If It Ain't Broke, Don't Brexit- by Jerry Jasinowski
The British go to the polls next week to vote up or down a proposal to leave the European Union (EU). It is fair to say that just about every government finance minister and the great majority of business leaders in Great Britain and throughout Europe believe a British withdrawal from the EU would be an unmitigated disaster.
If the British vote to leave the EU, the impact will not be immediate. The diplomats would have two years to negotiate the terms of Britain's withdrawal which would be the first since Greenland in 1985. This will create a period of political and economic uncertainty.
Along with Germany and France, Great Britain - which is itself the world's fifth largest economy - is a mainstay of the EU. It has a major voice in the legislation and policies set by the EU, the world's largest economic entity. Outside of the EU, Great Britain will have no say in EU matters which would be a serious problem considering that Britain has always depended on global commerce and half of Britain's trade is with EU nations. Without question, leaving the EU would lead to a loss of thousands of jobs in the financial sector. JMorgan Chase contends 4000 of its staff might be moved to the continent. Other banks would follow.
I recently returned from an extended visit with friends and relatives in France. They are without exception anxious about the possibility of Britain leaving the EU. They believe, and I think rightly, that London provides an essential balance to Berlin and Paris. Without that steadying influence, the EU would have even more difficulty finding consensus on divisive issues. The EU has been a great success in terms of binding Europe together economically, reducing trade barriers and embracing a common currency. But despite all that it remains a work in progress and would clearly begin to unravel if Britain were out of the picture.
Some Britons hope a "leave" vote would still permit Great Britain to participate in EU affairs through the European Economic Area (EEA) much as Norway has done. But Norway like Greenland is a small economy and even Norway feels the pinch of exclusion from EU decision making. The EU is constantly imposing new rules and policies that affect the economies of all European nations, not just those in the EU. Without a voice at the table, Norway - and possibly Great Britain - have no say in those decisions.
But the key bone of contention for many in Great Britain is not economic but rather the free movement of people which has led to increased immigration and potential for increased terrorism. There is more than a tad of Donald Trumpism in the hostility to immigrants that underlies this otherwise campaign for economic isolation. But this misplaced prejudice will not make Britain more secure. Even if Britain should withdraw from the EU and remain in the EEA, a sort of second class membership, it would still be subject to the free movement of people rules.
All in all, it would be much better for Great Britain and the EU if the Brexit movement were to fail. The vote is June 23. It will be pivotal.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. You can quote from this with attribution. Let me know if you would like to speak with Jerry. June 2016