresponding numbers are 29 per cent and 17 per cent. Again, there are 815 Indian businesses in the UK, employing 1,10,000 people and these are unlikely to be impacted, barring minor rise in administrative and compliance costs, were Brexit to unfold. The fact that a weak pound makes holidaying and studying in the UK far cheaper for Indians needs mention. To sum up, the economic impact will be marginal, if any, for India, from a trade perspective, given the presence of counter-balancing global levers.
Of course, there is one piece of bad news and that is for fish lovers in Britain. The UK boasts of roughly 10,500 “Fish & Chips” shops, serving 382 million portions annually. Post June 23, prices of salmon, haddock, cod have hit the roof, thanks to the Pound-Sterling collapsing by not only 13 per cent against the dollar but also 10 per cent against the Norwegian crown. Salmon prices that were already up 60 per cent compared to a year ago, thanks to the presence of sea lice in South America, now seem to be worth their weight in gold. Don’t forget that fishing is a huge industry in the UK, and a weaker pound has made imports from Norway costlier, what with Norway selling Salmons worth 3.4 billion crowns every year to Britain. Clearly, Britain’s loss is Norway’s gain. Supermarket chains like WM Morrisons and Tesco are already feeling the pinch with fish literally raising a stink.
Keeping “fishy” stories aside, what one needs to be cautious about, however, is the impact Brexit could have on global bond yields and therefore on India. German, Swiss and Japanese 10-year bond yields crashed to a negative 0.18 per cent, 0.64 per cent and 0.27 per cent on July 11, 2016. Swiss 30-year bond yields turned negative for the first time in recent history. UK’s 10-year gilt yield which stood at 1.35 per cent before June 23, 2016, crashed to a new post referendum low of 0.71 per cent on July 11, 2016. Negative bond yields globally imply more money going into Government bonds and safe haven assets like US treasuries, which means a stronger dollar, going forward. That could in turn mean lower crude oil and commodity prices globally, which in turn means China may be forced to devalue the Yuan like it did on August 11, 2015, sending global markets, including India, into a tizzy. A weaker Yuan could lead to a spate of beggar thy neighbour easy money policies by other central bankers, in a race to the bottom, leading to asset inflation and rising stock markets in the short term but paving the way for an assets bubble that could be disruptive once the bubble bursts. Do note, China has always reacted to a global “apocalypse” by simply printing more money to boost exports and investment demand, and allowing everyone around to feast on a liquidity binge. And as we all know, too much of a good thing is bad.
Make no mistake, Brexit may eventually never really “happen” because the onus of triggering Article 50 under the lisbon Treaty lies with Britain and it can simply choose to ignore the referendum and move on with business as usual. Also, Britons may opt for a referendum of the referendum, and for all we know, “Remain” may fetch more votes than “leave”. An interesting point worth noting, however, is that even if Brexit becomes a reality, Britain may continue to be guided by European Convention of Human Rights. To that extent, Britain will never quite rid itself of its European association. Eurosceptics, of course, believe Brexit will eventually change demography and geography so as to ensure the “United Kingdom of Great Britain and Northern Ireland” eventually becomes “United Kingdom of little England and Wales”. Moot point, though, is Brexit has stirred the imagination of generations, cutting across borders, gender, political affiliations, economic status and race.
Critics of Brexit equate it with fascism and hyper-nationalism, but that is just a malicious lie. Fascism, Mussolini style, or the Emergency of 1975, Indira Gandhi style, is dictatorial, radical, reactionary, militant, authoritarian style nationalism that rejects principles of “liberty, equality and fraternity” and relies on totalitarianism. Brexit, on the other hand, celebrate brotherhood, freedom of choice, right to vote, plurality, diversity; and most importantly, it is about people whose love for their nation-State and a shared national consciousness for a better tomorrow surpasses much else. Brexit-ers also demand accountability from the political class that has failed to curb a bloody civil war in Syria, Russian aggression in Ukraine and of course, Turkish aggression against the Kurds.
To sum up, Brexit is not another “Jasmine Revolution”, waiting to fail. Nor is Brexit an isolated event. Ultimately, Brexit is an idea that is all about reclaiming your national identity, without losing your global moorings. Just as Hindutva is not Hinduism but simply a state of mind and a secular way of life that celebrates Indian culture and Indian ethos, as ruled by no less than the Supreme Court of India in its historic 1995 judgement, Brexit too is about a nation-State that wishes to break away from the mould and assert its aspirations, without losing its global strappings. India had its Brexit moment in May 2014, when the charismatic Narendra Modi was voted into power with an overwhelmingly decisive mandate, as the Prime Minister of the world’s largest democracy, in its quest for a more vibrant India, that was no longer shackled by the vestiges of the defunct Nehru-Gandhi dynasty that had ruled the country for decades like their personal fiefdom. Right-wing parties globally are rising like never before. From Marine le Pen’s FNP in France to Frauke Petry’s AFD in Germany to Matteo Salvini’s Northern league in Italy to Kristian Dahl’s Danish People’s Party to Norbert Hofer’s FPO in Austria, to Geert Wilder in the Netherlands and of course, Donald Trump’s “Make America Great Again” campaign.... The list goes on and on and for a whole good reason.
Former Chancellor of Germany Helmut Kohl once infamously said, “A united Europe is the only way to contain German nationalism. If left to themselves, Germans would kill each other”. Well, Brexit would make Kohl turn in his grave. To sum up, setting the economics and the politics aside, the message from Brexit is loud and clear: We are not xenophobic but do not deprive us from taking pride in our identity as a nation-State that aspires for more and rightfully so.
(The writer is an economist, stock market expert and spokesperson for the Mumbai BJP)