Brexit will recede into the past ... just like 1066 and all that
... sound and fury signifying nothing.
So it’s official now. EU stands for Eastern Europe. I would not quite say that the Brexit clamour signifies nothing, but I do think the show on Friday was mostly sound and fury that in a few weeks will be focused instead on the Olympic Games.
While watching Donald Trump briefly come on the show to offer his “Hurrah”, however, I heard some people remark that the campaign to leave the EU was the sort he was running in the United States – unthinking and driven by prejudice with the real questions never properly examined in any depth.
There I disagree.
From the late 1940s to the mid-1960s, Britain went through another soul-searching episode of its social history. This one focused on the horrors of murder, the drama of the ensuing trials and the dread of the execution shed.
Do we do this or do we not? That is how the thinking gradually resolved itself into a single question and in the end the answer was definite. We do not. Capital punishment was abolished and there is only a tiny constituency for bringing it back.
The real weight of the deliberations, however, came not in academic journals and formal debates. There were definite arguments to be made about whether capital punishment deters crime and people paid attention, but where the change really came was in the pages of the gutter press.
There the question was presented not in terms of statistics on recidivism, but in personal terms of the lives of the victims and the terror of condemned. People read it, shuddered, told themselves “it could have been me” and then pondered it as they went about their daily businesses. Do we do this or do we not?
Community decisions of this sort are never idly reached. They are deeply considered by everyone in the community, but not always in the ways of professional commentators. And who has ever heard of a village decision being wrong after long and open discussion?
I personally think the Brexit decision was chiefly inspired not by the talk on exports and investment, or even immigration, but by the bureaucratic arrogance of Brussels. That’s the sort of thing that inspires a community decision, an assessment of character. We don’t trust these people. It’s fundamental and it is very much considered in depth.
But then I think Brexit was only the final statement of a goodbye from the EU, which actually began when Britain opted out of the euro in 1992. It was always an oddity to be in the EU and at the same time reject the EU currency. After a while you inevitably have to ask yourself whether you’re in or you’re out.
I also think time will soon show the immediate reaction of financial markets across the world to have been overdone. There are too many kids making the big decisions in dealing rooms these days.
Political dramas do not have a lasting effect on financial asset prices unless they involve large-scale destruction of the assets or fundamental changes in market liquidity and underlying rates of return. This has not happened here.
Tomorrow people in Britain will get up, have breakfast, go to work, have lunch, work again, go home for dinner, watch the telly (or play with their smartphones) and then go to bed. They will do the same next day, the next month and the next year.
All during this time that wonderful self-adjustment mechanism called the economy will go through its adjustment routines of up and down movements in pound sterling and interest rates to balance out the forces on it and Brexit will recede into the past, just like 1066 and all that.
By mid-August already you will find people saying, “Brexit? Was he in the 50-metre hurdles or was that the javelin?”
Can you remember who won the 1998 World Cup? If you watched it, did you not jump up, shouting in delight or dismay when a goal was scored in the final? What does it mean now?
Sound and fury signifying nothing, well, maybe a bit more than nothing with Brexit, but not much.