The Fleet Street Letter editor Charlie Morris claimed right of reply in today’s Capital & Conflict. The former platoon commander of the Grenadier Guards sits next to me when he’s in the office. And he didn’t like my Saturday Capital & Conflict headline “Don’t Vote for Brexit”.
But instead of giving me a drill yard spray, Charlie pointed out a new take on Brexit. And he’s got information from the halls of Whitehall you should know about…
It’s Cameron who should worry about uncertainty
By Charlie Morris:
There can be little doubt that Boris Johnson joining the leave camp is a game changer. Yet despite the hype, his decision hasn’t managed to shift Betfair’s odds of a Brexit, which remain at just 35%.
However, the pound did take a dive of almost 2% as Boris came out. But alongside many other currencies, as it was a US dollar up day. In other words, the US dollar’s rise can account for much of the pound’s weakness on the day. That didn’t stop the pro-EU media so gleefully pointing it out. They are partially right though. It is true that sterling took the brunt of the selling pressure.
The bookmaker’s odds and sterling’s weakness are telling us different things about what Brexit means for you. Betfair’s Brexit odds are just that. The fall in sterling isn’t a victory for Vote Leave. It just reflects the certainty of future uncertainty.
As you all know, markets hate uncertainty and Brexit has that in spades. In that sense, I agree with Nick Hubble’s piece last Saturday, “Don’t vote for Brexit”. Where I disagree with Nick is on this point:
If Britain were to leave the EU, which isn’t likely even with a Brexit vote in the referendum, in my opinion, ask yourself who would renegotiate the deal with the EU. The answer is some poor prime minister who wasn’t in favour of leaving the EU in the first place. What is that person likely to come up with in negotiations with the EU?
I disagree because I asked Steve Baker MP, co-head of Conservatives for Britain, about it recently. “If we vote for Brexit, will the Prime Minister have to resign?” Here’s what Baker told me:
If the British people decide, resoundingly, that the PM’s proposition is the wrong one for the overall governance of our country, it is quite difficult then to see how he could continue as PM. What we need to do though is to make sure that our country is governed responsibly, so even on that issue, we need to behave with great caution.
In other words, if Britain votes to leave, there will most likely be a leadership contest. The public will want Boris, but, as Michael Heseltine famously said, “he who yields the dagger, never wears the crown.” Heseltine brought down Thatcher, and although in many people’s eyes it was time for her to go, he was never forgiven. No doubt Boris is aware of all this, so needs someone else to do his dirty work for him.
A vote for Brexit will be highly disruptive. It will lead to short-term chaos, and it’s hard to say whether the storm will be political, economic or both. The good news is that storms pass.
A vote to stay, on the other hand, will continue to drag us into the European fold. In most continents there’s growth and prosperity, yet not in Europe. It’s true that unemployment is finally falling in Spain and Italy, but slowly and from high levels. I blame high unemployment and the debt crisis on the euro. They wouldn’t have happened without it. We escaped that catastrophe. Not to mention the Schengen zone’s refugee crisis. Now it’s time to get the rest of the economy out.
The economic arguments to stay and leave are complex. More importantly they are speculative. The debate is about to step up a gear and become more interesting. If we stay, are we despised or praised? If we leave are we shunned or does life continue with little change? It’s all to play for. With this much uncertainty it’s no wonder sterling has sold off… a little.
So that’s Charlie Morris’ take on Boris’ news and Cameron’s uncertainty. It seems both are staking their careers on the Brexit vote.
Political careers have lots of entertainment value. But in the end you’re left with what to do about all this. And that’s where all the Capital & Conflict editors start to think alike.
Category: Brexit