The Uneducated Brexit Vote

The Uneducated Brexit Vote.

Last week, our Director Ashley Clark was sat in a beer garden by the Thames having a quiet pint with his dog when he overheard a European lady complaining the she was European but British now, lived here, worked here paid her taxes here, she loved the UK and felt totally betrayed and at risk following the Brexit vote.  Understandably, she along with many of our European friends are concerned.  In our view, one of the first issues for Mrs May should be to secure the rights of EU nationals to remain in the UK and a reciprocal agreement for British nationals in Europe.

What then transpired was the lady and her British friends all suggesting that the British people were uneducated, ignorant and the vote was wrong.  This is something that we have heard across media and social forums many times.  It was at this point that Ashley entered their discussion.  Every day we have “Brexiters” complaining about the EU and “Remainers” asking how could so many vote to leave?  There are positives and negatives for both and until people can accept that others may also have a valid point, then we cannot move on. 

Given that we have offices in the Midlands, London and the South West as well as friends and family further North, we have heard both sides many times and knew the vote would be close given the different experiences and views of people around the country for being part of the European Union. 

Whether you voted to leave or remain is your business but this article is about trying to understand why geographically different areas of the country have a totally different view and this is what Ashley pointed out in his “pub debate” and then to try and second guess what the future holds for us all.

Why did so many in the South East vote remain?

This week we have seen a legal “lobby” group TheCityUK suggest that the London’s international law industry could risk losing up to £26bn in trade on Brexit added to calls from the financial services sector with claims of between £20bn and £50bn in lost trade without access to the single market.  London’s wealth has been built on Law and Financial Services, a World renowned centre for both.  London is also the tourist capital of the World, there are more visitors each year to London than any other place on the planet.  London is cosmopolitan and used to hearing foreign voices and foreign money being spent on every street.  Wealth has flowed into the capital with many acquiring personal wealth too through better paid jobs, pensions and disproportionate property price increases compared to the rest of the UK.  An artificially strong pound also helped London as the financial capital of the World as we were seen as a safe custodian of the World’s wealth.  Clearly, there is a lot at stake for London with a hard Brexit and many want a soft Brexit.  It  is clear why the South East voted to remain.

Why did so many vote to leave?

Ashley comes from a 200 year long line of trawler men in North Lincolnshire.  In 1970, Grimsby was the largest fishing port in the UK.  Before EU entry in 1973, there were over 400 trawlers registered out of Grimsby, by 2013 there were just 5 registered and that is just one port alone.  You can guess how Humberside voted.

Looking at the Midlands, where he grew up, before EU entry there were 90 British motorbike manufacturers, now there are around 18 and none are mainstream, they are specialists.  Ask yourself, how many British car brands are out there today compared to bygone days?  How many of those UK brands surviving today are actually UK owned. Rolls Royce is owned by BMW, Jaguar is owned by Indian group TATA, Aston Martin is only just about British again after a buy-out but there are still huge, near majority stakes held by Ford and an Italian private equity firm.  Today, new Aston Martins are powered by Mercedes engines.  Since EU entry, the Midlands engineering sector has been wiped out or bought.  You can guess how Midlanders voted.

Shipbuilding:  Britain used to have both the largest Military Navy and Merchant Fleet in the World.  Today, with the exception of military vessels, most recently ordered commercial vessels that could have been built in shipyards in Scotland, Belfast or Tyneside, were built in Italy, Germany or Poland due to EU tendering rules.  It is the same with the railways, Britain literally laid the railways of the World but who built the DLR rolling stock?  They were not UK built.  You can guess how Tyneside voted.

Not forgetting certain steel, mining, weaving, sauce brands, chocolate brands, paint brush brands etc that were huge Wales, Midlands and Northern employers, all now foreign owned and mostly gone overseas.

Regional Divide

Most of the UK has not benefitted to the same extent that the South East has from being in the EU.  Are these reasons why so many voted to leave?  To accuse Brexiters of being uneducated or racist is totally unfair, to accuse Remainers of moaning and wanting to reverse the decision or block the vote is also unfair.  It is our personal experience and the future for our children that has shaped all of our views and how we each voted.

The South East voted to remain because economically, people living in the South East have benefitted from EU membership.  Most of the rest of England voted to leave because they have not and will likely continue to not benefit from EU membership.

Both sides have valid arguments to leave or remain. But their own experiences have shaped their views.

Who’s fault is it all?

Unelected Eurocrats?  Partly, the idea of a full European Union with free movement, peaceful nations and close economic relations is an ideal that we all like and want but EU members have totally different systems for health care, benefits, pay, infrastructure investment, agricultural policy, immigration and more.  Our legal systems, local and central government systems, social customs, language etc. are all different.  This was not tackled by the EU.  Indeed, even now, some countries threaten the UK with a tough Brexit, i.e. Britain must pay.  Does this mean the EU is only being held together by fear of reprisal if you decide to leave?  How many more would leave if exit was easier?  Indeed, when David Cameron went to Europe to try and change benefits rules before the referendum, he came back virtually empty handed.  This was an unelected Eurocrat mistake, having no idea how people really feel about an unfair system, with detached personnel running our lives.  Did you know there are 10,000 people working within the EU “administration” who earn more than our Prime Minister?

Blame also lies with UK politicians. Politicians have consistently ducked the issue on archaic State Pension, care and the NHS systems.  These systems were designed in the 1940s for a population that did not live as long, nor was as large, yet politicians of all parties did nothing when each was in power and we simply cannot afford it.  When multiple industries in the UK were collapsing all over the country, politicians did nothing and played court to Bankers, allowing the UK to now rely totally on revenue and taxes from the banking system.  Politicians have ignored the industrial Midlands and North for decades, the engine houses that put the Great in Great Britain, “Made in Britain” is sadly something we rarely see now.  They have also ignored the coastal industries, the agricultural industry and more.  They even approved a high speed rail link to London, again empowering London, rather than building high speed links between ports and industrial centres to get raw materials and manufactured goods in/out quickly at lower cost.  Most of the population outside of London is disenfranchised from London, let alone Europe.  This was not an uneducated vote, it was a disenfranchised vote.

So what of the future?

George Osborne’s idea of a “Northern Powerhouse” is still a valid one and should still be pursued.  To spread economic risk not just today, but forever, Britain needs to reduce its dependence on Financial Services and London (and this being written by a person who works in finance, lives in London and has benefitted from the two).

It is an absolute joke that hundreds of thousands of low paid Eastern Europeans come to Britain each Spring to work our land and pick our fruit and veggies when there are 1.62m unemployed people in the UK, doing nothing for their money.  As a nation, we have become soft and won’t get our hands dirty unlike our forefathers or our EU friends.  Training, investing in growth industries, investing in people and getting rid of the "something for nothing" culture is a must.  Britain, like we have said before of Greece, needs to be mobilised with a fair day’s pay for a fair day’s work and be set to work and contributing to society.  Both Germany and Japan recovered quickly from WW2, why?  Because people had to work for food.  They cleared debris and they built factories quickly for food, survival and growth.  Our politicians need to stop “fat cats” bleeding companies dry with no bonuses and no dividends until pension deficits are gone and every single employee is at least paid a National Living wage i.e. zero reliance on tax credits or benefits, before any dividend is declared.  Politicians also need to tax international corporations properly.  Wealth created in Britain should be taxed in Britain.  If a burger company or coffee house does not want to do this, then we should start our own UK brand burger company, coffee chain, mobile phone company et al.  Will politicians take these unpopular, yet needed decisions?  No, we suspect they will “duck” them.

The future is likely to be an in-between, medium, “soft boiled” Brexit.   Britain is not a major player in Europe now, it is 27 nations combined versus 1.  It is the EU that will dictate how we exit, not Britain dictating how we leave.  Both UK and EU Politicians will likely go for the easier option, a soft Brexit.

What does this mean for our pensions and investments?

We do not know.  We believe it will take at least 10 years and possibly 20 years for the UK to recover and prosper outside of the EU.  We guess there will be higher taxes, lower tax breaks and a gradual move towards “Made in Britain” as the £ remains weak making our exports cheaper and a move away from reliance on Banking as many Banks will relocate at least some of their services to the EU to retain full market access whether the result is a soft or hard Brexit.  We also see a weak £ for at least a decade which presents an opportunity to develop a “Northern Powerhouse” with British manufactured goods cheaper overseas.

Britain will not implode, either way, hard or soft Brexit, we will survive.  After all, we survived for 1900 years without the EU and 43 years in it.  As the wartime poster said: “Keep Calm and Carry On”.  There will be industries that win and others that lose, but that happened too after we joined the EU in 1973.  So many countries outside the EU are not in large scale trade deals and they survive, so will the UK.  We just wish people, including politicians, would stop bickering and get on with it and stop blaming each other or name calling one side or the other.  The country has voted, whether we like the result or not, the dice has been thrown.

Expect a weak pound for many years.  Expect higher taxes.  Expect trade deals with English speaking former colonies.  Eventually, expect economic recovery and a more entrepreneurial Britain taking shape.  Expect UK property to continue to rise as the population will grow.  Expect stock markets to be as volatile as they have been for the last 20 years.