On May 22nd, one Boris Johnson gave his forecast for the UK's post-referendum future: "Given the choice between taking back control or being sucked ever deeper into the federal superstate, the British voted for independence on June 23. To no one's very great surprise, Project Fear turned out to be a gigantic hoax. The markets were calm. The pound did not collapse." Alas, untrue.
After the biggest ever proportional two-day decline, the pound touched a 30-year low against the dollar. Standard & Poor's and Fitch have downgraded UK public debt. Investors have savaged bank shares. So far, the experts, dismissed by Michael Gove, justice secretary, have been proved right.
Mr Johnson is to economic forecasting what England is to football. Any well-informed person knew that a vote for Brexit would inflict medium-term pain on the economy.
The Treasury might even have been underestimating the shock. It would be astonishing if there were to be no recession. This self-inflicted folly will hurt millions of innocent people. It is likely that buyers’ remorse will soon set in. Voters might conclude that the leaders of the Leave campaign were fools or liars.
Irresponsibility
It is easy to sympathise with the view of Harvard's Kenneth Rogoff that the hurdle for a change to the status quo had to be far higher than 50 per cent of votes in a referendum on an issue as profound as this one.
As it is, 36 per cent of eligible voters have been allowed to decide “without any appropriate checks and balances”.
This is just one aspect of the irresponsibility shown by David Cameron, Britain's prime minister, throughout this immensely important process. It is not surprising, for example, that he found it hard to argue credibly for Remain after spending more than five years denigrating almost everything about the EU. He has proved calamitously short-sighted.
Might it be possible to abort the entire process? Legally, yes. As Brexiters rightly say, the UK is a parliamentary, not a plebiscitary, democracy. The step that must be taken, if the UK is to leave the EU, is for it to issue a declaration under Article 50 of the Lisbon treaty, to trigger the process. In law, a referendum is solely advisory. Only parliament can do this, because only it makes valid law.
Selection
After selection of a new leader by the Conservative party, and perhaps even a general election, prime minister Johnson might, to paraphrase Emperor Hirohito’s remarks at the end of the second world war, declare that, given the “unexpected” economic damage and the risk of a break up of the UK, the situation “had developed not necessarily to the UK’s advantage”.
He might forget the whole thing or, alternatively, call another referendum, merely to make sure the people remained as determined. The desire of the Leave side not to trigger Article 50 and the determination of EU leaders not to negotiate until it does could then give the time needed to change minds.
Politically, however, this option would surely be too slippery, even for Mr Johnson. If so, a second option would be to suggest to the rest of the EU that the principle of unrestricted movement might be reconsidered.
What, the UK might ask, about a safeguard arrangement? After all, UK membership and continued (if modestly restricted) access to the UK labour market would be better than Brexit and a tightly restricted entry.
Moreover, only with safeguards on movement might Turkish or Ukrainian membership ever be feasible. The US could quietly indicate to the EU how much is at stake. Then there could be a referendum on new terms and so the UK might remain in the EU.
Restrictions
Yet it is probable that the EU will rule out restrictions on movement. If so, Brexiters must recognise something they prefer to deny: they cannot have their cake and eat it. Mr Johnson insists there will be “democratic control of immigration policy”.
He also states that there will be “free trade, and access to the single market”. But, if the EU sticks to its current policies, then the access to the single market the UK has today is unavailable, because that is incompatible with controls on EU immigration. Mr Johnson needs to make a choice.
“Access to the single market” are weasel words. Most will take it to mean the access the UK now enjoys. But it might mean the more limited access that the US, say, has. If that is all the UK seeks, it must say so.
But leaving the EU and seeking to retain current access to the single market, while accepting free movement of labour, would be mad. If the UK were willing to accept all this, it should stay inside the EU, since it would continue to possess a voice in the single-market regulations that would affect it.
Controls
Controls on immigration are the crux. If they are inescapable for the post-referendum UK and if the EU will not shift on the issue, then the UK must lose its access to the single market. It should, instead, open discussions on the best trade agreement to allow such controls.
Right now, however, the best thing to do is nothing. The UK must work out what it wants. The EU must consider whether free movement is inviolable. The UK should avoid triggering Article 50: that would eliminate its leverage and would push it out of the EU within two years, probably with no further trade agreement. Any such stalemate cannot continue forever. But there could be benefits, for both sides, in avoiding too hasty and brutal an ending.
The story goes that a man condemned to death told his king: “I could teach your horse to sing, within a year.” The king replied: “Very well. But if the horse is not singing a year from now, you will be executed.”
Upon the criminal’s return, his cellmate remonstrated: “You know you can’t teach that horse to sing.” He replied: “I have a year I didn’t have before. A lot of things can happen in a year. The king might die. The horse might die. I might die. “And, who knows? Maybe the horse will sing.”
I suggest we try that year or so.
- Copyright The Financial Times Limited 2016
