Brace for Brexit: Believe or “Beleave”

June 15, 2016


“Believe you can and you’re halfway there.” – Theodore Roosevelt

I learnt earlier this week that the UK’s most popular newspaper The Sun has correctly called the country’s general election outcome – via its choice of which political party to give its editorial nod too – for over 40 years.  I am not sure whether this also applies to referendums but their stamp of approval for ‘Leave’ as opposed to ‘Stay’ is a weighty call.

Every U.K. citizen has their biases and preferences in the EU referendum debate, but what I do know is that if you have to believe in what George H. W. Bush once famously called “that vision thing.” On this basis, even more interesting than a tabloid front page disclosure were the comments contained in a Pew Global Attitudes Survey.

the sun

I don’t mind so much that three times as many German citizens polled believe that their country plays a bigger role on the world stage than 10 years ago against their British peers, or that there are pretty big divergences across Europe on attitudes towards the use (or not) of force against terrorism, but the stunning line contained in the report that “one of few areas of common ground among the roughly 1,000 people in each of 10 EU states surveyed this spring was the primacy of self-interest.”

Well so much for the European Union then.

As the old WW2 poster noted “loose talk can cost lives” or even political structures and allegiances.

Before we start debating the inevitability that 2016 is the beginning of the end for the decaying, growth sclerotic pan-European movement let’s have a think about “self-interest.” A dictionary definition of self-interest would probably be something like “concern only for getting what you want or need and not about what happens to other people,” but I think what the question really answered is based on a deep preference for liberation rather than control. A little quoted fact is that to be a member of the European Union, a country has to be a democracy and cut from this perspective like motherhood and apple pie, few are going to talk against this.

(Chris J. Ratcliffe/AFP)

You can see this from a later question in the survey which stated that  across Europe ‘”median 74% of those want to see the EU become more globally engaged … although the U.K. bucked the trend, with 55% saying Brussels should play a more active role compared to 90% in Spain and 80% in France.” Predominately the issue is not with a pan-European structure having a role. It is all about what the tone of that role is.

It could be argued that Britain has the best of most world’s in its current European Union relationship. Free trade, almost free movement of its citizens and workers and guaranteed participation on the top table in any of the world’s big macro events. Yes, there are membership costs and regulatory standards harmonization hassles, but their inconveniences do little to outweigh the aforementioned positives. As the majority has stated, our future is ever more globally centered.

And yet the “Leave” campaign appears to have moved into a headline polling lead.

The key is tone and belief. Shifting democracies towards dynamism is never easy. As I have noted here before, supply side change is easily discussed and easily dismissed especially when the major beneficiary is not your current (political) generation. Yes, it is back to “that vision thing.”  Even a decidedly “self-interested” citizen can be easily swayed by lower taxes, sharper bureaucracy and a crackdown on waste and corruption. It happened in the 1980s – in many ways the high point of Europeanism – when elements of the above were combined with the opening of borders, wallets and business coffers. We cannot go back in history, but we can try and copy elements of the zeitgeist and this is what the current “Remain” European debate is missing – unlike its opponents who are in reality probably championing an earlier epoch 20 odd years before where stability and certainty felt more within reach. This has an appeal particularly in the older generations.

I find myself often quoting Say’s law that “supply creates its own demand” and it is true with supply side reform and general citizen and corporate buy-in. Today however, such a nimbler but necessarily pluralistic vision is not really on offer and if too much prevarication continues, it never will be.

In short, get a belief in a European vision or Beleave will do a lot more than sneak up on you.

Sentifi – Brexit Widget


Chris Bailey has just under 20 years of investment industry experience at long-only and long-short institutions as a global multi-asset fund manager, strategist/macro thinker and, in the earlier part of his career, as a securities and fund analyst.

Chris founded Financial Orbit Limited in 2013 and his daily macroeconomic comment and securities analysis with relevance for global investors can be accessed via his Financial Orbit Macro, Financial Orbit Stocks and Financial Orbit Immediate publications, selected summaries of which are posted at as well as his twitter feed. Additionally, Chris undertakes bespoke research and consulting work for a number of global asset management firms on both market strategy as well as global securities analysis. You can reach him on Twitter @Financial_Orbit.

Cover Photo: Bloomberg

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