Congratulations to the “Vote Remain” campaign. Not only have they managed to hog the headlines over the most blatant scare stories in British politics since the 1924 Zinoviev Telegram, but they have also succeeded superbly in drawing attention away from the worst features of the EU: its appalling lack of accountability, the absence of transparency in its operations and the continuous chipping away of our sovereignty.
Those hyperbolic “Project Fear” emanations rest, not on known facts in economics but on forecasts and projections from sources that have proved woefully fallible in the past.
To the heavy bombardment of scare stories over the past three months, more have been added in the past few days lest we were not terrified already.
According to Chancellor George Osborne, leaving the European Union would tip the UK into a year-long recession, with up to 820,000 jobs lost within two years.
Citing a Treasury analysis, he said a Leave vote would cause an “immediate and profound” economic shock, with growth between 3 per cent and 6 six per cent lower.
David Cameron has said a vote to leave was the “self-destruct option” for the country. That’s how much store he places by his own government’s efforts.
George Osborne also says a UK vote to leave the European Union could hold back growth in house prices. In the event of a vote for Brexit, by 2018, houses could be worth up to 18 per cent less than if the UK voted to remain, he told the BBC.
G7 finance ministers have also weighed in, saying Brexit could cause a “shock” to the world economy.
The warnings come with almost every news bulletin and do not gain credibility by their repetition – either by the Treasury or outside bodies such as the IMF.
Remember that these warnings are projections – not facts. And they have been cast in the most guileful manner to maximise shock impact. Predictions of house price behaviour have proved about as reliable as predictions about the oil price. Remember how the mighty house of Goldman Sachs forecast when oil was soaring above $100 a barrel that it would go to $200?
And when the price then crashed to $30 a barrel, it predicted it would keep falling to $20? Today the price is nudging $50.
When it comes to economic forecasting, let’s remember the great dictum of J K Galbraith: “The only function of economic forecasting is to make astrology look respectable”.
Both the Treasury and the IMF have been wrong about the British economy. And the Treasury and the CBI boffins were proved equally wrong when they forecast that the British economy would take a hit should we come out of the Exchange Rate Mechanism. In fact, the economy went on to enjoy a strong growth performance.
The CBI pundits and political panjandrums from Ken Clarke, through Nick Clegg to Peter Mandelson were also wrong about the dire consequences should we fail to join the Euro.
The fact that, now, as then, other bodies and organisations joined in this exercise of collective braying does not make the forecasts better or more accurate.
As for the prediction of plunging house prices, note the spin on the ball: this is a prediction of a fall of “up to 18 per cent” less – the words “up to” covering a fall in the range of 0.1 per cent to 18 per cent.
And the words in the fine print of the forecast should be noted – this would be a fall from the level at which prices as they might otherwise be – and as most are predicting a general rise in house prices, we should deduct that from the scary-sounding prediction.
These scare stories have a double function. One is to scare the pants off voters about the consequences of BREXIT. The second is to divert attention from the serious concerns of voters both here and across the continent: the lack of accountability of EU institutions; their utterly baffling lack of transparency and the erosion of the authority of national parliaments.
Is this really about finance and money? Is it really fanciful notions of what GDP might be in ten years’ time that are uppermost in the minds of voters? The ‘Remain’ campaign has been dominated by competing claims on the economy, finance and our gross and net EU contributions.
It would surely follow that regions that have received large amounts of EU funding would be more generally disposed to Vote Remain. But intriguing anomalies abound.
Last week the pro-Remain Financial Times carried a lengthy article on the paradox that is Penryn (pictured), a small town close to Falmouth on the south coast of Cornwall.
Here EU largesse has been liberally scattered. There’s the brand new university campus built with more than £100 million from Brussels. The EU has also helped transform a former coal yard into designer office space.
EU funding has helped spruce up roads and rail lines. Each EU funded development is boldly proclaimed with large advertising boards declaring EU regional fund support and bearing the EU insignia.
With such generous and well-signposted funding, you would expect Penryn to be solidly in favour of Vote Remain. But to the FT’s consternation, many in Penryn are ready to Vote Leave in the referendum.
With just 530,000 people, Cornwall took in more than €654 million (£506 million) from Brussels during the EU’s 2007 to 2013 budget cycle, among the UK’s biggest beneficiaries. But this is a county that doesn’t like being told what to think. And this is a reminder that the EU money does not necessarily buy love.
The current referendum battle – increasingly portrayed as an internal Tory Party fissure between Prime Minister David Cameron and Boris Johnson – is just not engaging voters. And the greater the volume of warnings and scare stories about leaving the EU, the greater the risk for Vote Remain that voters will be turned off by a campaign dominated by finger wagging from the political elite and corporate bigwigs.
This referendum is about more than money and infrastructure matched funding. Money alone can’t buy EU love. Fundamental concerns of identity, accountability and sovereignty are – as they historically have always been – powerful magnets acting on voter attitudes and behaviour.
The “Puzzle of Penryn” is no anomaly, but a phenomenon that should give Vote Remain pause for thought as it pummels us daily with those flaky forecasts of doom and disaster.