Five years and two referendums later

I was reminded today of the fact that it is exactly five years since the Scottish electorate voted by a majority of 55% to 45% in favour of remaining in the United Kingdom. Those were what have now come to be seen as the good old days. The decision came just two years after the 2012 Olympics when it felt like the country was pulling together. Despite concerns about the direction of economic policy, the Scottish referendum outcome reflected a decision to bury differences as the country looked to the future with some optimism.

Looking back at what I wrote at the time, I noted: “This may not be the end of the story. For one thing, given the significant swell of support for the pro-independence campaign it cannot be absolutely ruled out that they will push for a second referendum. This will add further fuel to a nascent English nationalist movement led by UKIP, which will thus set the tone for the May 2015 General Election. Once the election is out of the way, the next big item on the political agenda will be the prospect of a UK referendum on EU membership. The main lesson from the Scottish campaign is that it will cause a lot of bitterness.” I could not have foreseen in 2014 just how right that would prove to be.

It is extraordinary to think that less than two years separated the Scottish independence and EU referendums, such was the change in political sentiment during this period. The long-awaited publication of David Cameron’s memoirs, which have been splashed all over the newspapers in recent days, suggests he is deeply saddened by how the EU debate played out and he is scathing about the behaviour of colleagues such as Michael Gove and Boris Johnson during the campaign. But just as Tony Blair could never admit that the UK’s involvement in the Iraq War was a mistake, so Cameron cannot accept that he made a mistake in calling the EU referendum. He believes that a public vote was “ultimately inevitable.” But he is wrong. In early 2016, only 10% of voters believed relations with the EU were a pressing issue for the UK. It was well documented at the time that Cameron was trying to spike the guns of UKIP and I have consistently expressed the view since early 2013 that his call for a referendum was a gamble with the national interest.

Arguably, Cameron’s success in securing the "right" result on the Scottish referendum emboldened his decision to hold an EU referendum. With the benefit of hindsight maybe if the Scots had voted for independence Cameron might not have been so gung-ho about the EU plebiscite, and although UKIP would have continued to be an irritant, the rest of the country may not have torn itself apart over the EU issue. As it is, we are now in a position where the UK is only 43 days away from crashing out of the EU without a deal.

The release last week of the summary Operation Yellowhammer documents make clear the scale of the economic risks facing the UK if it does crash out without a deal. The document notes that “When the UK ceases to be a member of the EU in October 2019 all rights and reciprocal arrangements with the EU end. No bilateral deals have been concluded with individual member states [and] public and business readiness for a no-deal will remain at a low level, and will decrease to lower levels, because the absence of a clear decision on the form of EU Exit (customs union, no deal etc) does not provide a concrete situation for third parties to prepare for.” These are the outcomes that government told us not too long ago were unthinkable and now we find they are government policy.

Just to highlight the specific nature of some of the Brexit-related risks, “the reliance of medicines and medical products' supply chains on the short straits crossing make them particularly vulnerable to severe extended delays. Any disruption to reduce, delay or stop supply of medicines for UK veterinary use would reduce our ability to prevent and control disease outbreaks, with potential detrimental impacts for animal health and welfare, the environment, and wider food safety/availability and zoonotic diseases which can directly impact human health. Certain types of fresh food supply will decrease.”

In other words, the UK government’s inability or unwillingness to accept the deal negotiated with the EU last November poses potential health risks to the country’s population. These are not the hysterical ramblings of desperate Remainers – this is what the government has been forced to admit might actually happen. To further highlight the collapse in effective governance, far from preparing to meet the challenge, the government has suspended parliament in case it asks too many inconvenient questions and is now fighting a challenge to its actions in the Supreme Court. Nor does the madness stop there. For all the obvious shortcomings of Boris Johnson as Prime Minister, opinion polls suggest the Conservatives are actually extending their lead over Labour. To counter this, the Liberal Democrats have now adopted a repeal of the Article 50 notification as their official policy which is (a) unlikely to happen; (b) not particularly wise and (c) not the threat to democracy that the foaming-at-the mouth brigade would have us believe because all you have to do is not vote Lib Dem.

We live in febrile times and the anger that the Brexit debate has stirred up is not going to dissipate once the UK is out of the EU (or not). To put this into some form of historical context I have combined the post-1998 Baker, Bloom and Davis policy uncertainty index for the UK with their index covering the period 1900 to 2008 (based on a smaller sample so there are some comparability issues). Nonetheless, it shows that policy uncertainty spiked to its highest ever level in the wake of the EU referendum and even now is at levels consistently exceeded only in 1919, 1939 and 1946 (chart above). The UK economy is not merely suffering an economic shock: It is being subject to repeated convulsions which will not easily be healed. I fear it will take a generation to heal current wounds. The apparent civility characterising the Scottish referendum in 2014 seems like a lifetime ago.