Opinion: The Remains of the Day

Opinion: The Remains of the Day

Expect a vote to remain in today's referendum, and the sun to rise regardless tomorrow if it's not. Ian Taylor shares a personal view

So today is the day. Four months of largely tortuous and unedifying debate ends tomorrow – and thank God for that.

Abta’s Travel Matters conference yesterday saw industry leaders restate their support for a vote to remain in the EU.

Mark Tanzer, Abta chief executive, warned that the industry “has more to lose than to gain”. Deloitte partner Graham Pickett argued: “Brexit could be very damaging.”

Virgin Holidays managing director Mark Anderson suggested: “If it’s leave who knows what will happen to the pound and to consumer confidence.”

And IAG chief Willie Walsh expressed the view that: “Personally, I believe Britain’s interests are best served by staying in the EU.”

But to confound all that, Walsh also repeated his previous assertion that a vote to leave “will not have a long-term material impact on our business”.

That is a startling assessment in view of so much of what we’ve heard and Walsh will not have made it lightly.

I’ve heard IAG’s corporate view dismissed as “Willie speaking to his shareholders”. That would not merely be irresponsible of the head of a listed company, it would be illegal – so we can dismiss it.

The reality is that for all the heat generated on the issue there has been very little light.

Mark Tanzer noted disarmingly yesterday: “If there is a vote to leave, we’ll reassure people that nothing will change in the short term.”
Expect all those bodies which have argued for months that the prospect of ‘Leave’ is too awful to contemplate to provide similar messages should this be the outcome.

One of the last press releases I received yesterday on the referendum came from the International Society of Hospitality Consultants. It made somewhat schizophrenic reading.

Jonathan Worsely, chairman of Bench Events, was quoted listing a series of blood-curdling reasons to vote Remain or commit Harakiri.

But he was followed by a few lines from MRP Hotels managing partner Herbert Mascha which suggested: “A vote for Brexit would be the starting point of a long-term process and will not have an impact on people’s short-term travel plans. What will happen in the long term is impossible to say.”

That is something rather different, no?

If the consequences of quitting the EU are really so dire, it rather begs the question why Cameron called the referendum.

I don’t buy the line that it is all about democracy. Referendums are generally held by governments to endorse a desired outcome. In any case, the EU is profoundly undemocratic. If you don’t agree, name the UK’s EU commissioner and throw in the identity of your own MEP.

Cameron wanted to lance the Eurosceptic boil in the Conservative Party and was under pressure from business to put the issue to bed.

He will have thought, or been led to believe, his unexpected election victory last year gave him the basis to pull it off. Or maybe he just enjoys Russian roulette.

Either way, business is less happy with him now. The Financial Times’ chief economic writer Martin Wolf asked at the end of May: “What sort of government would run such a risk, particularly when the economy has barely recovered from the financial crisis?

“The referendum is a risky and dangerous gamble . . . arguably the most irresponsible act by a British government in my lifetime.”

What of the outcome?

The last poll to land on my desk, from TNS, put Leave two points ahead with 43% against 41% for Remain, with 16% undecided or not intending to vote.

TNS noted: “The turnout among different demographic groups will be critical.” That is because the 18-34 age group which strongly favours remain “tend to turn out at lower levels than older people in general elections".

This is not a general election, of course. "[But] if turnout does reflect the general election it could mean a victory for Leave even if opinion among those registered to vote is almost evenly split.”

TNS also noted a common feature in referendums, including the Scottish Independence vote, of “a late swing to the status quo”, suggesting: “It is possible the same will happen here.”

We will know on Friday morning – not before, because there will be no official exit polls, just endless pontificating.

Either way, today’s vote today is not likely to resolve the issue of Britain’s membership finally or curb the bloodletting in the governing party or end the search for anti-establishment political alternatives that has become a feature across Europe and the world.

That is the era we are in and we had better get used to it.

For what it’s worth, I expect the vote will be to remain – in which case there will be a bounce in the value of sterling and in the equity markets and a metaphorical rainbow should appear over Westminster and Brussels.

I also expect any rainbow to fade rather quickly. The reality of declining global trade, stalling growth in China, negative interest rates in the euro zone, rising interest rates in the US, decades-long stagnation in Japan, recession in some major emerging economies, and high debt and low levels of investment almost everywhere will soon kick in.

But if it’s a vote to leave, I don’t expect the sky to fall in.

We can expect the UK government and EU leaders to seek to limit the uncertainty since this would benefit no one. The Bank of England would take stimulus measures, and it’s reasonable to expect UK and EU leaders would seek to clarify the situation on trade deals and regulation as soon as possible.

The long-term implications could well be more profound for Europe. The fear in Brussels is of growing pressure in other member states to follow Britain out.

The Financial Times’ columnist on Europe, Wolfgang Muenchau, noted 10 days ago that retaliation by EU member states against Britain for leaving “would harm them more than the UK. The EU has a trade surplus with the UK.”

For travel, the Continent will remain as close as ever and three out four outbound holidaymakers from the UK will continue to go there.

A fall in the value of sterling could impact outbound travel but would benefit inbound – but then outbound has had a pretty decent year up to now despite several months of a weaker pound. ONS figures show departures up 9% in the three months to April and GfK reports bookings up 4% to the end of May.

At the same time, The Guardian economics editor Larry Elliot has pointed out that, even with a vote to remain: “The gap between US and UK interest rates is likely to widen and push up the value of the dollar against the pound.”

The people the sky will fall in on in the event of a leave vote are David Cameron and George Osborne – and possibly Heathrow Airport and hopes for a third runway should Boris Johnson be the beneficiary.


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