Chris Haskins: Britain may pay high price over fantasies of past glory

THE EU referendum may prove to be the most significant constitutional event in British history since the Act of Union of 1709 which brought about the integration of England and Scotland, and the repeal of the Corn Laws in 1846.

Is Boris Johnson regretting his stance on Brexit?

The Scots are likely to have another referendum which could lead the way to the end of the Union and the British economy may undergo the greatest upheaval since free trade was introduced by Sir Robert Peel.

Boris Johnson and Michael Gove have sought to reassure people that nothing will happen in the short term and that the withdrawal will take a long time to complete.

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From their perspective, this is understandable because they do not appear to have worked out a policy to deliver their aspirations. Furthermore the scale of the task is daunting; negotiating an orderly withdrawal and replacing existing EU trade agreements and regulations with British ones. It may take up to 10 years of Parliamentary time.

But an extended period of withdrawal will prolong the uncertainty, scare off potential investors and enrage the rest of the EU. The economy will stall, interest rates pressure will be upward because of the UK’s reduced creditworthiness and the cost of mortgages may rise which will, in turn, dampen consumer spending and lead to recession.

And Yorkshire and the Humber, which voted 60 per cent to leave, will suffer more than the rest of the country because of its trade links with Europe, its large numbers of farmers, and a relatively high proportion of low income people who rely on social security support.

Withdrawal from the EU will trigger a review of strategy by companies which have located in Britain in order to access the Single Market. Already JP Morgan, the American bank, has indicated that 4,000 jobs will transfer elsewhere, and Airbus is reviewing its substantial commitments in Britain.

The inevitable reduction in British competitiveness will have two sad consequences – a downward pressure on wages and a rise in unemployment. This will bring further pressure on government finances.

The NHS, farming, the food and leisure industries and the City of London are heavily dependent on European workers. They await with concern what new 
rules will be introduced to curb migration.

The Brexit supporters seem divided on this issue. Boris Johnson seems reluctant, because of his liberal instincts, to make drastic cuts in migrant numbers, but millions of poor people who voted to leave want severe restraints on foreign workers. It would seem that little thought has been given towards developing a post-Brexit economy.

Those sectors which currently benefit from EU funds will lose this support within three years. Farmers will be particularly affected, and the National Farmers’ Union will try to persuade the Treasury to replace this loss.

But if the general economy is in trouble this will be a hard task, and British farmers will have much less political clout than those in Europe. Farmers in the Celtic nations will have to make separate deals.

The rural economy has also attracted substantial EU funds. Will these be underwritten by the Treasury? I doubt it. Our universities have also been substantial beneficiaries from Europe to pursue research. They are rightly apprehensive.

As well as Scotland, spare a thought for Northern Ireland, with its 300- mile border with the Republic, and an increasingly integrated all-Irish economy. The economic logic for reunification, as an alternative to Brexit, is compelling, although latent animosities are so strong that a return to the darker days cannot be ruled out.

These uncomfortable short and medium term prospects will become quickly apparent to a new Prime Minister.

It is not surprising that Boris Johnson and Michael Gove are back-pedalling by suggesting that little will happen in the short term, and that withdrawal will be slow and gentle. But unnecessarily prolonged uncertainty will only exacerbate the economic problems, and investors will abandon the UK in even larger numbers.

A couple of weeks ago I wrote in this newspaper that Boris Johnson, if he became Prime Minister, might rue the day he switched sides in the referendum. But unless the negotiations can create a gigantic fudge which would leave Britain part of the EU in all but name – a line he seems to prefer and which may well be the answer – the people of Britain and Europe are in for a hard time.

This seems a high price to pay for indulging in British fantasies of past glory, the pursuit of personal ambition and a suspicion of foreigners.

Fifty four years ago the great American Secretary of State Dean Acheson noted that “Great Britain has lost an Empire and not yet found a new role” and he added that the then Prime Minister Harold Macmillan “is now attempting wisely in my opinion, to re-enter Europe”.

Today we are back to square one, with a vengeance.

Chris Haskin is a peer, farmer and businessman. A former chairman of Northern Foods and the current chairman of the Humber LEP, he is writing in a personal capacity.