Saturday, 25 June 2016

Eurogeddon is cancelled

It has been less than 48 hours since the result of the referendum came in and already Project Fear has been shown to be the ludicrous fear-mongering exercise it was. When the initial result came in, there was an inevitable drop in the value of sterling and a plunge in the markets. This was entirely expected, especially as the markets had been betting on the opposite result so a dramatic correction was inevitable. But despite the cries of doom and 'we told you so' from Remainers (who should have realised that assessing the economic impact of Brexit three hours after the referendum result was a little premature) this state of affairs did not last the day. Sterling rallied to around the same level as it was trading at in February, and the FTSE, despite hitting depths not seen since, err, Tuesday afternoon, closed 2.4% up and recorded it's strongest weekly result in 4 months. Moreover, the Government can now borrow at historically low rates, just 1.08% for 10 years and at under 2% for 30 years. Hardly the Black Friday George Soros was predicting. In the banking sector HSBC chairman Douglas Flint said the bank's "commitment to British businesses, customers and staff in the UK remains undiminished" and a JP Morgan highlighted that they "will continue to serve our clients as usual, and our operating model in the UK remains the same."

But it wasn't just in the financial markets where Eurogeddon failed to materialise. Aston Martin reaffirmed it's commitment to a £200 million investment in a plant in Wales. The CBI, despite it's prophecies of doom going into the referendum, suddenly proclaimed that UK businesses are "used to dealing with challenge and change and we should be confident they will adapt." Barack Obama also pirouetted against his 'back of the queue' comments a few months ago, saying in a statement that: "The special relationship between the United States and the United Kingdom is enduring, and the United Kingdom’s membership in NATO remains a vital cornerstone of US foreign, security, and economic policy.” NATO Secretary General Jens Stoltenberg said "the UK will remain a strong and committed Nato ally, and will continue to play its leading role in our alliance", a position reiterated by our own defence secretary who reassured our partners that Britain would not be "withdrawing from the world."
The sentiment expressed by Obama was echoed by the US state department; "Nothing’s going to change about the deep and abiding relationship we have with the UK, which is a special relationship”, Hillary Clinton, and the GOP who said: "Our friends in the United Kingdom are our indispensable ally, and this is a very special relationship, and that relationship is going to continue no matter what. Period, end of story."

It wasn't just the Americans reaffirming their desire for co-operation. The Canadian President Justin Trudeau issued a statement saying: "The UK and the EU are important strategic partners for Canada with whom we enjoy deep historical ties and common values. We will continue to build relations with both parties as they forge a new relationship." Closer to home, Angela Merkel stressed that "the negotiations must take place in a businesslike, good climate. Britain will remain a close partner, with which we are linked economically", and French President Francois Hollande, describing Britain as a "great, friendly country" in a televised statement, reiterated our historical ties, and confirmed our close relationship, particularly in defence, would be preserved. Paris also reiterated that there would be no changes to the arrangement regarding Calais. Italy's foreign minister Paolo Gentiloni said: "Great Britain will certainly remain our friend and our ally in NATO."

As for trade, German newspaper Die Welt cited a finance ministry paper, and detailed how Germany should offer Britain "constructive exit negotiations" aimed at making the UK an "associated partner country." The German foreign minister Frank-Walter Steinmeier also urged a positive outlook saying: "We have to accept the decision that was made, and not go looking for revenge." The WTO also offered their support with the director general tweeting: "The WTO stands ready to work with the UK and the EU to assist them in any way we can." The Icelandic government is apparently already discussing the possibility of a trade deal with the UK, and will raise the issue with EFTA. Tellingly the country's President Ólafur Ragnar Grímsson discussed in a statement the renewed importance the EEA would have, paving the way for the UK to join them. "Iceland and Norway will now, in a totally new way, become participants in negotiations that must take place between the European Union and the United Kingdom, and the European Union and member states of the European Economic Area with this new triangle of countries in the North Atlantic. Our significance with regards to relations with our neighbours as well as the member states of the EU has undergone positive changes.”

So, just as I and every other person on the Leave side were saying beforehand, we will of course continue to work with our friends and allies across the globe. Leaving political and judicial union with Europe does not mean an end to trade and co-operation, and nor does it mean isolation and withdrawal. The economy will stabilise and will continue to grow, especially once Article 50 negotiations are concluded and a deal is struck (watch Sterling skyrocket when that deal is announced, especially if it's the EEA deal that will maintain full single market access). The campaign, and the rhetoric, is over. Political realities have set in. Life continues, as do our relationships, and we set off on the long road to our departure from the EU. We will leave the same way we went in, gradually and in stages, and the turmoil that Stronger In predicted will fail to materialise. Like every apocalypse, reality never correlates with the prophecy.

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