The EU referendum is not the same as the Scottish referendum

People are recycling arguments from the Scottish independence referendum in the EU debate. But they’re not the same, says Merryn Somerset Webb.


The arguments from the Scottish referendum don't apply here

In today's FT Janan Ganesh writes about the politicians and City men who are pro Brexit.

Their "insouciance" is, he says, "the privilege of the rich". Politicians are immune from recession; their money keeps coming in anyway. "An MP, peer, adviser or think tanker has job security and, if it fails, an escape hatch to the public relations sector." In Westminster, the crash didn't happen and nor will the much forecast nightmare of the post-Brexit recession.

This lot, says Ganesh, can look out at the front line and not worry too much about 3.6% off GDP here or 18% off house prices there. They can afford their principles. Same goes for the City fat cats. It's a "picture of decadence" and Ganesh doesn't like it; not one bit.

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I recognise this argument. I used it a lot in the Scottish independence debate. The difference is that then it was a good argument.

Scotland and the UK have a monetary union and a fiscal union. At the time of the vote, fiscal transfers were flowing from the rest of the UK to Scotland. It was possible to quantify the exact fiscal loss to Scotland on independence from those transfers. It was also possible to work out the costs of setting up new parallel institutions and it was obvious that "sterlingisation" (or a new currency) would come with clear costs. So we were working with facts: facts that showed us that the poor really would suffer on independence. That might have been the case for only ten years, but it would definitely have been the case.

Given that, the rich who planned to vote for independence and presumably decamp to London when things got hairy were indeed displaying "the privilege of the rich".

This referendum just isn't the same. There is no monetary union. There are no set up costs to leaving (so far we have been allowed to keep all our institutions). And of course to the extent that there are fiscal transfers, they go the other way. The only fact here is that the UK will send £19.6bn gross or £11.1bn net to the EU. That's real money. The rest is guesswork.

So the answer to Ganesh on this one is to say that if you can accuse the Brexiters of "privilege of the rich" when it comes to their political ideas, you must also look to the incentives of Remainers. After all, while Greek GDP has fallen some 25% since the crash, there has most certainly been no recession either in Brussels or in the pay packets of the top executives of our multinationals.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.