States of Matter. Britain’s exit ghosts

Joanne Cox, a Labour Member of Parliament, was murdered just a few days before a United Kingdom referendum on European Union membership. Her assassin later declared his name in court as “death to traitors, freedom for Britain”.

Leaving aside the suspect’s history of mental illness, his sublimation of personal identity in a toxic slogan represented in rather extreme form, how the Exit v Remain question has departed from logical moorings and become a contest in fears and anxieties.

In a melange of illogic, Cox argued a clear humanitarian case for open borders. The day of her assassination, the UK Independence Party (UKIP) whose slogan of ‘Britain First’ was on the killer’s lips, unveiled a campaign poster declaring — over an image depicting a throng of refugees at a Slovenian border fence — that ‘Breaking Point’ had been reached.

The UKIP had struck an accustomed note of undisguised bigotry, to the acute discomfiture of fellow travellers in the British Exit (or Brexit) camp. An immediate result was the defection of one prominent member of the ruling Conservatives, former party chair Sayeeda Warsi. And even as Michael Gove, currently justice minister, “shuddered” at the UKIP’s message, he reaffirmed his vow of fealty to Brexit.

Gove’s contribution to the overwrought public mood has been significant. His dark warning that a million immigrants would flood into the UK once Turkey secures EU membership, earned a rebuff from Prime Minister David Cameron. Turkey’s accession, under discussion since 1987, is still a long way from being cleared. Gove refused to back down though, challenging Cameron to a game of dare on how far he would hold out against Turkey’s accession.

Far-right propaganda stokes fears that every subject of Her Majesty’s realm risks having a Turk as neighbour. Within the Conservative spectrum, Cameron stands resolutely with the Remain (or Bremain) camp. Having renegotiated some aspects of UK membership, he believes the balance of advantage lies with staying in the EU. One ingredient of Cameron’s new deal was a degree of autonomy for financial institutions from the EU diktat in matters like prudential regulation and bailouts. Another involved an ‘emergency brake’ permitting member states to deny welfare benefits for a defined period to migrant workers.

The urgency of the latter clause arose from perceptions that social services in the UK were under strain from rising migrant claims. The term ‘benefits tourism’ has been common currency and Cameron himself has frequently deployed it with little regard for facts.

Reality is that the UK changed its ‘habitual resident rule’ in 2004, raising the threshold for welfare eligibility when seven new states — the largest being Poland — entered the EU. If the UK has since become a magnet for migrant workers — the archetypal Polish plumber — it is not ‘benefits tourism’ that is the driver but market demand, since its ageing population cannot keep the wheels of the economy running. And with most migrants entering the workforce from the moment of arrival, they pay all applicable UK taxes, keeping the welfare system solvent.

In January this year, Cameron’s office fluffed the test when challenged to produce evidence that ‘benefits tourism’ is a real problem. Facts though, are a minor inconvenience in the Brexit campaign, which has made much of the seeming iniquity of the UK’s annual contribution of £18 billion to the EU, purportedly enough to build a new hospital every week. The reality is that a substantial rebate was negotiated on this figure during the 1980s and a large part of the UK contribution flows back, notably as agricultural subsidies.

The UK’s net contribution would finally be less than 0.4 per cent of its GDP. By way of comparison, a Treasury Department estimate in May put the cost of leaving at between 3.6 and 6 per cent of the GDP.

The UK Treasury is justly famous for not having spotted the global meltdown-sized object hurtling towards the economy in 2008. And it hedges against a possible mishap here by pointing out on page 40 of a 90-page report, that it has not, even in the worst case scenario, allowed for certain “tipping points”, such as the “crystallisation of financial stability risks (and) a ‘sudden stop’ to the external financing of the UK current-account deficit”. Some 12 pages on, it identifies the current-account deficit — 7 per cent of the GDP — as “high by historical and international standards” and “a particular economic vulnerability”. Subtle understatement or half-hearted alibi against future embarrassment?

By way of comparison, the previous conjunctures when the UK’s current account has run comparable deficits, were the mid-’70s and the early-’90s. In the first of these, the UK had to devalue the pound and plead for a bailout from the International Monetary Fund, imposing steep social spending cuts as a reciprocal offering. In the latter situation, after much more radical surgery had been done on the social sector by the Thatcher regime, the UK had to beat a tumultuous retreat from the European Exchange Rate Mechanism after failing to keep the pound at an agreed level.

The 2008 meltdown brought a renewed phase of harsh austerity, but no contraction of the deficit. It is a scenario in which the UK’s financial sector continues to profit from funding this deficit, while politics conjures up a climate of fear over unceasing waves of migrants. Long after the last vote is counted, the Brexit referendum will be remembered for its toxic politics in which productive workers were made scapegoats for austerities imposed by big global finance.

(This piece is being sent to press as the counting of votes begins in the Brexit referendum)

Sukumar Muralidharanis an independent writer and researcher based in Gurgaon

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