From joke to giant: Brexit then and Brexit now

This article was first published in the April 2016 UK edition of Accounting and Business magazine.

In the name of producing clarity ahead of the referendum on whether we stay in or exit the EU, all sides – partisans and politicians, lobby groups and economic think-tanks – will be laying down a never-ending barrage consisting of statistics and mud in equal measure. All slung into the public space. Clarity is the least likely result.

It is probably more fruitful to look at how we got here and at the extraordinary differences in the economic and social factors in the UK between the time of the last referendum and now, as we stand on the brink of the next. Frankly, the differences are astonishing. At the time of the first referendum, interest rates were around 25% and mortgages unlikely. The highest rate of income tax – not that it affected any I knew, although the tabloid press made sure that everybody was aware of how deeply it affected the Rolling Stones – was 83%, with a 15% surcharge on investment income taking that up to an eye-watering 98%.

The key economic indicator back then was the balance of payments figure. And there was an obsession with protecting the currency. If you went on holiday abroad, you could not take more than £25 with you. An inspection was undertaken, a declaration made, and your passport stamped to confirm you were not flouting the rules and so endangering the nation’s balance of trade and economic prospects. It’s a far cry from the myths of the golden days of the baby-boomers.

But this was the world of the first EU referendum. The press consistently referred to the UK as ‘the basket-case of Europe’. The economic headlines about the UK across European media were pretty similar to those that Greece has endured for the past 18 months. Germany and France were economic titans, with the UK economy, by comparison, viewed as almost comically inept. 

Mind-bogglingly different

My first few working years in the British economy in the 1970s now seem extraordinary. We experienced the ‘three-day week’, for example, when energy sources were so crippled by political strife that businesses could operate for only three days a week. One government minister appeared on Radio 4’s Today programme to urge all citizens to economise on fuel in the national interest, suggesting we should brush our teeth in the dark to conserve electricity. 

It is probably baffling for anyone too young to remember it happening, but it was how our deeply flawed economy worked. It came as no surprise to discover that the audit client I was working at should decide to paint the glass canopy of its factory white ‘to conserve light and hence fuel’. The economic era of that first referendum is a long way away from where we are now.

And so too were national attitudes as a result of our lowly economic status. No one worried about economic migrants coming and taking our jobs. The big concern was that the huge imbalance between the wealth of the German economy and the relative poverty of the UK would lead to a demographic hollowing-out as UK workers deserted en masse to Germany. A little later on in the 1980s, a popular TV series, Auf Wiedersehen Pet, dramatised the world of a bunch of lads from the north-east of England doing exactly that in Düsseldorf.

That first referendum came at a time when the UK saw itself at the bottom of the European economic heap. People thought we had to become more European to replicate here the prosperity we could see being achieved in Europe.

Fast-forward to the referendum to take place in June and almost all these cultural references have been reversed. The fear now is that Europe is being hollowed out by economic migrants flocking to the UK to enjoy the perceived comparative economic prosperity. 

The UK is now seen as a truly global player. Forty years ago, when inept engineering and labour relations made car manufacture a long-running joke in the country, no one would have bet that UK car production would now be one of the stars of UK manufacturing. The idea that the City of London, then a closed shop at all levels, would now be a serious global leader in many fields and have carved out an unchallenged midway time-zone leadership, between Hong Kong and New York, would have been doubtful at best, laughable at most.

From joke to giant

The last referendum was approached from a position of great economic weakness, this one from a position, by comparison, of great economic strength. And that is the essential difference. It is not something you can measure statistically and then come to what you might feel to be a rational conclusion. It is going to be a decision based on how culturally secure people feel themselves to be. And secure they should feel, as the governor of the Bank of England made clear to the Treasury Committee of the House of Commons in early March.

The odd thing is that it may encourage voters to go for exit. The economy performing so well this time round could paradoxically give people the confidence to think that UK could become a ‘super-Singapore’, not to mention the heady prospects of an indeterminate independence, freedom and self-determination. With one bound, as they used to say in the comic strips, we would be free. That, I think, is unlikely. 

Robert Bruce is an accountancy commentator and journalist