Michael Gove, who is likely to be the person most responsible for setting the parameters of Britain's negotiation with the EU after a leave vote, indicated on the BBC Today programme the UK will not stay in the common market. We would seek a free trade agreement like Albania, or Iceland.
This means the risks of #brexit have gone up. The prospects of a risk-free slip into the EEA have gone. We must therefore run the risk of the foreign investors on whom we rely to cover are triple deficit (current account, fiscal and trade) going on strike.
Where this to happen, In order to tempt them back, the Bank of England would need to raise interest rates , which slows growth. The UK may not be a default risk , but as a country with I need for constant inflows of foreign capital we may need to print more money to cover the bills . Investors will therefore need a higher return to compensate for the risk.
This is one mechanism by which leaving the EU could slow growth. There are others. The UK may become a less attractive place for foreign companies to invest. And not just because of access to the single market. For all its faults, the EU has been consistent in its application of laws surrounding state intervention in business and preventing government's interfering too much in markets. Leaving risks that benign business environment.
The risk therefore of a catastrophic cycle of interest rate hikes and currency issues has to be set against the sheer paucity of the potential benefits from leaving the EU . Just what are we hoping to achieve? Why are we risking prosperity in this way?
An honest answer would make use of Gandhi's aphorism " it is better to be governed badly by oneself, than well by other people." If it is simply about democracy, then supporters of brexit will need to be honest about the potential economic costs.
The post EU UK could become the free market prosperous business-friendly place of brexit fantasy, but it could equally become a paranoid insular protectionist hell hole of UKIPpery, or worse yet, the Labour Party could nationalise everything in sight. These are both outcomes European Union protects us from.
The problem is brexit becomes a tabula rasa on to which everyone can paint their own ideal post EU UK . Then arguing against brexit becomes an argument against everything that person holds dear. Many have spent decades seeking confirmation for a prior belief that the EU is behind all the bad things. Nothing can persuade these people that leaving the EU isn't a panacea to solve all the UK's ills. It's a peculiar Mania.
The lesson of the ERM debacle is not that the EU is evil, but that the UK should not have joined the euro, and we didn't. It doesn't follow we should leave the EU too. The EU is not the enemy. The UK is not going to join the euro. EU is not going to Force the UK into a superstate, a European army, or a single currency.
The European Union is a collection of some the freest, most prosperous and happiest democracies on Earth. The Euro project has impoverished half the continent on the altar of political vanity. But that is not the question we are asking in this referendum. We are asking specifically whether the UK should leave the European Union.
What are the benefits of leaving the EU? If they aren't economic, they seem mostly to accrue to politicians who gain greater freedom to interfere in our lives. And what do we the people gain, to offset the probability of a negative economic outcome?
Will we lose the right to live, work and travel at will from Helsinki to Lisbon and from Warsaw to Dublin? Probably not, but it's a risk. Will UK be better off economically speaking speaking? Probably not. That means people will lose jobs.
The risks are real, the benefits seem ephemeral. And very fact that we are having this referendum now means should the EU develop in a way that is an anathema to British interests, for example if as I am told is "inevitably" going to happen, the Euro is forced upon the UK, we can always leave another time. The very fact of this referendum undermines fatally the sovereignty argument.
Thankfully the polling seems to indicate the remain campaign is winning.