June 07, 2016
Neck and neck
There has been more polling evidence that the Leavers are gaining ground. The Daily Telegraph has been running polls that are most friendly towards Remain. And these polls are also now showing that the gap is closing. Among those most likely to vote, Remain is at 48% and Leave at 47%. A week earlier the numbers were 51% to 46%.
There is one thing we can say with same degree of confidence about the Brexit campaign. Project Fear is not working - just as we expected. We would not be in this situation today - with the two sides running neck and neck in the polls - if the Remain camp had made a positive argument for the EU, something we have not heard yet. And we note that the anti-Trump camp in the US and elsewhere is making the same mistake. Here is Larry Summers:
"If he is elected, I would expect a protracted recession to begin within 18 months. The damage would be felt far beyond the United States."
There is no evidence that trained macroeconomists are able to forecast a recession with any greater precision than the general population. And there is even less evidence that they can make such sweeping future extrapolations about political trends. If there is one lesson to be learnt from the Brexit campaign, then it surely is: Don't scare the voters. Make a positive case.
Back here in the UK, we have not heard a positive case for the EU yet. All we got are scare stories. We generally disagree with the overall drift in Raoul Ruparel's characteristic eurosceptic analysis, but he is right in his assertion that the europhiles in the UK have lost the war, and that they are ineffective campaigners. Simon Nixon, a commentator with whom we normally also disagree, makes the interesting observation that the Brexit campaign is strengthened by a wider insurrection against globalisation. The Leave campaign portrays the EU supporters as part of a self-interested global elite.
"..perhaps the Remain campaign’s biggest problem has been its inability to come up with a convincing narrative of why the EU exists, what it does and where it is going."
Gideon Rachman has been one of the few FT commentators who have taken the possibility of a Leave victory seriously right from the beginning. He notes that each side will play their trump cards between now and the June 23 referendum - the Remain will talk about the economy, while the Leavers will talk about immigration. Immigration is a powerful campaign argument. It entails a concrete example of what loss of sovereignty actually means, while previous issues, such as the EU's working time directive, failed to capture the public's imagination. What is not helping either has been the British government's failure to anticipate the scale of migration from Eastern Europe.
There is increasing talk of heightened volatility in the FX markets as a result of the recent poll trend favouring Leave. We don't see this. The pound is actually up this morning. Against the euro it is down for the week but up for the month - make of that what you will.
The polls are interesting to watch, but they will ultimately not give us a clue about the actual election outcome. The result will be determined by two unpredictable factors. The first is the debate in the next two weeks. The second is turnout. What we can say is that the Leave camp, if it can maintain a neck-and-neck race until the finishing line, might come out on top because they are more likely to mobilise their supporters than the Remain side with their abstract campaign.
Also watch for the anti-Cameron factor. Labour voters in particular might be tempted to use the referendum to wreak havoc among the Conservatives. If you care about national politics more than about the EU, then it would surely be tempting to vote Leave. The Labour leadership has so far not been very helpful for the Remain campaign.