People’s Vote Rally: Professor Sir Anton Muscatelli’s Speech

Speech by Professor Sir Anton Muscatelli

People’s Vote Rally, Augustine United Church, Edinburgh

Saturday 26th January 2019

Good morning everyone and thank you very much for the invite to speak to you here today.

I’ve been allocated a very strict 15 minute window in which to speak – although we’re going to hear a lot this morning about the need to stop the clock and grant more time, so I hope the Chair will take that into consideration if I over step the mark slightly.

As you might already know, I am the Principal of the University of Glasgow and Chair of the First Minister’s Standing Council on Europe – but I am speaking today very much in my personal capacity as an economist, and I’ll try to lay out what I think the economic consequences will be for Scotland, before perhaps reflecting on the situation more widely.

By now, my views on Brexit are presumably well known.  A few months ago, I described our looming exit from the EU as “the most unhinged example of national self-sabotage in living memory”.  It won’t surprise you to know that nothing has happened since to change that view.   Indeed, as I see some politicians in Westminster playing a high-stakes poker game with the livelihoods of the people in our country, my view has hardened.

It doesn’t need an economist to tell you that Brexit is going to be an unmitigated disaster for the UK economy. And much of the impact will fall on those who can least afford it. And Scotland will be no different.

The Scottish Government document Scotland’s Place in Europe: People, Jobs and Investment sets this out in rather stark terms.

Under the least worst-option – that is leaving the EU but remaining in the single market – we would see Scottish GDP fall by 2.7 per cent.

Unfortunately, that least-worst option was ruled out from the beginning of the negotiations by the Prime Minister given her red lines. And the road to where we are was not helped by the similar, if at times impalpably fuzzy and implicit, red lines set by the Leader of the Opposition and some of his advisers.

The only logic I can see is that if you’re going to seek to cause unnecessary economic damage for the sake of an ill-defined ideological goal, then you may as well go all out.

If we do end up approving the withdrawal agreement and the PM’s direction set out in the Political Declaration, and we did in say 4-5 years negotiate a preferential UK-EU free trade agreement – the Canada model – we could expect a hit to GDP of 6.1 per cent, equating to £9bn in cash terms or £1,610 for every man, woman and child in the country.

That this would be the outcome of the preferred option of most Brexiteers should give us serious pause for thought.

Under a WTO terms – i.e. a No Deal scenario – the Scottish Government estimates that we would see GDP fall by a staggering 8.5 per cent – resulting in a loss of economic output up to £12.7bn terms. Now it may be worse because that’s a forecast for 2030. It is very difficult for any economist to forecast the chaotic economic conditions which would prevail if we crash out on 29 March.

It’s an analysis which is not partisan. Most similar analyses, indeed including the Bank of England and the UK Government show similar figures. Indeed in February leaked UK Government analysis suggested that the hit to Scotland would lose even more: GDP would be 9% lower than staying inside the EU!   By the UK Government’s own analysis that is what No Deal would mean for Scotland.

In Scotland, we also have a very specific demographic problem – one which we’ve been making some progress on in recent years, which will be entirely wiped out and reversed by Brexit.

For generations, our inability to sufficiently expand our population base has troubled policymakers and politicians alike. The desire to increase our numbers has never been seen as an end in itself, but rather as a necessary tool to stimulate economic growth, entrepreneurship and to expand the tax base that pays for the delivery of sustained social benefits for all.

In recent years, progress has been made– but most of the increase is down to inward migration from other parts of the EU. Talented individuals who have sought to make Scotland their home, on either a temporary or increasingly a permanent basis.

More than 180,000 EU nationals were resident in Scotland in 2015 –3.4% of the total population, yet accounting for 4.9% of the total workforce – significantly higher than their population share. These individuals, and their families, contribute massively to the skills base. As wwell as to our culture and to our society.

They pay taxes which help sustain and deliver vital public services in health, education and transport. This is clearly even more important now that the Scottish Parliament is wielding its tax powers.

Unless there is a serious shift in rhetoric and policy, and within that a willingness to grant a differentiated deal on immigration for Scotland, we face the real possibility that the important progress on population growth will be reversed.

The impact of that on our economy, our tax take and our ambitions for society could be catastrophic for Scotland and take generations to overcome.

Far beyond the social and cultural value they bring to our country, the simple, economic fact is that Scotland needs EU migrants if we are to come anywhere close to realising our full potential as a nation.

Failure to guarantee this is, in effect, a conscious policy choice to damage Scotland’s economy – a decision that could only be taken by a government willing to sacrifice the economic and social future of this country on the bonfire of an extreme ideology.

But with all this said, what can be done to stop it?  As many of you know at the start of this process I felt that the softest of Brexits was the only compromise if Brexit was to proceed. But at this stage, with a negotiation which has been conditioned by the UK red lines, and without a single vision in the UK Parliament of what that looks like, it’s difficult to see that outcome.  So, in my view, there is only one solution: to request that the EU allow a brief extension to Article 50 and to hold a People’s Vote.

Arguments that such a vote would be undemocratic are barely serious – there could be nothing more democratic than allowing the people of the UK to speak clearly on what is the most important issue these islands have faced since 1939.

This is not some high-minded, idealistic wish; it is realpolitik, an admission that the Parliamentary process has failed to find a way through the impasse.  The UK faces an unprecedented political crisis and only the people can get us out of this mess.

The government has been unable to secure an appropriate deal.  Parliament has been unable to offer a suitable alternative.  Giving the people the final say is, in my view at least, the only remaining option that could avoid us being dragged over the cliff-edge into economic catastrophe.

At Prime Minister’s Questions earlier this week, Theresa May argued that delaying Brexit and continuing the debate would be pointless and would not solve anything.  In that limited sense, she’s absolutely right.

There is no way to fix Brexit.  The problem can’t be solved.  The square can’t be circled.

The Prime Minister’s red lines are so restrictive as to have forced her into a corner, boxed her in and tied her hands.  She has nowhere else to go. This is why plan B looks very like plan A. The plan is to run down the clock and to seek vague reassurances on the backstop. The EU will not concede legal reassurances and so the plan is to make the political declaration even vaguer. The blindest of blind Brexits.

The unicorn hunters still labouring under the belief that there is a better, bespoke deal to be negotiated with the EU while refusing to accept Freedom of Movement are barely trying to engage in serious politics – this is pseudo-politics, completely failing to live up to the gravity of the crisis now engulfing the UK.

They are modern day alchemists, desperately trying to turn their base metal into gold – but we all know how that ends up.  Base metal won’t turn into gold and Brexit isn’t going to turn into anything less than an unmitigated disaster – regardless of any imagined deal which provides all the benefits of the single market, with none of the obligations.

The UK is in the midst of a genuine constitutional and political crisis – many politicians have failed to provide the leadership necessary to drag us out of it.  And it is that failure by politicians which means that the People must now take back control of our destiny.

Of course, any People’s Vote could result in another vote to Leave, which would then be taken as the mandate for the hardest of Brexits.    In the event of another vote, it is incumbent on all of us to learn the lessons of the 2016 referendum and to make the positive case for the many gains our EU membership guarantees us.

That positive case is there – the case for continuing to work in partnership with our friends and neighbours across Europe needn’t be a dry, technocratic one.

It’s about preventing job losses and ensuring continental investment and trade continues to pour into Scotland and the UK.

It’s about preventing a race to the bottom on workers’ rights and standing in solidarity with our friends, neighbours and colleagues who have made Scotland their home. That’s the real argument behind the four freedoms. It’s about creating a level playing field.

And it’s about ensuring that the economic catastrophe staring us in the face does not fall – as it would – on those who can least afford it.

Above all, as was stated so clearly in the Treaty of Paris and the Treaty of Rome, it’s about preserving peace in Europe. It’s about using freedom of movement within the EU as a way of ensuring that integration which will prevent future conflict in Europe. Young people at my University keep telling me how much they value that feeling that they belong to a common European home. Where being a citizen of an EU country does mean being the citizen of somewhere. It means feeling proud of your national identity whilst still feeling that you belong everywhere in Europe. In contrast to the Prime Minister’s thesis, it’s about being a citizen of everywhere  in Europe – not a citizen of nowhere.

I believe this is the defining issue – and the coming months will be the defining time – of our generation.

It has never been more important that those of us who value our relationship with Europe – who value what it means to be European – make our voices heard.

Given the intellectual, economic, moral and social vacuum at the heart of the Brexit proposition, this is an argument that is there to be won.

Will we sink further into the mire of negativity, protectionism and xenophobia, or will we strike back against it, acting as a beacon for the rest of the world that has seen these negative forces in the ascendency far too often in recent times?

And if the energy and strength of purpose of those in this room today is anything to go by, I am sure that we will prevail.