This article was first published by The Commentator
Recently Chancellor George Osborne has been raising his head above the parapet to warn of doom and gloom about the possible economic risks of Brexit. He warns of panic in the markets and a beginning of instability. Sadly for Mr Osborne, there is very little evidence any panic or uncertainty is happening. In fact, it seems like just the opposite.
The central plank of Osborne’s economic case is Brexit would cause uncertainty. This would then cause companies to rethink investments, banks to reconsider and reduce loans to vulnerable small businesses and the financial sector to relocate as much of their assets and jobs abroad. The problem with this threat of uncertainty is it is very unlikely to happen -but even if there is a degree of uncertainty there is almost no other place for investors to go.
At present, given Brexit might just happen, we would expect Osborne’s predictions of doom and ruin to be taking effect as companies and financial markets start to move towards the exit door – because of the supposed “uncertainty”. This is simply not happening. At present, given there is still a large possibility of Brexit occurring, we would expect Osborne’s predictions of doom and ruin to be already being borne out as companies and financial markets begin to move towards the exit door because of the “uncertainty”. This has simply not happened. Banks are rushing to provide the cheapest possible mortgages with interest rates having tumbled significantly over the past few months. The UK£ is still an incredibly strong currency, with its value against the €uro being above average for the last ten years and it’s on a 5-month high against the US$ currently. Financial markets will have already accounted for this in the event of Brexit. If they really believed in the doom-laden scenarios being brought out by the Treasury the UK£ would be collapsing in value – not rising.
There also seem to be no long-term fears over Brexit. Generally, if there is confidence in a country long-term it shows in its debt sales. The lower the interest the government has to pay on its newly issued long-term debt, the more confidence investors hold in the country’s long-term future. The interest on Britain’s debt is incredibly low, with the majority of the developed world having to pay far higher interest rates to borrow money. All this means is investors, despite the possibility of Brexit, think Britain’s long-term economic future is amongst the brightest in the developed world. They would not be risking huge sums of money in the hope or belief Brexit won’t happen, without pricing it into decision-making. It is clear from this they do not think Brexit will be an economic catastrophe – or even an economic shock!
Seeing as we are now hearing more and more British businesses, including a majority of personal investors favouring Brexit, and even the fanatically Europhile CBI, admitting Britain could well prosper in the long term after a Brexit, there is no realistic possibility of economic calamity. It is now obvious we need to look at the actions of business which show no fear of Brexit, rather than their words which have often been carefully scripted for them by the Treasury.
The reason for such continued faith in Britain and investors continuing to hoard their wealth and investments in the British economy is obvious. Even if there is some uncertainty caused by Brexit, the outlook for the rest of the world is far worse. The Eurozone is continually on the verge of crisis with another Greece or Italian problem never far from happening. Then, of course, there are the fears about how the EU will be able to cope with the continued struggle over the migration crisis. Britain has effectively become a safe harbour for investors from Europe’s economic woes.
It is not just Europe which has problems. There is a worldwide economic slowdown (which Osborne is seemingly blaming on Brexit!), with China’s industries, for the first time in over a decade, beginning to slow in growth and even in drop in output. Investors are increasingly wary of China because of this slowdown and the Chinese Government’s increasing tendency to intervene in the economy, often in very unpredictable ways. On top of this, the US election is not reassuring many people with the continual risk of the US refusing to pay its debts; many investors are scared of keeping their money there.
This all makes a mockery of George Osborne’s claims of investors fleeing the United Kingdom. They haven’t started moving their money yet and the reasons are obvious: the UK is absolutely one of the safest and most secure economies in the world and no amount of scaremongering from George Osborne will change this. There will be no flood of investors leaving the UK the day after Brexit. By their actions already we can see they do not believe the Chancellor. If the only argument swaying your vote to Remain is the Osborne’s economic scaremongering, take heart from the fact no one whose job it is to know seems to believe him. Certainly what they are doing with their money shows they don’t. So if Osborne’s scaremongering is the only thing making you undecided, please make sure you understand the facts and vote to Leave to Get Britain Out and secure our future outside the EU.