EU referendum: Economic scare stories are getting dangerous
With just days to go until the country votes, and after a pause following the tragic and appalling events of last week, referendum campaigning has resumed.
The Remain camp has been gaining ground, but its lead is not comfortable enough for David Cameron to sleep easily. Warnings about the potential impact of Brexit on the economy have not been taken at face value.
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Indeed, just 17 per cent told pollsters Ipsos Mori they believe the chancellor’s claim that UK households would be £4,300 poorer by 2030. Instead of rethinking how they put across their reasonable points about the economic risks of Brexit, Remain campaigners doubled down on the scaremongering.
The chancellor’s ill-conceived idea of a blackmail Budget of spending cuts and tax hikes was rightly greeted with ridicule. Massive austerity would not be the appropriate response to any short-term exit shock. But claims by the Prime Minister that Brexit would be like putting “a bomb under the economy” and by former chancellor Alistair Darling that he is more worried now than during the financial crisis are far more dangerous, and have arguably worsened the dramatic sell-off we’ve seen across markets.
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By creating an atmosphere of panic around the referendum, Remain’s more extreme messages risk becoming self-fulfilling. For although a vote for Brexit will inevitably fuel uncertainty about the future, nothing fundamental will change immediately.
Acknowledging the likelihood of leaving being an extended process rather than a clean break, even Remain campaign chairman Lord Rose admitted last year that “nothing is going to happen if we come out of Europe in the first five years… There will be absolutely no change”. Both the Bank of England and the IMF have issued fresh warnings about Brexit, notably the risk of a sharp drop in sterling. We should take them seriously. But those responsible for the stability – economic and political – of our country should also make it clear that, if Britain does vote to leave, they are willing to use all the tools at their disposal to minimise any short-term damage.
Such a concession may not be in the Remain campaign’s strategic interest, but it would at least be honest – and prudent.