On the eve of the Brexit vote I was sitting in a restaurant in Hungary having dinner with a group that included a British freelance journalist who also farms in the UK. She correctly predicted the then-pending referendum would fall in favour of an “out” vote, which would remove the UK from the European Union. But what was most memorable about that conversation was she said most farmers she knew told her they were going to vote “out”, despite the large subsidy payments they all receive from Brussels.
How much do those EU subsidies amount to? Hold on to your hat. She told me her family’s farm was not particularly large by British standards, but at the end of the year they walk into the bank with an annual cheque for more than 40,000 UK pounds! Before the pound collapsed a day later, that converted to more than C$60,000. Larger farmers receive considerably more.
I guess Sir Elton John was right when he sang, “Your money can’t buy you love”. Not if you’re the EU, anyway.
I would have thought that under those circumstances farmers would be feeling a lot of love for the EU and count among the strongest supporters of an “In” vote. I’m sure many did vote that way, but anyone who turns their back on that kind of coin is cutting off their nose to spite their face.
In listening to the in-out debates on British television during my stay in Europe, I heard some people dismiss that loss by saying they expected subsidies to continue, coming directly from the UK government and funded largely by savings from not paying membership dues to the EU. Others pointed out that the many potential costs the country would face after leaving the EU will far outweigh those savings, putting farm subsidy funding at very high risk—at least in the short term.
As an outsider listening to the in-out debate, the whole thing seemed surreal. At the same time, it was also a little familiar, sounding a lot like Quebec’s stay-separate debates from a few years ago. These things always seem to have one thing in common: emotions overrule common sense and true self interests.
People in favour of leaving the EU who were interviewed for the news always said they were willing to accept the short term pain certain to occur if the country opted out. Many said they believed the short term disruption would be minimal. Not surprisingly, the days immediately following the vote have proven the opposite. Almost instantly, billions of pounds of net worth held by British citizens and corporations on the London exchange was wiped out. Granted, it may come back—eventually. But other stock exchanges around the world also saw significant losses. As of today, CNN reports resulting global losses now amount to U.S.$2.1 trillion.
Many corporations have publicly reported they’ve put further British investment on hold until the future becomes more certain. Many are talking about leaving the UK for continental Europe to ensure future EU market access. For months now, manufacturers have seen many farmers put off buying new farm equipment until their future economic situation becomes clearer, which further helps spread the economic pain far beyond the British Isles.
The worst thing about the whole Brexit affair is, according to many observers, the referendum itself and the posturing of some politicians seemingly in favour of an “out” vote were simply political maneuvering meant not to actually spur a Brexit, but instead further personal political gains by politicians painting themselves as national champions. From what I’ve seen, those assertions sometimes do seem to ring true, meaning all this upheaval was likely unnecessary.
That kind of political posturing seems to also be occurring now in the U.S., with Donald Trump inciting a lot of knee-jerk nationalist reactions from another electorate fuelled by emotion to help him win the White House.
Nationalist movements are gaining political popularity elsewhere too, particularly Sweden and France. There is a growing threat they will also pull out of the EU, magnifying the Brexit phenomenon. That kind of hyper-nationalism in many countries today is contributing to market volatility and making the world a much more complicated place.
That’s never good news.