An idiot's guide to Brexit

There are plenty of reasons why the so-called "Brexit" -- the UK's possible departure from the EU -- would be a dumb move.  Pro-Brexit campaigners are dreaming in technicolor if they think that the EU will allow the UK to keep intact its vital trade links with its European neighbours in the event that it votes (on June 23) to leave the union. When people like Mark Carney warn of damage to the UK and EU economies, and even the global economy, if Brexit actually happens, a lot of people seem to be shrugging their shoulders: what else would you expect the Governor of the Bank of England to say, right? But it's unlikely that he's merely crying wolf here: the downward spiral of Sterling since the referendum date was firmed up is clear evidence that the threat is real.

Which brings us to the Toronto Star's unreliably opinionated business columnist, David Olive.  In this column in Saturday's paper, he makes a few good points -- and a whole lot of really dumb ones. Let's take a look.

• "The Brexit pamphleteers also claim Britain on her own would be freer to bring about the prosperity that non-EU Scandinavian countries enjoy. They must be thinking of oil-rich Norway, since the average per capita income of the other Scandinavian countries is only slightly higher than Britain’s."  

That's simply incorrect, as this table (which uses IMF data) shows.  Norway is certainly the richest Scandinavian country in terms of GDP per capita, but Denmark, Sweden, Finland and even Iceland all comfortably outrank the UK by this measure. 

• "Cut off from its integration with the European financial system, London’s role as a gateway to Europe would wither. Frankfurt, already the de facto fiscal-policy capital of the EU, could eclipse London in commercial finance as well, given its centre-stage role and location within the EU."  

Where to start?  It's arguable that London's financial role could be one of the things least affected by Brexit. After all, the UK has never joined the single currency, yet it nonetheless remains the predominant banking and financial centre in Europe, so why would Brexit change that?  As for the reference to Frankfurt as the "fiscal policy capital of the EU", this is simply wrong. If Olive is trying to say that Germany drives EU fiscal policy, he's on firm ground -- but Germany's fiscal policy is made in Berlin, not Frankfurt.  Lastly, if banks do start to leave London after a Brexit, the likely destination is Paris, rather than "Mainhattan" -- international bankers take their lifestyles very seriously.  

• "This sorry state of affairs was manufactured largely by one man, British PM David Cameron. The brutal austerity measures with which Cameron chose to confront the Great Recession were exactly not what the doctor ordered. Britain’s painfully slow economic recovery accounts in large degree for today’s British discontent generally, and with immigrants in particular."  

Cameron's misguided austerity drive is a well-worn theme of David Olive's.   He's right to assert that fiscal austerity was the wrong medicine for the UK economy in the wake of the financial crisis, but here's the thing: although Cameron and his Chancellor George Osborne talked a good game in terms of spending cuts, program spending in fact continued to grow in the early years of the Tory-LibDem coalition.  That's why the target date for eliminating the budget deficit keeps receding into the future with each budget.  As for Britain's "painfully slow" economic recovery, suffice it to say that the UK's growth has hugely outpaced the Eurozone's, as this table from Eurostat demonstrates.  In 2014, the latest year for which full data are available, UK GDP rose 2.9 percent. The Eurozone's rose 0.9 percent. 

• "When the Eurotunnel opened in 1994, a poll showed that a majority of Britons were bracing for an onslaught a rabies-infected vermin, cats, dogs and foxes from France, where many Britons believe rabid animals are rampant. No one in France has died of rabies since 1924. Still, protestors routinely gathered at the Folkestone end of the Chunnel to protest the dire outcome this megaproject would mean for Britain."   

I'm only citing this paragraph because it contains the only fact that Olive and his minions actually bothered to check -- although, as this story shows, it's not strictly true.  

It's hard to predict how the vote will go in June: best guess is that the Brits will reluctantly vote to stay in.  Very clearly, though, if it were left to David Olive to make the case for Europe, the pro-Brexit side would win in a landslide.