June 06, 2016
Leave's lead is widening
One thing we noted about the Guardian is that it hides its most shocking pro-Brexit opinion polls, like those of ICM last week, deep down on the webpage. We also only accidentally stumbled upon the latest poll of the Observer, part of the Guardian group, which confirmed the recent trend. It's 43% in favour of Brexit, against 40%. According to this poll the Remain campaign lost four points over the last two weeks. What seems to have happened is that voters are responding to the Leave campaign's message on immigration, which is now taking centre-stage in the debate. Half of those polled believe that there would less immigration if the UK left the EU.
The article said that the Leave campaign believes it can win for as long as it can keep the headline polls close. They are betting on a low turnout of Labour voters - not unreasonable in our view, given that this referendum is now in part turning into a mid-term protest vote against Cameron. As for the polling methodology, the difference between phone and internet polls seems to be closing. Opinium, the pollster, said an adjustment in the methodology would result in a remain lead of 43-41. Essentially, what these polls tells us time and again, is that the two sides are running close.
The Guardian also has a detailed article on how the Bank of England will keep the financial system funded after a pro-Brexit vote - with an immediate meeting by the monetary and financial policy committees after the vote. One of the measures very likely to be implemented is an emergency liquidity facility, and possibly also swap agreements with the ECB and the Fed.
One observation we have made is that the pro-Remain economic arguments are getting mixed up with a debate about the usefulness of economic models after the financial crisis. Considering the dismal performance of virtually all of them, it is astonishing that any sane person would start a political campaign on the basis of what those models are predicting. In this context we noted this morning an article by several authors lambasting Patrick Minford's pro-Brexit economic analysis, which claims that a unilateral abolition of tariffs and quotas would lead to a fall in import price of 10% and a rise in GDP of 4%. We do not pass judgement on the technical arguments behind the modelling assumption of Minford or of those who criticise him, but what is clear from the debate is that it is model-based - and those models are highly imperfect to say the least.
Our own view of the economic impact of Brexit is that it is likely to be negative in the short term - and neutral in the long run, since in the long-run the economic performance depends on skills, resources, and policies, and there is no reason to assume that those would be intrinsically worse. Since this decision about EU membership is about the long-term future, the economic arguments are irrelevant. We would distinguish, however, arguments about economic security. Those would definitely favour Remain - as would national security in general - which would clinch it for us.