Black Day

So a narrow vote ( although it might as well be overwhelming ) to leave the EU. As I write this at mid morning on the Friday we already see two consequences as the pound plummets and Cameron resigns. I can’t say I’m a huge fan of Cameron’s but he is vastly better than any likely replacement including Boris with his bumbling. I will find the gleefulness of the likes of Nigel Farage very hard to stomach.

It seems clear that the referendum was decided on immigration. I fear that the bigots carried the day. Plus I notice from the demographics of the vote how many older people are backwards looking. I have always seen a dark side to the kippers with a nasty undertone of racism. I would like to think the success of the anti immigration message is largely down to ignorance and prejudice but I think we can’t ignore the really worrying undertone of racism. Those who think that coloured faces will start to disappear will be disappointed.

The economic consequences will be only too apparent. My central prediction( remembering all the warnings about prediction ) is for a period of severe turbulence followed by some sort of plateau and a long period of relative economic decline. However I find that for the first time ever I wouldn’t be too averse to a recession to bring people to their senses. There is a significant chance this will happen.

The plunging pound will help exporters to the extent it makes their wares cheaper overseas. We will see the effect immediately at the petrol station and after a very short delay in rising prices in the shops. The dragon of inflation could arise again.

I see that the Bank of England is making 250 billion available to banks to try and mitigate the shock. While short term measures might help there is very limited long term room for support to the economy. With interest rates already very low there is little chance of sufficient reductions to ward off recession.

The irony of this is that the leavers don’t care. A further irony is that long term immigration will drop because the UK economy is no longer attractive. The final “joke” is that the touted Norwegian or Swiss models will require free labour movement anyway.