I have to confess to having been a “Remainer” in the great Brexit debate, as I felt the economic damage of leaving the European single market was large.
However, I do support the new “points-based” immigration system and don’t trust the Euro politicians to be in charge of laws governing the UK. To be fair, I don’t also trust UK politicians but at least we can vote to remove them.
But why are these comments relevant during the coronavirus crisis?
Because, I think other European countries will soon be facing populist pressure to leave the EU. The coronavirus crisis and self-isolating, has made us focused on “family first” and country second.
In reality, Europe has quickly fragmented into individual states, with all boarders shutting and countries focusing their medical resources internally, with few thoughts about acting as a single united European Union, moving resources as required to coronavirus hot spots. Of course there have been some examples of inter-country assistance, but these appear to have been extremely limited.
Economist are telling us that for every month a county is in lockdown, its GDP will fall by 2% and therefore the entire world is predicted to exit the coronavirus lockdown into a recession as bad the 1930s Great Depression.
As a newly ’independent’ country, with our own currency, Britain can use “fiscal easing” to borrow heavily and plough cash into funding measures to counter the coronavirus downturn, such as business rate holidays, further salary subsidisation and investment in infrastructure projects, to name a few.
If needed we can also devalue our currency to make exports cheaper and imports more expensive, whilst introducing whatever import tariffs we believe necessary to protect UK employment.
People may hate Trump and believe his tariff-led negotiations will cause trade wars, but you can’t deny the boost in US economy since his election – even if it has been at a severe cost in terms of world harmony.
Economically, there are major benefits to European states staying together, including a large tariff free single market and a central bank, able to borrow money at much lower rates, due to the strength of the whole and the balance sheets of the stronger counties like Germany and France, balancing those of weaker economies like Italy, Spain and Greece.
As we have seen with Greece previously, poorer EU counties tied to one currency and a central European bank, have far less leavers to pull to get them out of recession and reduce unemployment levels. Quite often the richer countries, who are there to bail them out, impose stringent austerity policies that are deeply unpopular, in order to ensure their loans are repaid
We have already seen in the US and other countries, how successful populist politicians can be. Promise the world today and ignore the consequences tomorrow, often gets people elected. So don’t be surprised as we emerge from the coronavirus crisis and head into recession, if Greece, Italy and even Spain’s choose to put the short term above the longer and decide to leave the EU, in order to take back control of their own currencies, laws and economy.
From a travel industry point, the upsides of this are probably greater than the downsides. New currencies often devalue, making the destination better value for holidaymakers. These newly independent counties will in turn want to continue to attract UK tourist and should have aggressive tourist boards providing co-funding for advertising. I also can’t imagine visa or fifth freedom flying rights being an issue with major holiday destination like these.
In hindsight, perhaps the UK exiting the EU ahead of the coronavirus fallout will turn out not to have been such a bad idea after all.