Wednesday 12 October 2016

How will Public Opinion change to support or reject Brexit?

The previous post "How much of a mandate for Brexit does May actually have?" has had over 2500 reads in the 48 hours or so since it was published in Sunday.  It's clearly a topic of interest.

In David Davis's speech on Monday he said "The mandate for Britain to leave the European Union is clear, overwhelming, and unarguable."

The conclusion in the article was quite the opposite.  The mandate was not overhwlming and clear. It is certainly arguable:
  • 62.6% of eligible voters did not back Brexit.  
  • The 51.9% to 48.1% result was only marginal.  Over 16,100,000 voted to Remain.
  • Key groups like London, Scotland and the better educated people across the UK voted net to Remain
  • Research by Ashcroft concluded those of working age voted net to Remain, as did people actually in work. It was retired and unemployed who voted net to Leave.  
Therefore it is important that Mrs May and her Government tread carefully, and not betray the majority who did not vote for Brexit.  It will be important to bring the whole country along with her. 

Yet so far we've had a blunderbuss approach,  David Davis also said "no one should seek to find ways to thwart the settled will of the people." Wrong again, public opinion is not settled.  It will shift. If the Brexit deal looks like it will make sense, that will strengthen support for Brexit.  But if it's looking bad or iffy, as seems to be the case, public opinion will shift against Brexit.  It doesn't need much for that to become clearly net against.


OPINION POLLS SO FAR

As noted in the previous article, research immediately after the Referendum in June for  "Bregret", regretting their vote, meant a net figure of over 900,000 would not have voted for Leave.  They would possibly have switched to Remain. Only some 650,000 switching would have meant a Remain win.

The Chairman of one of the polling companies, ComRes, has suggested that later polls are more even. But there have been no such polls published in the last couple of weeks, when people have had a clearer view as to what Brexit is meaning, or could mean.


SO HOW COULD PUBLIC OPINION CHANGE?

The balance of probabilities is that public opinion will turn against Brexit rather than towards it.

(1) Devaluation of Sterling

The pound in your pocket is now worth over 15% less against major currencies such as the US dollar and the Euro.  Foreign travel is more expensive, with the exchange rate at airports now providing less than a euro for a pound.  A lot of of food, cars, white goods and consumer electronics are brought into the country as Dollar and Euro purchases.  The increase will be passed on to consumers.

Those cost increases will probably result in an increase in official inflation figures. That's bad news for everyone, but particularly for those on fixed incomes, including retired and unemployed folk who had voted net against.


(2) That £350 million a week for the NHS and the latest Economic Forecasts

Polling suggests the main issues for Leave voters were Control (sovereignty) and Immigration (control of borders).  But there was another very clear message prominently on Leave's campaign bus, that £350 million would be available for the NHS.  That must have had an influence.


The £350million claim was rubbished by Nick Robinson on the BBC before the Referendum, partly because that was the gross figure, not net after deductions and grants the UK receives.  There's also the matter of the cost of replicating EU administration that the UK nonetheless needs. As a result, Brexiteers now disown the claim.  But the claim was still being prominently made right up to Referendum day.

How many Leave votes might have gone to Remain if people had not been deceived?   How many have already switched their opinion?

But more importantly was the obvious implication that the money would be available because there wouldn't be any reduction in the monies the government would have available.  That is taxation receipts would not decline.

As the Chancellor, Philip Hammond said at the recent Tory conference "People did not vote on June 23rd to become poorer or less secure".

Indeed people did not vote to Leave at all costs. 

As we approach the Autumn Statement on 23 November, economic forecasts will become more prominent in the media.  So far they have been very downbeat.   Let's see.


(3) What form of Brexit were we sold?

We were sold a "Cake Brexit" - having our cake and eating it.   This refers to having both of:
  • Being able to continue a free trade relationship with the EU, such that exports do not decline, businesses do not move to Eire or continental Europe, so jobs and taxation do not fall
  • Whilst controlling immigration despite the usual need to adopt Freedom of Movement as a core and existing requirement of that free trade
MPs such as John Redwood argue that the Germans will want to continue selling their cars and the French their wine and cheeses to the UK, with the UK having total imports exceeding exports to the EU.  Arguably that will be the dominant factor in negotiations.  Possibly.  But in percentage terms the UK is far more reliant on the EU than the EU on the UK. That weakens the argument.

But more importantly is that the EU is desperate to avoid "contagion" - other EU states wanting similar special terms to any granted to the UK. As the Financial Times quotes a German official today in that context "If we have to choose between the EU27 and the UK, we will choose the EU27" The priority is the unity of the EU27, even at the cost of its economic and political ties with the UK.



So how will Cake Brexit be delivered? If not, what will be the public reaction?


(4) Did the Referendum vote mean leaving the European Union, the Single Market, the Customs Union or what?

The Referendum question was about leaving the EU. There was fierce debate in Parliament as to whether that means also leaving the Single Market and the Customs Union, both of which involve more countries, and so are not technically equivalent.  

This spilled over onto the BBC Daily Politics programme yesterday, with two senior Tory MPs disagreeing on whether the vote meant leaving all three or just the EU.  This is primarily about two things
  • The jurisdiction of the European Court of Justice, ECJ (not to be confused with the European Court of Human Rights) across more than just the EU
  • The likely difficulty of avoiding compliance with Free Movement of People if the UK doesn't leave all three.

In a sense both MPs are right.  Unfortunately the Referendum question was unclear, and Leave voters' intentions even more unclear.

This gets back to the Cake Brexit situation.  Can leaving all three be achieved whilst preserving free trade, not only in the long term but also through the transition?  Then many people will be happy, including many Eurosceptics who voted to Remain because they thought this was unachievable.

Again, it is more likely that public opinion will shift against Brexit.


(5) So is there anything alse to increase support for Brexit?  What about the Transition?

Most potential upside to Brexit has been covered above.

The real difficulty is the transition.  New international trade agreements that support the Brexit vision cannot be put in place before the terms of Brexit have been agreed with the EU.  These terms provide the options and restrictions on any other deals.  This is likely to take years.  Further complications of the transition are discussed in today's FT article above.

In the meantime the big risk is that businesses, jobs and exports will be lost.  That means lower tax receipts, on top of the loss of the pound's purchasing power.  That neans people feeling poorer, taxes raised, public services cut, and/or the annual deficit rising.  Public opinion would surely turn against Brexit, wouldn't it?


WHERE DOES THAT LEAVE THERESA MAY AND HER GOVERNMENT?

Politically Theresa May and her Government are boxed into a corner. The Referendum Act that set a low bar of only 50% of votes and the Tory promise to respect the result is driving actions at the moment.

But the result wasn't clear and emphatic as the Tories are claiming.  As discussed above it is more likely that public opinion will turn against Brexit rather than getting behind it, as the economic impacts becomes increasingly apparent.  People won't like it if they are not getting what they were sold before the Referendum.

It is therefore right and proper that Theresa May treads very carefully before pressing the Article 50 button to formally leave the EU.  Ponteitally it means cancelling Brexit.

How that can be done politically?  It is a major challenge.  Assuming the economic forecasts  produced for the Autumn Statement show a worse result for Brexit than staying in the EU, we'll start to see what political options there are.


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