EU Referendum Part II: Even Further Out

TOSCAFUND Discussion Paper
April 2016 The EU Referendum Part II: Even Further Out
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In February Toscafund produced a Discussion Paper which considered
the approaching referendum and reached an unequivocal conclusion
that being out of the EU would be beneficial. This second instalment
touches upon a variety of themes, raised over recent weeks
concerning “The Brexit debate”. They have been written only where I
have had a sense that something has gone unsaid, been poorly argued
or has been misrepresented.
themes touched upon range from the potential of Brexit to trigger
‘double-departures’ – involving Scotland and Downing Street, neither
of which should be seen as calamitous – to an argument that any
economic ‘disruption’ which Brexit might trigger – as voiced by the
Chancellor – should not in fact be feared but mostly welcomed. I also
go on to not only debunk the feared post-Brexit spike in food costs,
but to argue that household grocery bills could easily prove lower,
free of EU market abuse.
There is a piece which draws upon ‘The Italian Job’ for a 1960’s
cinematic lesson as to the long-term nature of the UK’s involvement
in Continental Europe. The idea of international collectivism is also
covered by comparing what the European Union affords the UK
relative to what a more dynamic and considerably more expansive
Commonwealth promises. I spend a moment considering the ‘vested
interests’ from within the UK involved in the debate supporting IN, as
well as the role German self-interest has played in shaping within the
EU a ‘first amongst equals’ hierarchy, which has brought us to a point
where we in the UK should finally begin to serve our self-interest by
opting to ‘Leave’ it. Indeed, one particular vignette makes clear that
even if Brexit is not achieved this time, it is only a matter of time
before it happens, with much discomfort between times by not going
now.
The research also makes a case to debunk concerns that Brexit would
restrict air access and lift fares to and from the UK and the EU. It is no
less dismissive of the fear it would dampen investment into the UK.
There is a section which explains why if we want to see the most
extensive devolution of economic management across the UK the
best policy for ALL parts of it is to be free of the European Community.
In an age of celebrities weighing in to wield their influence on serious
issues I touch upon the danger of taking comedians seriously.
Throughout, I try to deal with the objections and fears being voiced
over Brexit which are coming at us very thick (sic) and extremely fast. I
will of course draw the line when we are told Brexit would increase
the probability of the UK being hit by an asteroid, for believe me one
of those is coming.
Author:
Dr Savvas Savouri
Contact information
Toscafund Asset Management LLP
90 Long Acre
London WC2E 9RA
England
t: +44 (0) 20 7845 6100
f: +44 (0) 20 7845 6101
e: ir@toscafund.com
w: www.toscafund.com

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Contents page
1. In praise of the self-preservation society.....................................................................................................................3
2. BRIC’in Brexit?.........................................................................................................................................................................5
3. Britain’s impressive Common Wealth beyond Europe...........................................................................................6
4. Unacceptable German behaviour ..................................................................................................................................8
5. The EU: Agent double-0 0................................................................................................................................................10
6. Debating a double departure: Brexit then Sexit?...................................................................................................12
7. Brexit would turn devolving doors ..............................................................................................................................14
8. ‘Double-Departure’ II – this time it’s personal.........................................................................................................15
9. A very personal refugee story ........................................................................................................................................16
10. It’s all the same in ‘The End...’.........................................................................................................................................18
11. The referendum debate: I’m a Celebrity... .................................................................................................................19
12. Flight of Fantasy..................................................................................................................................................................20
13. Make Us One again.............................................................................................................................................................21
14. The disgrace of not disqualifying oneself .................................................................................................................22
15. Food for thought on Brexit .............................................................................................................................................24
16. The EU: Where mutton is dressed as lamb................................................................................................................25
17. Shifting alliances .................................................................................................................................................................27
18. The mandates of the EU and London Assembly are Polls apart.......................................................................28
19. The story that many will not tell....................................................................................................................................29
20. Brexit: an educated option..............................................................................................................................................30
21. Promotion Out of the European to the world league...........................................................................................33
22. The UK’s OUTward investment appearance.............................................................................................................34
23. No need to steel ourselves for sterling weakness..................................................................................................35
24. Beating steel drums ...........................................................................................................................................................36
25. Brexit: In my Defence.........................................................................................................................................................38
26. Welcoming of our tax disharmony when outside the EU ...................................................................................40
27. Whose case exactly needs to be answered? In my defence too.......................................................................43
28. Why Brexit is a better bargain for us............................................................................................................................45
29. Good trading practices.....................................................................................................................................................47
30. Thinking twice about the numbers .............................................................................................................................48
31. Euler never quite expect certain changes.................................................................................................................50
32. The referendum – Voting to Stay or Leave, and a broken nose........................................................................53
33. The Truman Show...............................................................................................................................................................54
34. Seeing Europe in 2020......................................................................................................................................................57
35. Wacky European Races.....................................................................................................................................................58
36. Fear the real serpents not imaginary sharks.............................................................................................................60
37. Valued migration points...................................................................................................................................................61
38. Trigger happy contracts...................................................................................................................................................63
39. Staying ‘In’ – Dear, oh financially dear........................................................................................................................65
40. The insanity of the ECB .....................................................................................................................................................67
41. Condemnable damned economic lies........................................................................................................................68
42. ‘Remain’ simply won’t wash............................................................................................................................................70

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1. In praise of the self-preservation society
Few British films have gained the cult status of 1969’s ‘The Italian Job’, written by Troy Kennedy Martin (who
had earlier given us ‘Z-cars’ and, less than a decade later, would script the classic TV serial ‘The Sweeney’).
‘The Italian Job’ has it all, the iconography of swinging London as well as car chases through the industrial and
often chaotic architectural majesty of Turin. The film begins with Charlie Croker (Michael Caine) being
released from prison wanting to get back to “work”. Although the film includes any number of memorable
scenes one stands out; having watched an entire van blown to pieces, Charlie Croker cries plaintively to the
witless gang member Arthur (Michael Standing) “you were only supposed to blow the bloody doors off”. Such
humour never stopped even during musical interludes involving a soundtrack by Quincy Jones and Don Black
and the dulcet tones of Matt Munro, singing “On days like these”. The film was filled with beautiful women,
not to forget the peerless Irene Handl. Other cast members the film could boast included, John Le Mesurier
and Noel Coward, the former as the Governor forced to apologise to the latter, the panjandrum inmate Mr
Bridger, for Croker breaking into ‘his’ prison. As well as delightful cameos by Benny Hill and Fred Emney (if
ever a bulldog took on human form, it was his) the film managed to blend working class and posh boys
(“chinless wonders”) into a single ‘firm’ (“now, it’s a very difficult job, and the only way to get through it is as a
team, which means you do everything I say”). There was even a character, Camp Freddie (Tony Beckley) who
was Mr Bridger’s “man-on-the-outside” always sporting something in pink, and Big Willy – “for obvious
reasons” - the driver of the coach. As well as providing men of the certain age – I admit mine – with endless
chances to reminiscence, and indeed to regress, I believe ‘The Italian Job’ has a contemporary relevance to the
UK’s ‘IN/OUT’ EU referendum.
The film, of course, predates the UK entering the European Economic Community (the forerunner of the
European Union). In fact the underlying premise of ‘The Italian Job’ was not European unity but rivalry across
it. More specifically, the plot turned on the competition between a British and Italian gang to get their hands
on the $4 million China was sending to Italy for Fiat to build a factory in China (in the book, which followed the
film, a German gang would be included in the competitive fight for the Chinese money; there is also
interference from the Mafia’s US side). Notably on the theme of international capital flows the script has
Croker phoning ‘the fixer’ Camp Freddie and pleading “Tell Mr Bridger this is a foreign job to help with this
country’s balance of payments”.
If one particular moment evokes where we find ourselves, it is the scene involving an impeccably tailored,
sinister, but softly spoken mafia ‘Don Altabani’ played by Raf Vallone, accompanied by his heavily armed
henchmen all in sunglasses and trilby hats. These are lined up looking down on the Alpine road where our lads
have been intercepted on their way into Italy. First the two E type Jags then the Aston Martin DB4 convertible
(“pretty car, paid for?”) are bulldozed and sent into the ravine below. After a brief reflection on this
intimidation and mortal threats, Charlie Croker counters with this:
“You’ll be making a grave error ... there are a quarter of a million Italians in Britain, and they
will be made to suffer. Every restaurant, cafe, ice cream parlour, gambling den and night club,
in London, Liverpool and Glasgow, WILL BE smashed. Mr Bridger will drive them into the sea.”
This point was clear, hurt Britain and Britain will retaliate. Realising this is not an idle threat ‘Don Altabani’
reflects with a smile before pointing with his sunglasses in a northerly direction with the words “Well
gentlemen, it’s a long walk back to England, and it is that way; good morning”. As we know Caine and his team
would not be cowed and chose to see out ‘The Italian Job’. They after all still had their trinity of red, white and
blue Mini Cooper S’s, a Land Rover, a Ford Thames van and a Bedford coach; all ‘Made in Britain’.
To repeat, it may be close to fifty years old but the film resonates with contemporary themes. The Caine
mountain speech has its own contemporary relevance in the face of EU threats were we to vote for Brexit;
sanction our goods or our nationals, and we will act on yours.
Since cars feature prominently in the film (“remember in this country they drive on the wrong side of the
road”) it is worth spending a moment on their fortunes (after all to quote from a book by Matthew Field it was

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“the greatest commercial ever for any car”). In 1969 the Mini Cooper S, Aston Martin DB4 and E type Jaguar
were global engineering and design icons. Sadly within a handful of years Britain’s automotive industry had
fallen on hard times. This included the three brands showcased in the film, all struggling with build quality,
labour disputes and woeful state management. Fast forward, however, through the supply-side labour market
reforms of the 1980’s, the state de-engaging from public ownership and Britain keeping sovereignty over its
currency and interest rates, and all three marques are back and are thriving, producing more cars than ever
before from British factories (albeit foreign owned).
True, the original Fiat 500 also featured prominently in those Turin streets and it too has been successfully
revived as indeed have the Alfa Romeo and Lamborghini marques which also featured in the film (not always
flatteringly it has to be said). There is, however, a marked distinction between the scales of these revivals; the
UK’s far stronger than that enjoyed by Italy. Indeed, if we move from the volume of British cars being made to
their unit value and export share, our car makers have “never had it so good”.
Chart 1: China’s FDI, 2005-15: Britain vs. Italy Chart 2: Vehicle production, Britain vs. Italy
Source: American Enterprise Institute and Heritage Foundation, OICA, WARD, RITA, Wood J. (Motor Industry of Britain Centenary Book, 1996), Toscafund
To recap the film’s plot back in 1969 was to ‘redirect’ to Britain the Chinese capital intended for Italy. The
reality now is that China’s foreign direct investment into the EU is directed in its largest amount to the UK.
Crucially, the Chinese capital which has recently been entering the UK has not been to finance the building of
industrial or commercial property in China, but to invest widely across the United Kingdom itself. In short,
today we are not seeing Britons making their way to Italy to take advantage of events there but witnessing
Italians heading to our shores to carry out ‘A British Job’; taking up work in finance, education, health services
and indeed extensively across many sectors. Italians are far from being alone in seeking to do A British Job,
French and German nationals keen to do so in growing numbers as indeed continue to do the Polish et al.
Keep in mind these arrivals are not at the expense of Britons. After all, whilst there have never been more
foreign-born nationals working across the UK, neither has there been a time when more of us have been in
gainful employment or seldom fewer of us – as a percentage – out of work. For their part vacancies are at a
multi-year high.
Frustratingly because of the intention to have a sequel, the conclusion to ‘The Italian Job’ was left hanging,
quite literally. For my part, I have always drawn hope from the last line “hang on a minute lads – I’ve got a
great idea”. Who after all amongst us didn’t want them to get away with it?
In closing I like to think this homage and contemporary economic references to ‘The Italian Job’ will be
welcomed by its star. Mr Caine has after all stated publically he has no fear of being outside the EU, nor any
shame in being a member of the Brexit “self-preservation society”. In fact let me quote what its producer
Michael Deeley said back in 2002 of the Italian Job, “it was the first euro-sceptic movie”.
8.5%of total
6.9
3.6
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2.4 2.3 2.2 2.1 1.9 1.8 1.7 1.7 1.6 1.5 1.5 1.5 1.5
0
20
40
60
80
100
120
USA
Australia
Canada
Brazil
Indonesia
Russia
Nigeria
Britain
Pakistan
Kazakhstan
Malaysia
SaudiArabia
Venezuela
Argentina
Italy
India
Algeria
Vietnam
Peru
Iran
Ethiopia
Billion,US$
0.0
0.5
1.0
1.5
2.0
2.5
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Million
Italy UK

5
Trumping the STAY campaign
Those campaigning for us to vote we ‘Stay’ within the EU have the advantage that an ‘Exit’ would involve change,
and the “fear of” change brings on paralysis, what Milton Friedman described as “The tyranny of the status quo”.
Let me consider two of the most recent warnings which have come from the ‘IN’ campaign. We have heard from
Nick Morgan, the Education Secretary, that voting for Brexit puts the prospects of future generations at risk. Now
that is scary stuff. But then again so was “Alien” and I know that wasn’t a documentary, but a work of fiction. And
works of fiction are precisely what we are getting from the ‘IN’ campaign. Indeed I would not be surprised if we get
a story that Brexit would increase the probability of the UK being hit by an asteroid. Anyway let me move to the
second piece of ‘Stay’ campaign hyperbole; not that in identifying two such instances I am exhausting the contents
of Project Fear. To arouse the “undecided’s” who are keen on watching professional football, the ‘STAY’ campaign
has claimed that many hundreds of our favourite players would have to leave our shores. I will not respond with the
ridiculously clichéd argument that this would allow us to develop “home-grown talent”. What I will answer with is
this: why should Brexit involve any wholesale evacuation from the UK?
I fear ‘Stay’ campaigners have got their lines crossed between our upcoming referendum and the ongoing US
Presidential Primaries. In fact, I find the narrative coming from the STAY campaign as absurd as that emanating
from the lips of Donald Trump. Let me be clear, were a President Trump to fulfil his ludicrous promises to send
“Mexicans back”, as well as stopping those following a particular religion from entering the United States, the
economic cost to that nation would be unprecedented. Let me make a second point perfectly clear, Brexit is entirely
consistent with those already in the UK, and making a valued contribution, being given leave to stay. Brexit is no
less consistent with ongoing immigration. What the Brexit campaign is simply demanding is the restoration of
sovereign powers to decide what constitutes “a valued contribution”.
2. BRIC’in Brexit?
In 2001 Jim O’Neill – now Baron O’Neill of Gatley and Commercial Secretary to the Treasury – gave us the
‘BRIC’ acronym for the quartet of economies which he expected to develop rapidly in the coming years, and
what a time it has been in the period since. In what follows, I want to put myself in the minds of the leaders of
these four nations and imagine what they might be thinking of ‘our’ referendum. I have already made clear
that China’s leadership is sanguine about the potential for Brexit, and would continue to engage ever more
with us regardless. As for a Putin-led Russia, I can only imagine it would very much welcome the weakening in
the EU, which would be caused by Brexit. There will, of course, be those arguing that a comparatively stronger
Russia is unwelcome to the UK and, going still further, that we are stronger in dealing with it within the EU
than alone. My response is that the EU’s seemingly monolithic approach to Russia is anything but uniform.
From Hungary and Italy to France and Germany and up to Finland and down through Poland and Bulgaria to
Cyprus, the engagement with Russia varies nation by nation, with sympathies ranging from extreme cold to
warm. As I have written elsewhere the UK does not require the EU to intermediate on its behalf with Russia,
as it can deal directly and if necessary firmly with it. I am sure we would earn the respect we had in the 1980’s
when the Soviets lauded the “Iron Lady”. Let me move on to the “I” in BRIC, India.
Few, if any, can deny that India’s strongest links, across the European Union, are with the United Kingdom.
That these would, somehow, loosen in the wake of Brexit is to me at least an absurd prediction. Indeed, much
like China, I see India’s engagement with the UK steadily increasing over time, regardless of Brexit. I would
emphasise that outside the EU the UK can begin to emphasise the importance of a far bigger Union of Nations,
one which includes India, ‘The Commonwealth’. This brings me to the fourth of Baron O’Neill’s BRIC quartet,
Brazil.
Having proven something of a poster economy for South America in the years after it was identified as a BRIC,
Brazil has more recently suffered economic weakness and has been embroiled in, not unrelated, political
strife. With its plutocrat’s descendents of Portuguese, Spanish, Italian and other European Continentals one
might imagine Brazil’s leaders would be unwelcoming of Brexit. Well, the reality is that their ancestors were
part of an earlier wave of those opting to EXIT Europe.

TOSCAFUND
April 2016
3. Britain’s impressive Common Wealth beyond Europe
Much is made of the EU’s scale: Its scale of population, in GDP, and its sheer geographic e
denying that the numbers are large. The EU covers 28 sovereign nations with a population in excess of 500
million, spread over 4.3 million square kilometres with a combined annual GDP above $18 trillion. We are told
that the European Union’s sizeable critical mass affords the UK benefits when the EU acts as its ‘agent’, far
more so than were it to represent itself. If I wished, I could dismiss the claim there is ‘strength in numbers’ by
citing the idiom “he travels fastest who travels al
strength in numbers, consider these figures; 53 nations whose combined population is 2.3 billion spread
across 30 million square kilometres and with a combined annual GDP of $10 trillion. Now, some w
last figure as surprising given it is just barely over half the GDP figure cited for the EU. Well, the important
point is that whilst the EU’s $18 billion
impressively upwards. What then is the collection of nations whose numbers figure so impressively when
compared to the EU’s? The Answer is the Commonwealth of Nations known to most as the British
Commonwealth.
Map 1: British Commonwealth
Source: Wiki Creative Common License, National Statistical Offices, Bloomberg, Toscafund
political status. Commonwealth realms are shown in blue, republics in pink, and members with their own mo
Unlike the parochial nature of the European Community, the Commonwealth of Nations is spread across the
entire globe, boasting at least one member on every continent. Unlike the European Community, whose
members have little in the way of natural resources; the Commonwealth is blessed with minerals in
abundance, from Zambia and Namibia across to Malaysia. Unlike the EU’s generally ‘aged’ demographics, the
Commonwealth is ‘youthful’. True, the Commonwealth contains relatively poo
however, is that many of these have been developing impressively and becoming more enriched by the year,
notably here India. This said, the Commonwealth also contains some of the world’s most advanced nations
and wealthiest nationals; just consider the likes of Singapore, Canada, Australia and New Zealand. Lest we
forget the UK is not alone across the EU in also being a member of the Commonwealth; Cyprus and Malta join
it in this duality (Ireland left the Commonwealth in April 1949)
Of course, in all the talk of memberships of the European Community and British Commonwealth the global
growth behemoth China, is not in either. This said China’s Special Administrative Region, Hong Kong was part
of the latter from 1934 until 1997. In
connections with the UK. And not only do I not expect Brexit to loosen Anglo
will strengthen regardless, as Beijing engages ever more with the UK as a compleme
activities to educate its young and operate from, given the convenience of its time
Discussion Paper
The EU Referendum Part II: Even Further O
6
Britain’s impressive Common Wealth beyond Europe
Much is made of the EU’s scale: Its scale of population, in GDP, and its sheer geographic e
ion’s sizeable critical mass affords the UK benefits when the EU acts as its ‘agent’, far
citing the idiom “he travels fastest who travels alone”. I will not do so, however, because there is indeed
across 30 million square kilometres and with a combined annual GDP of $10 trillion. Now, some w
illion GDP figure is hardly moving higher, the $10 billion
. What then is the collection of nations whose numbers figure so impressively when
Source: Wiki Creative Common License, National Statistical Offices, Bloomberg, Toscafund – Note: Members of the Commonwealth shaded according to their
political status. Commonwealth realms are shown in blue, republics in pink, and members with their own monarchy are displayed in green
the way of natural resources; the Commonwealth is blessed with minerals in
Commonwealth is ‘youthful’. True, the Commonwealth contains relatively poor nations. No less true,
ls; just consider the likes of Singapore, Canada, Australia and New Zealand. Lest we
it in this duality (Ireland left the Commonwealth in April 1949).
of the latter from 1934 until 1997. In fact China’s connections with the EU are largely because of its
connections with the UK. And not only do I not expect Brexit to loosen Anglo-Sino links,
will strengthen regardless, as Beijing engages ever more with the UK as a compleme
activities to educate its young and operate from, given the convenience of its time-zone and language.
ferendum Part II: Even Further Out
Much is made of the EU’s scale: Its scale of population, in GDP, and its sheer geographic expanse. There is no
ion’s sizeable critical mass affords the UK benefits when the EU acts as its ‘agent’, far
one”. I will not do so, however, because there is indeed
across 30 million square kilometres and with a combined annual GDP of $10 trillion. Now, some will see the
billion number is moving
. What then is the collection of nations whose numbers figure so impressively when
Note: Members of the Commonwealth shaded according to their
narchy are displayed in green
the way of natural resources; the Commonwealth is blessed with minerals in
r nations. No less true,
ls; just consider the likes of Singapore, Canada, Australia and New Zealand. Lest we
fact China’s connections with the EU are largely because of its
, I am convinced these
will strengthen regardless, as Beijing engages ever more with the UK as a complementary hub to its local
zone and language.

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A Brexitstential view of Japan
No doubt many readers will find it curious that a discussion paper considering the merits of the UK being promoted out of
the “EU league” should involve consideration of Japan’s own regional engagement. The relevance occurs on two fronts. For
one – a point I have made in a section below – Japan’s halcyon economic growth came when its engagements were not close
to home but far afield, all the way in fact to either side of the North Atlantic. In essence Japan proved that an economy could
perform strongly even when the region in which it was located was not terribly impressive. The second relevance of the
“Japan story” for the UK is that whilst casting its sights far afield served it well when the North Atlantic was an attractive
marketplace Japan allowed its domestic economy to suffer under a protective-mind-set, one which has produced adverse
demographic, monetary and broader economic consequences. Consider, these paragraphs which I penned back in March
2010 in a Discussion Paper considering Japan’s ‘failings’.
“Australia and Japan have been involved in negotiating a Free Trade Agreement since April 2007. That some deal was
being sought between two such close trading partners was hardly surprising. Disappointingly, within a year of talks
beginning they stumbled. The cause of the failure was Japan’s insistence that certain products be excluded from any
agreement. Notable here were food commodities, around which Tokyo has imposed considerable tariff and quota
barriers. If one needs an example of Japan’s long term economic problems here it is; it wants access to overseas
markets without reciprocity.
Having based its economic growth on mercantilism Tokyo cannot see the inconsistency (indeed hypocrisy) in its
approach to trade. It wants Japanese producers to export freely, whilst at the same time it demands the right to
protect what it sees as strategic sectors. Of course in defending its farmers Japan has managed to ensure they supply
forty percent of its food needs. The flip side of this is that Japanese households pay the highest retail prices for food
across the developed world. This is just one instance of how Tokyo’s protectionism has created an inefficient internal
economy. From barriers restricting the import of beef to those limiting the inflow of economic labour, Tokyo has
pursued a policy which can only be described as economic asphyxiation. Of course Japan is preserving a social order,
many elements of which it is quite right to be proud. What needs to be accepted is that it has maintained this social
order at considerable economic cost. Japan’s is after all a nation with no significant natural resources, a lessening
competitive advantage across traded good sectors and a moribund internal economy.”
I often re-read these words to remind me that the UK can learn a great deal from Japan, just as China in fact can. The lesson
both London and Beijing can learn from Tokyo is how not to take an impressive economic foundation and undermine it
through narrow-minded policy. Yes, the UK can successfully depart the EU. It cannot do so however if it isolates itself from
the arrival of any of the crucial inputs which Japan has been reluctant to accept; from prime-age adults enthusiastic to be of
economic value and cheaper imports which would improve household disposable incomes.
So what is my point? Well, those emphasising the importance of the UK being represented by the EU
inevitably understate the considerable scope we have to wield our collective Commonwealth influence.
Leaving the EU should be seen as the catalyst for the Commonwealth to show its true size on the global stage
across which it spans like no other community of complementary nations. Let me quote directly from the
Balfour Declaration of 1926, which effectively forged the concept of our Commonwealth made up of
“…autonomous Communities equal in status and in no way subordinate one to another in any aspect of their
domestic or external affairs, though united by a common allegiance”. Compare this with the increasingly
imperious nature of Germany’s leaders as first amongst “EU equals”. For the record, the Commonwealth is
headquartered in Marlborough House, London, and will remain there regardless of whether the UK leaves the
EU.

8
4. Unacceptable German behaviour
Those who cannot remember the past are condemned to repeat earlier errors, paraphrasing the philosopher
George Santayana. As much as there is wisdom in this it can equally be argued we must not exaggerate how
many precedents history provides us and not forget that the motivations today of certain participants might
be markedly different from their counterparts in the past. With this in mind let me continue.
The migrant crisis we are sadly witnessing calls to mind events and actions just over a quarter of a century ago,
events which I can remember as if they were only yesterday.
The Europe of 1991 looked dramatically different from only two years earlier. True Europe is accustomed to
change. The extent and speed of the change between 1989 and 1991 was, however, quite breathtaking. The
drama which Europe experienced was the pulling back, indeed the tearing down of the Iron Curtain which had
separated East from West from 1945. Nowhere was this captured more vividly than in Berlin, where the
Curtain separating west from east had taken on a hard and austere grey concrete form from the early 1960’s.
With a rapidity which few could have ever foreseen, the “two Germanys” began to plan their reunification
(after a referendum had given it an overwhelmingly popular endorsement). You may now be asking just what
is the relevance of all this history to the Brexit debate? Well, I will come to that.
One crucial element in the way of reunifying the German Democratic Republic (‘East’) from The Federal
Republic of Germany (‘West’) was money. In one part there was the feeble Ostmark. In the other there was
the robust Deutschmark. In deciding how to reconcile these two fiat currencies the West German leadership
was conscious that a sensible valuation might well create a migrant tidal wave. For there was a genuine fear
amongst West Germans (of whom there were 63 million at the time) that the 16 or so million who lived in East
Germany would see the sizeable wealth disparities between the two sides, and sweep west. It was in part –
not entirely, but in large part – to avoid a tidal wave of migration that the authorities in West Germany
decided to be generous when valuing East German wealth; notably agreeing to a one to one currency
conversion. I come finally to where I see the relevance of this to contemporary events.
Efforts back in 1990 by the authorities in West Germany to discourage the migration of their fellow Germans
in the East, contrasts markedly with how Angela Merkel (an East German we should remember) has more
recently opened her arms to welcome migrants. True, Merkel has met with growing resentment amongst her
own people for her words, and these have been part of her party’s recent electoral setbacks. It is also true
that efforts have recently been made to keep potential migrants away, notably by being financially generous
in them staying away; a pre-emptive act back in 1990 but a rearguard action now.
I wish to close this short section by coming to the issue at the core of the work, Brexit, and the relevance of
this historical look at German reunification.
To recap, the financial generosity extended by West Germans to East Germans back in 1990 was far from
being selfless, but very much self-interested. One consequence of this selfish behaviour was a burst of
inflation across a re-unified Germany, whose empowered Bundesbank was amongst the developed world’s
most hawkish monetarists. The result was to elevate interest rates. Which, finally, brings me to Brexit.
Until 1989 German interest rates were only a matter of discussion in the UK. From the end of that year
however the pound entered into the European Monetary Union (EMU), which meant how the Bundesbank
behaved mattered greatly to us in Britain.
With the UK property market descending into pricing crisis from late 1989 the UK needed cuts to interest
rates. This medicine could not, however, be dispensed without compromising sterling’s position within the
EMU’s Exchange Rate Mechanism (ERM). The Mechanism after all demanded that the rates of exchange
between its member currencies tracked within narrow bands around a central peg, a peg which invariably was

9
A sinking pound: how uplifting
Graphics showing a ‘sinking pound’ have provided the ‘IN’ campaign with what they
consider the perfect economic symbolism of why ‘financial markets’ are so uneasy
with the Brexit threat. Well, I have written elsewhere, and will repeat here, that far
from a weaker pound being a problem for the UK, it is one for the euro-zone, and
specifically the European Central Bank. A weakening pound is providing the UK with
the monetary medicine which the ECB can only now administer with negative
interest rates and an expansion in its QE programme. At a time when central banks
are being forced to hit their inflation targets “from below”, we are witnessing
desperate efforts at reflation widely across the developed world. Widely, it may be,
but desperation to avoid deflation is not a problem in the UK, and whilst this is not
entirely because of the pound’s behaviour it is in part a result of it. Those Britons
frustrated that their savings are not yielding more, should welcome a weaker pound.
Those Britons working across it in sectors whose fortunes are lifted as the pound
sinks should welcome foreign exchange markets selling sterling. I could go on and
identify economic reason after economic reason why in the world we find ourselves
a weakening currency is to be welcomed. As for those comparing the pound’s level
today with its value against the dollar in the early 1980’s, they need to reflect on
how much the world has changed. Then the problem across developed economies
was stagflation, and a weakening currency was the over-ridding concern. Now, the
threat is deflation, and a weakening currency is to be welcomed. Then the global
economy consisted of only a handful of nations. Now we have world where with the
exception of a few nations – most notably North Korea – all sovereign economies are
open for business. Then the UK was a rigid unreconstructed economy. Now it is the
prototypical service and high value-added developed economy, and a template for
others to follow. Then we had the EEC which was useful in bringing down barriers
between its members. Now we have the EU which has no focus other that self-
aggrandisement.
quoted against the Deutschmark. And as already noted German interest rates were elevated in response to
the inflation surge triggered by a reunification; one aspect of which was a generous conversion of East
German wealth; which in turn was motivated by the migration agenda of West Germany’s leadership. What all
this German self-interest meant for Britons was painfully high interest rates through 1991 and much of 1992.
As we know we finally and fortunately departed the ERM on September 16th of that year.
Just as the unilateral actions of the German leadership back in 1990 – to avoid a surge in migration – created
unwelcome consequences for the UK to the recent no less unilateral encouragement of migrants by the
current German leadership, has threatened as much unpleasantness. Just as Germany has been inconsistent in
its behaviour we should be consistent in ours. We left the EMU in 1992, and we should leave the EU now.
In short, I now hope others will share my view that the reasons for this UK exit from a EU superstructure were
to free us from having to imitate German policy set with little or no consideration of the ‘EU collective’. With
Germany once again acting unilaterally we should draw upon the lesson of 1992 and break-free.

10
An unfriendly return?
Sometimes a sportsman returns to a stadium which he
once graced as a ‘home’ player, and is welcomed extremely
warmly. More often, the welcome by the faithful is less
than friendly. The reaction is particularly vitriolic when the
departure is the result of a transfer request, all the more
so, when the ‘team’ has been facing relegation (most
recently experienced by Jemain Defoe on his return to
West Ham’s Boleyn Ground). Indeed, a player who has
desired a move but continues in situ, is invariably as
unpopular with the faithful in the same insipid, simmering
way as one who departs and returns in ‘new colours’
(consider Saido Berahino still at West Bromwich Albion).
What is the relevance to our approaching Referendum?
We know the UK electorate is contemplating transferring
out of the European Union; I see it of course as a
promotion. This has not gone down well with the EU
faithful. Now, in the years ahead we will still have to
perform on the European pitch, whether we are wearing
the EU shirt or the UK’s reinstated red, white and blue.
Herein lies the problem, a mistaken perception of
disloyalty. Players depart or demand a move almost
invariably when their ambitions – including financial reward
– are not matched by the team they are in. There have
been instances when the threat by the star players to leave
has triggered a reaction and ‘The Club’ raises its sights to
those of its very best (Wayne Rooney in 2010). Other times
players leave and the loss to their old team is made all the
worse by seeing them thrive in their new environment (I
imagine Luis Suarez has not regretted his move from
Liverpool, and suppose his former team mates can only
look on in silver-wear envy). The lesson for us is that as
much as we are Club players we should recognise that we
have out-grown team EU and a transfer request is not
enough we need to move on up.
5. The EU: Agent double-0 0
They have come to represent and be resented for introducing some of the worst excesses in professional
football. They are grasping and greedy for themselves, when purporting to act in the best interests of others.
The vast majority have no professional qualifications in law, accounting or finance to recommend them for the
role. Football clubs claim they have been another major reason for the surge in costs, and in turn exorbitant
Premier league ticket prices. Managers complain they invariably unsettle otherwise satisfied players. I am
referring, of course, to football agents. You may well be asking what the relevance could possibly be of these
‘intermediaries’ to the Brexit debate. Let me show how I see the two are linked.
At its core the discussion on the UK’s position in the EU is the importance of the latter acting as the agent to
the former. The reasoning of EU enthusiasts is that the UK is quite frankly not the economic, military or
political behemoth it once was to negotiate on equal terms with others. It needs in effect representation.
Let me repeat that I am convinced our sovereign nation is perfectly capable of negotiating from a position of
strength with any counterpart. This is not to deny that the interests of certain nations are best served by
utilising an agent to negotiate on their behalf. What I am arguing is that the United Kingdom is perfectly
capable of doing its own bidding.
Reflect for a moment on the head of state or Government of, say, Slovenia, Luxembourg or Bulgaria wishing to
travel to India, China or Brazil to make trade
or some such representations. One wonders
how much of a priority the leaderships of
these nations would view this request, and
just how lowly the counter-party
representation might be were the trips to go
ahead? The answers would be quite
different were it to involve the UK head of
state or head of Government. And yet,
despite this the UK is subjugated into having
EU institutions speak on its behalf on a
number of key issues and act for it in a raft
of important negotiations.
Are we really to believe we need the EU to
represent us in dealing with India, Canada or
Singapore? I have noted elsewhere the
largely untapped power which exists in the
Commonwealth of Nations, an organisation
in which India, Canada and Singapore stand
alongside the UK as equals.
Another unwelcome aspect of having an
agent is that we may not be the only client.
And within the EU we are one of twenty-
eight nations being represented. In having to
accept a one-size-fits-all agreement we risk
involving elements which are
disadvantageous to us, and far inferior to
what we could have achieved had we
negotiated directly without an intermediary.
As for the strength in numbers argument I
have already touched upon that when I

11
Trading-in an ageing partner
The UK ‘trade dependence’ on the EU is much cited as to why Brexit has to be avoided ‘at all economic costs’.
That we trade with our European neighbours is undeniable. However, that this dimension of our ‘trade game’ will
somehow disappear on Brexit and undermine our economy is absurd. It is absurd because were we to somehow
see barriers raised to our trade with the EU post Brexit this would do more harm to those remaining within the
EU than us. I say this because the UK runs a deficit. It is also absurd because it assumes the EU is a flourishing
export market for the UK; the evidence plainly shows it is not; indeed, it is getting worse. And it is absurd because
it fails to recognise the success the UK has been enjoying over recent years in trading in goods and services
beyond the European Union.
Were the UK to continue within the EU then each passing year of its tenure would see the share of its trade flows
to the EU fall as it engaged ever more beyond it. This is not a fanciful prediction but one entirely consistent with
what has been seen over recent years and with any sensible set of global growth forecasts.
Chart 3: UK trade engagement with the EU Chart 4: Share of UK exports destined for “EU 19”
Source: ONS, Toscafund
-100
-50
0
50
100
150
200
250
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
£billion
Balance Exports Imports
0
10
20
30
40
50
60
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Exports,%share
highlighted how much the Commonwealth dwarves the European Union. What the UK offers and would like in
return from say Singapore, Australia or New Zealand is quite different from that of Spain, Italy or France.
Let me close by returning to the surge in wealth across the English Premier League. It is true that part of this
has been appropriated by grasping agents whose interests are in churning their clients and inflating their
costs. This said they are a parasitical by-product of the surge in demand for our football from far beyond
Europe. Our clubs have been acquired at ever more lofty prices, and so too the right to broadcast their
competitive games. The reality is our football ‘industry’ is simply sharing a widespread surge in demand for all
things British, from our prestige branded car marques to our universities. Each of these easily sell themselves
without the need for an agent, certainly not one who also represents other clients envious of this clients
success and keen to extract and redirect some of the UK’s ‘economic rent’ for themselves. Let’s quite frankly,
successfully, go it alone.

12
6. Debating a double departure: Brexit then Sexit?
Let us for a moment suppose the electorate across England votes to a sufficiently large degree that there is a
UK-wide majority for an Exit from the European Union. Since it is inconceivable that a majority across
Scotland, and almost certainly Wales, vote to leave the EU, we will find ourselves facing legitimate calls for a
second referendum on Scottish independence. Of course, so much was written ahead of the referendum of
September 2014, one might imagine this could be recycled. Well, not quite.
An independent Scotland in the EU with the rump of the UK also a member would have very different
questions to answer than an independent EU-embedded Scotland, where the rump of the UK was sans the EU.
The issue of which currency Scotland would utilise was one thorny question ahead of the first Referendum.
The thorns here would become even sharper ahead of a second. Could the SNP still claim it would continue
within the sterling bloc whilst inside the EU without meeting with resistance from other EU members
complaining this afforded it an unfair competitive advantage because the pound had weakened with Brexit? If
unable to continue with the pound how would Scotland transition to a new currency, and what would this be,
the euro or some entirely new fiat? Indeed, the complexity, not the possibility, but the sheer complexity of a
‘double departure’ is such that anyone claiming to know its resolution reveals an ignorance of just how many
contingent outcomes there could be.
As much as I was confident in claiming Scotland’s economic interests were best served within a United
Kingdom inside the EU, I am convinced that a sovereign Scotland inside an EU which – in particular – England
was not a member, would face considerable economic challenges. It could, for one, prove a pawn in a power
game between a Westminster Government navigating an un-chartered Brexit course and an EU leadership
resentful over being slighted it might try to make the aftermath of Brexit as fraught as possible for England.
One way of doing this would be to isolate it. Another would be to encourage Scotland’s nationalists that a
sovereign Scotland would be welcomed within the EU. Let me consider these concerns in sequence.
I say again what I have written elsewhere that any attempt by the EU to isolate the UK would be pure hubris.
The result would be self-inflicted pain to its members who enjoy a net trade surplus with the UK and have
nationals working there, as well as businesses operating out of it. As for encouraging Scottish nationalism here
too the EU would meet with self-inflicted harm. It would after all face an internal backlash, as for one the
Spanish Government would hardly welcome any move which might be used by its own ‘separatist’ elements.
Let me turn now to reflecting on two ‘island’ stories which, to my mind at least, provide an insight to matters
on the British mainland in the event of a ‘double-departure’. Consider first Ireland.
Just as much as a ‘double-departure’ could be said to open a front-line on the British mainland between an EU
member and one outside it, Ireland is certain to see this in the event of Brexit. And any attempt by the EU – or
isolationist minded Brexiters – to frustrate the considerable commercial links between Northern Ireland and
the Republic, would damage the economies on both sides and could wreck far wider unwelcome implications.
More positively, Ireland provides a practical illustration of how a euro-zone nation can work literally on the
same ground as a part of the sterling bloc.
The second island which I believe might provide some insight into the practicalities of a ‘double departure’ is
Cyprus, one side of which is within the EU, the other not.
Whatever tensions can be said to exist between the legitimate Republic of Cyprus and the self-proclaimed
Turkish Republic of Northern Cyprus (TRNC), the border is now open for populations to move across and some
commercial trade to be performed (even if informally). On one side there is the euro, on the other the Turkish
Lira (the name incidentally which Greek Cypriots have always had for “pound” which was the name of the
currency which the euro replaced in “the south”). My intention in drawing upon the island of Cyprus is to

13
Amber warning
Stop Press we have had an Amber warning. Well, not quite more a false alarm. Let me explain.
Amber Rudd, the Energy and Climate Change Secretary recently warned that Brexit would result in a “massive
electric shock because UK energy costs are likely to rocket by at least half a billion pounds per year.” When I
read this my first reaction was to understand the source of the data. I discovered the figure was drawn from a
report commissioned by National Grid from a little known economic consultancy. The crux of its argument was
that the price shock to UK households would be as a result of investment in energy coming in at a higher costs
of capital. Not only would I contest that capital costs or long-term interest rates need not necessarily rise in
the event of Brexit, I would even go so far as saying they could compress given the deflation set to plague the
euro-zone for the foreseeable future. We need to put the Rudd(y) nonsense we have heard in the context of
the Hinkley Point saga.
The UK’s nuclear industry has been in the hands of France’s EDF since 2008, the assumption being its
management are expert in this energy source. Not expert enough however to avoid cost overruns and
construction delays in their ever more ambitious projects. In fact for the UK Government to encourage EDF to
build much needed new capacity it committed to over-pay on our behalf for the energy produced, in fact over-
pay to the tune of three times the market rate. True, who could claim to know what the price will be in the
future? This accepted I’d hazard a guess it will not be the £92.50 per Megawatt hour committed to. The reality
is that at a time when the Government has hardly ever been able to borrow more cheaply it should have
considered pulling all its efforts into funding new nuclear capacity and, say, licensed EDF to manage it. Such
funding could legitimately be put on the right-side of any budgetary Golden Rule. The reality is that the UK
should never have looked to a French private company to self-fund new nuclear capacity but looked instead to
co-invest with China, which has a one-third stake.
show those concerned about a ‘double departure’ that if stability, of sorts, can exist across Cyprus forcefully
divided in 1974, there should be little to concern us across Britain, where rivalries whilst competitive have not
been combative, not that is for many hundreds of years. As for economic growth, the Republic is reeling from
EU imposed austerity, whilst the TRNC is benefiting from a markedly more competitive currency in its efforts
to attract tourists which might otherwise opt for the south.
I noted earlier the considerable literature produced ahead of the 2014 independence referendum. There was
a contribution to this anthology from Toscafund, where I was the author. I wrote then that Scotland’s best
economic interests were served being untied but still united to the other elements of the UK. Indeed in related
research Toscafund has stressed the importance of devolving economic management widely across the United
Kingdom, not only to Holyrood but City Hall and Cardiff and indeed to new Combined Authorities across
England. Facing, as we do, the possibility of Brexit let me make clear that I am convinced that Scots wishing to
reclaim the maximum power over their economic management can best serve this ambition by remaining
within a devolved UK outside an EU which is keen for ever more centralised economic management.
Let me close by considering a particularly important Common cause which Scotland would still share with
England were it to Sexit following Brexit. Since the SNP has maintained it wishes to see the Queen remain as
head of state one imagines it is committed to remaining within the Commonwealth of Nations. An
independent Scotland would keep the EU at 28 but take the Commonwealth from 53 to 54 nations, a
reflection to my mind at least, at the stagnation in one and the dynamism in the other.

14
In the eyes of the beholder
John Maynard Keynes, the brilliant economist and political scientist, used a wonderful analogy to explain how
we should make decisions. In his seminal work “The General Theory of Employment, Interest and Money”
(1936) Keynes asked readers to imagine that a newspaper held a beauty contest, one where a prize was
available only to those who could successfully identify the candidate in the pageant who was most popular
with other readers. He argued that we were confronted with such decisions all the time, and in such ‘contests’
we had to put aside our personal preferences. To repeat, we have to judge not who we find attractive but who
we judge the bulk of all other judges do. What is my point? Over recent years many, many hundreds of
thousands of nationals across the European Union have cast their vote for who they consider the economic
beauty across it. They have done so by EXITING their homelands to relocate to the UK. If they are EXITING their
part of the EU in favour of the UK, surely this tells us something about how we should vote on June 23
rd
?
7. Brexit would turn devolving doors
Some see the treatment of people with uniformity as fair. Others by stark contrast see any failure to
distinguish between ability and need as the root of unfairness. Very often those pursuing one of these lines of
reasoning find themselves inadvertently supporting the other. For instance some of those who demand supra-
normal taxation be levied on certain sectors and even professions as being ‘only fair’, will also demand
nationwide pay bargaining, even though changes to the cost of living are invariably different from place to
place. From the other side some who demand means testing of state benefits invariably decry the end of
universal child allowance.
Just as there are those, like me, who see a nationwide tax system as indiscriminate of regional characteristics
and a drag on the macro-economy, there are others who view any spatial differentiation in tax rates as
actually unfavourable for singular stewardship of the British economy and bad for the sense of British
nationhood.
Well, for those against devolving tax powers the rise of the SNP has now released that particular genie.
Indeed, George Osborne just might well be encouraging new unitary assemblies across England in an attempt
to avoid Scotland – as well as Wales, Northern Ireland and London – exploiting a ‘special status’ within the
United Kingdom and stoking English nationalism. Whatever the Chancellor’s motivation it is almost certain
that looking at the UK in 2020 will see a tapestry of varied fiscal policies and tax rates. And just as with the
‘council tax’ where we see that otherwise identical homes in one post code are charged differently from
others, so we will have to get used to differentiation more widely across our tax system.
Let me repeat that I welcome the devolution of fiscal powers. I am convinced they provide for clearer
accountability in how tax revenues are spent, and greater flexibility in how particular regions are managed.
After all, it allows economic policies to be tailored according to their particular strengths and needs. Now,
there are no practical reasons nor lack of contemporary precedent to deny the UK regionally varied income
taxes. Neither is there a lack of contemporary precedent for sales taxes to be varied within the UK – the
United States and Switzerland both exhibit them in a well functioning way. There is also plentiful motivation in
economics why it should be encouraged. All this said, differentiated intra-national sales taxes are precluded by
some or other blunt EU Directive, part of many of its centrally imposed statutes aimed to achieve the ill-
conceived objective of ‘harmonisation’. This is just one of many restrictions which Brexit would remove from
the UK and so help speed us on our way to such self-managed English economic engines as the ‘Northern
Powerhouse’ and ‘Midlands Motor’. As for Scotland, I repeat that continuing in its long established Union with
England, Wales and Northern Ireland all outside the EU offers all the best hope of achieving the maximum
practical powers over their economic self-determination.

15
8. ‘Double-Departure’ II – this time it’s personal
As much as one needs to keep any political navigation system set on a default of ‘pragmatic’, one has to
assume some near certainties. With this in mind I would like to consider the post-referendum political
landscape in Westminster. I will confine myself mostly to trying to anticipate what unfolds for the perspective
of the party currently in UK Government, from where I will rather ambitiously look out to 2025.
One axiom I hold is that The Conservatives will be the Party of Government through to the next General
Election, and indeed up to the one after. Another axiom is that the Tory leader from, at the very latest 2020,
will be someone other than David Cameron. As to why I hold the second belief, the current Prime Minister has
already said he will not run for a third term. As for the first, the Labour Party is a leadership change away from
a credible chance at Government, and Sexit away from seeing that possibility fall to near zero.
If I had been asked to reflect on Cameron’s successor twelve months ago I would have unhesitatingly said we
would follow the Eden-Macmillan, Thatcher-Major and most recent Blair-Brown instance of Prime Minister
making way for the Chancellor of Exchequer (when James Callaghan succeeded Harold Wilson he did so having
been Foreign Secretary). Question me now as to this succession and I would say Osborne’s credentials and
credibility have been tarnished, not beyond repair but to a point they are in need of some very serious efforts
at his rehabilitation. This said in the contingent case of Brexit not only does Osborne’s succession probability
fall to zero, so does the likelihood of his continuing his tenure of No 11.
Some may see the prospect of a ‘double-departure’ from Downing Street as a political change demanding a
swift General Election. Well, given the conditions of our fixed-term Parliament’s votes of no confidence no
longer hold sway. In fact to get the requisite two-thirds of MP’s voting down the Government would require
Labour MP’s to bring on a General Election their Party could not possibly win (my axiom, many will not agree,
of course) and which would simply add years to their time in opposition.
Assuming the next General Election is 2020, we are still left with the question of Tory Party succession. Here
we have of course to deal with the contingencies from the approaching referendum.
As I have already made clear Brexit would make the positions of Cameron and Osborne untenable. It would in
effect promote Johnson and Gove onto the bridge navigating the UK – certainly England – out of EU territorial
waters. This pairing would also be required to deal with – legitimate – demands for a second referendum in
Scotland for its independence. These becoming neighbours in Downing Street of course begs the question
who occupies which address: Chancellor of The Exchequer Gove is my best assessment here.
In the event Brexit is averted this will of course be to the great relief of Cameron and Osborne. In the case of
the Chancellor it would provide welcome respite to help with his ‘rehabilitation’ within the Parliamentary
Conservative party. Of course margins matter and the greater the victory for IN, the greater the relief and
respite for the neighbours on Downing Street.
Those concerned with all this talk of ‘double double departures’ will of course ask about the UK economy.
Well, this is where I stand on ground I am more comfortable than the quagmire of politics. Yes, sterling will be
weighed down by uncertainty. The point I would make is that we have to reflect on the relative appeal of
currencies. With this in mind we have to be conscious that all is far from well across the euro-zone where
economic, social and political shifts are likely to prove no less dramatic than those in the UK. Over in the
United States political change could prove no less tumultuous and so too monetary and economic events.
What I want to leave readers with is this final axiom in my thinking at least. China is economically sound and
England is where across the North Atlantic it will engage with most to achieve its ambitions. It will look to
England in this way regardless of our EU membership and which Tory pairing occupy the adjoining properties
on Downing Street.

16
9. A very personal refugee story
The Syrian refugee crisis is having some bearing on all across the EU, from Greece where most have begun
their incursion into ‘The Union’, up to Germany where many hope to settle, having been invited to do so by
Angela Merkel with far from popular approval, even from within her own ranks. Elsewhere, the likes of
Slovenia, Slovakia and Hungary have either refused to sanction any transit through their nations or made
every effort to ensure refugees pass quickly through. It is also impacting Calais, where a large number have
assembled in the hope of travelling across the English Channel. Indeed, those fleeing Syria have coalesced with
others from Iraq and Afghanistan, and the MENA region more widely, all bundled into one huge refugee pool.
Bundled together too have been those escaping persecution and real danger with those whose prime
motivation has been to advance their economic fortunes, departing poor but essentially safe nations.
This is not the place and I am not qualified as the person to catalogue or chronicle every instance people have
swept into and across Europe in search of refuge (or indeed out of it). I do, however, consider myself well
placed to discuss one particular refugee crisis where my family was involved first-hand.
On July 20th 1974, five days after a coup ousted the legitimate Cypriot Government, Turkish forces parachuted
into northern Cyprus. These quickly over-ran the beautiful coastal town of Kyrenia on the northern coast and
picturesque port of Famagusta nestling in the south east. In the weeks which followed the invasion, many
hundreds of thousands of Cypriots were forced to leave their homes in what we would now describe as a
process of ‘ethnic cleansing’. This very real drama had a profound effect on me and, if I may, will quickly
explain why.
Back in July 1974, I had just turned eight and it was through those naive eyes that I saw my Cypriot father, who
had arrived in London aged 19 back in 1955, take in the unfolding tragedy. First there was the shock of the
coup, and then the invasion. Next was the desperate search for information concerning my grandparents,
great uncles and great aunts, aunts and cousins, all of whom had fled south from their beloved village of
Gypsos, which stood between Nicosia and Famagusta. My father was also desperate to know how his brother
and cousins – my uncles – were fairing in their frantic but forlorn efforts to defend their country as members
of the woefully outnumbered National Guard. So why bring up distant memories? Well, I believe the island’s
experiences in the forty two years since Cyprus was a battleground provides a number of positives, as well as
salutary lessons for where we are today.
To this day the island remains partitioned; its capital, Nicosia, divided almost as long as Berlin was during the
cold war, the fortifications no less ominous. Now for all its travails the Republic of Cyprus quickly became a
successful well functioning economy. It rebuilt a tourist industry, practically from scratch, transforming small
fishing villages and grazing land into substitutes for what it had lost. Such was its success that in 2004 the
Republic of Cyprus was inducted to the EU and on January 1st 2008 made part of the euro-zone. For a number
of years, over this halcyon period, the Republic of Cyprus became a magnate for new arrivals, not simply as
tourists but workers as keen to enter as they were welcomed to perform jobs Greek-Cypriots had grown too
skilled, educated, or important for. Then from a position where it was a poster economy for the enlarged EU
and euro-zone, the Republic of Cyprus saw its fortunes deteriorate to a point that the young are now
evacuating it, with the UK a favoured destination, which brings me back to the aftermath of July 1974.
Back in 1974, Turkey’s role in the refugee crisis was not as it is now, as a transit point, but rather as an
instigator. As well as relocating to ‘their respective new sides’, displaced Greek and Turkish Cypriots ventured
elsewhere, notably the UK, and more specifically, London. Whilst there were some bad apples amongst them,
most of those arriving made an unequivocally positive contribution to the British economy, just as I am
confident the present wave of Cypriots entering will do and as indeed my father’s generation did when they
arrived in the UK sixty or so years ago.

17
Disruptive pricing
It has been claimed by the Chancellor – wrongly citing it as a concern expressed by the OBR – that Brexit would be
‘disruptive’ to the UK economy. This ‘warning’ has of course also been expressed by The Bank of England almost as a
‘party line’. What I wish to do in what follows is make clear that I quite frankly agree with the claim Brexit would prove
disruptive. I do so not using the negative connotation of say a ‘disruptive pupil’ making things worse for all in the class.
I use it in the more modern usage where a long established exploitative order is disrupted, and is done so for the
greater good.
The price we are paying for goods and services is falling across the world precisely because of the arrival of
“disruptive” technologies. From home deliveries and banking to media streaming and even how we are transported,
we have seen market disruption. Rather than wish it away, we are welcoming of this economic disruption because it
has lowered our cost of living. In short sclerotic markets have been re-enlivened by disruption. True there are
casualties amongst the traditional order who see their old models pushed aside, indeed destroyed, by the disruptor;
their stubborn pricing power and high margins lost in what seems like a flash. No less true the net national benefit is
unambiguously positive; a form of Joseph Schumpeter’s Law of Creative Destruction or ‘Schumpeter’s Gale’. If we
reflect on the idea of ‘disruptive uncertainty’ in this context we realise that far from being something to avoid, it is to
be encouraged and welcomed when it arrives. And quite frankly nothing is in greater need of disruption than the
European Union.
The European Union supports stubbornly inflexible practices which survive at our cost. We across the United Kingdom
will have the chance on June 23rd to strike a disruptive blow. We could, if we vote sensibly, dislodge and dislocate
markets so they find more competitive pricing points, not only within our own country but widely across the nations
continuing within the EU.
Remaining with the present, the euroised Republic of Cyprus functions alongside the self-declared Turkish
Republic of Northern Cyprus, whose currency is the Turkish lira. With the border now partially open and a
degree of transit across it, unthinkable a decade ago, Cyprus illustrates the practicalities for Brexit; for
Northern Ireland and the Irish Republic and even for an England, outside the EU, nestling alongside a
sovereign Scotland within it. Indeed, talk of the impracticalities and the unprecedented nature of an ‘EU Exit’
is simply missing reality. And one element of reality is currency competitiveness. The improved affordability of
the Turkish lira against the euro has added to the economic pressures bearing down on ‘the south’, illustrating
that currency strength not weakness is what should be most feared. This is a valuable lesson for those
complaining about an ever cheaper – read more competitive – pound in the run-up to the referendum. As I
said earlier, the story of the Republic of Cyprus since it was sliced into two from 1974 is peppered with
displaced populations, emigration, rebuilding, renaissance, immigration, recognition into the European
superstate and single currency, then economic failure and emigration of the young. Rather than look to the
EU, the Government in Nicosia is best advised to focus on its ‘Commonwealth’ links generally and the UK in
particular, even if the later is no longer in the EU. Indeed it is in its own interest that Nicosia vetos any attempt
by the European Commission to penalise the UK in the event of Brexit. For the record I was disappointed with
the Greek Cypriots when they voted against a form of reunification when given the chance to do so in a
referendum back in April 2004. Indeed, had they voted in favour there is a very strong chance the whole island
would have escaped becoming euroised, just as the UK did when it EXITed the ERM in September 1992.
I will close with a reflection on the UK’s 1975 referendum on our membership of what was the European
Economic Community (whose ambitions were confined to a single market which none should take issue with).
Back then the Cypriot and (indeed Vietnamese) refugee crisis had little bearing on how Britons voted but a
great deal of positives for the UK economy. The handling of the more recent refugee crisis will by contrast
most definitely have an impact on how we vote on June 23
rd
.

18
10. It’s all the same in ‘The End...’
Whether or not we record a majority vote for Brexit on June 23
rd
I am convinced that ‘a sort’ of Brexit will
happen in the end. After all the European Union is facing fractious challenges from various directions, and
whilst how it will look in say 2025 can only be speculated at, it is certain to have been globally de-emphasised
and become decentralised and quite possibly have seen a number of departures.
I have made clear, in the first Brexit discussion paper, that Finland is my favourite to leave the euro-zone and
by default the wider European Union; quite possibly in collusion with Sweden and Denmark aligning with a
non-EU Norway. Elsewhere amongst the Unionists – from Hungary, Croatia, Bulgaria, Poland et al – everything
from nationalism to pan-Slavism threatens to grow popular support, with Moscow at the very least watching
enthusiastically, and quite possibly actively encouraging, inciting, euro-scepticism.
It is inconceivable that as schisms appear and widen across the EU, popular sentiment across the UK to it does
not deteriorate, even in its stronghold of Scotland. There will of course be those dismissive that this dystopian
outlook is simply the exaggerated product of a deeply euro-sceptic mind. To these, I say, I have only
economics on my mind, and the worse economically is not behind the euro-zone but awaits it.
Such are the economic problems facing the euro-zone the ECB is exhausting itself using extraordinary
monetary measures in trying to deal with them. The efforts being made remind me of the Bank of Japan’s
frantic endeavours to reflate and revive the Japanese economy in the mid 1990’s: it after all originated non-
conventional monetary policy or quantitative easing. Then, just as green-shoots began to appear across Japan,
these were trodden under foot by the Asian currency crisis which hit in the autumn of 1997. This sent
currencies of regional competitors to Japan sharply lower and triggered a renewed bout of deflation and
contraction in the economy of Japan. I fear something similar awaits the euro-zone.
Whilst the euro-zone boasts nineteen of the EU’s twenty eight members, the nine EU nations still with their
own currency face a rising probability of a voluntary or forced devaluation against the euro. The likelihood of
this can only rise were, say Turkey and Ukraine, to follow the path of Egypt to rear-guard ‘managed’
devaluation after devaluation. Moreover, from Serbia, Macedonia, Albania to Moldova and Georgia a number
of other currency devaluation could detonate around the euro-zone at any point.
To close then, the EU’s financial ‘fault lines’ will widen, with deteriorating economics compounding social and
political tensions and divisions. Those in the UK watching these events and keen for the UK to EXIT the EU will
sense a growing justification in doing so. They will also be increasingly frustrated that a stubborn number of
their fellow nationals fail to see just how troubled the EU is, and the risks it posses to the UK. Of this latter
group I suspect those opting to accept the tyranny of the status quo over the uncertainty of change, will come
to see the change coming over the EU and realise a leap out of it is an escape which becomes more fraught
the longer it is delayed.

19
11. The referendum debate: I’m a Celebrity...
Whilst we all have a right to a say on the upcoming referendum, few can argue with the claim that some of
those who do volunteer a view are more informed than others. The idea that actors, singers and sundry other
‘celebrities from the arts’ fall into the ‘informed’ group is so questionable as to be almost laughable. And yet
not only has this group produced a cacophony of opinion it has almost universally been one-sided, and that
has been to decry Brexit.
I do not want to waste too much space or time on what makes an otherwise entertaining actor, singer or
comedian a self-appointed ‘considered’ authority on the issue of the EU referendum. What I will do, however,
is reflect on a recent occasion when celebrities canvassed us loudly to vote a particular way.
Back in 2011 we were offered a referendum on ending the first-past-the-post electoral system. It was in fact
the cornerstone Liberal Democrat condition for joining in Coalition Government from May 2010, so convinced
was Nick Clegg that the form of Proportional Representation (PR), also known as Alternative Voting (AV),
would provide his party with a near permanency in future coalitions; l will come back to this ambition later.
I remember clearly, how a host of those across the arts and sport took it upon themselves to encourage us to
vote in favour of AV. There was Jonathan Ross and Kriss Akabusi but most significantly there was the intellect
of Eddie Izzard. Up against them was the Conservative Party, as well as a large part of the Labour Party. For
Eddie Izzard and his fellow celebrities AV offered parties with broad national but rather shallow support the
chance to be represented in Parliament. Supporters also pointed to the form of PR, the Additional Member
System (or ‘second vote’), working effectively in the UK’s devolved Parliaments and Assemblies. Cutting to the
chase, in a comparative low turnout the AV vote was lost. Let me explain why I have taken the liberty of
providing a short retrospective of the AV referendum.
We know the result of the 2015 General Election. The Liberal Democrats suffered a collapse in their
representation in Westminster, the cost so it has been suggested of it joining the coalition. For its part UKIP
held but one of the two seats it had originally gained through Tory defections. Up in Scotland the SNP won 54
of the 57 seats on offer, this surge a major contributor to the Labour Party failing to replace the Conservative
Party in Government, which is now unencumbered by a junior coalition partner. Now imagine the 2015
election had been contested under AV.
Assume that whilst the AV referendum had gone the way of those in favour of change there was no change in
the overall number of MP’s at 650. Let us further assume that AV polling had been introduced in time for the
recent General Election. Now whilst AV arithmetic would have delivered the SNP broadly the number of seats
it did achieve, for its part UKIP would have gained something in the region of 90 seats, since it polled c13% of
the popular vote. One can only guess how Eddie Izzard and other celebrities would have taken to such an
outcome. And yet it is precisely what would have happened had their intervention in the 2011 electoral
reform referendum ‘gone to plan’. For me this is a fascinating hypothetical instance of the maxim ‘be careful
what you wish for’, the law of ‘unintended consequences’ and the quip that Eddie Izzard’s loyal audience ‘isnt
laughing now’. Fortunately for Eddie Izzard, his like-minded celebrity friends and their admirers, their
performances didn’t go down too well with the voting public back in 2011. Despite this they have taken the
stage yet again for this referendum. They have done so with the same poor material.

20
12. Flight of Fantasy
Apparently Brexit would see a return to the days when air travel was affordable only to a privileged ‘wealthy
elite’. Or so it has been claimed by the Chief Executive of Easyjet, the Euro-enthusiast Dame Carolyn McCall.
Her reasoning is that Brexit would combine somehow to spike air fares and restrict air access across the
European Union to and from the United Kingdom. Whilst Dame Carolyn’s concerns were mocked by Sir
Richard Branson – suggesting both her airline and Ryanair were “s*@#ing themselves” – he took the
opportunity to raise his own Brexit fears, notably that it might trigger a sharp rise in air passenger duty,
stopping short however of explaining precisely why. One really wonders whether those making such ridiculous
claims genuinely believe they will be taken seriously. They might be relying on Brexit being averted, and so the
hollowness of their warnings not being exposed. It is, of course, possible that they actually believe such
nonsense, in which case my recommendation is they should either quickly become better informed or better
advised.
Where do I start unravelling Dame Carolyn’s particular Brexit flight of fantasy? For one Britain’s airports are
important destinations, origins and stopovers for EU airlines, and these would face the commercial discomfort
of any retaliation to denying ‘our’ airlines access to EU airports. There is also the fact that many millions of EU
nationals working within the UK are as reliant on the affordable flights we are told will be affected by Brexit;
indeed these British based ‘expats’ would arguably be more exposed than Britons. What would they think of
the EU were they so inconvenienced by it? Indeed can the EU afford to make even more enemies? I could also
ask what hoteliers, restaurant and bar owners and their staff across Spain, Portugal, Greece, Cyprus, Croatia,
Bulgaria and other popular destinations for free-spending British tourists say of any attempt to restrict their
travel to them? And let us be clear these austerity-hit parts of the European Union hardly need any more
centrally imposed economic pain heaped upon them.
There are plentiful other reasons why concerns over increased flight restrictions, added expense to and from
the UK and EU destinations in the event of Brexit are grossly exaggerated. I will close by pointing out just one
of these.
Each year ever more young adults from China and elsewhere across the emerging world travel to the UK to
take-up full-time study whilst others visit to attend summer schools. In addition, a growing number of Chinese
and others across the world arrive in the UK whose motivation is simply recreation. And whilst all these may
travel elsewhere across the EU, make no mistake their primary destination across Europe is the UK.
Consequently, any attempt by the EU to restrict air travel from the airports of its erstwhile member the UK
would have an unfavourable impact on Paris, Rome, Madrid and whichever other cities across the EU which
Chinese and other emerging world nationals currently visit from their UK base.
The ‘Stay’ campaign should really stop making claims against Brexit which simply fly in the face of reason.

21
13. Make Us One again
In this short section I want to reflect on what exactly the ‘Stayers’ see which the ‘Exiters’ fail to grasp.
Here is a truism if ever I have written one; there are a great many Britons in the direct pay of the EU, and a
sizeable number of others who benefit through channels which stem from it. Yet other Britons have retired
across the warm-water coastline the EU can boast, and are in this way benefiting from the ‘passporting’ of
their pensions into their chosen retirement destination. This is not to deny that there are those who will
benefit financially in the event of Brexit. My point is that one self-served group is far larger than the other,
with much to lose.
Since we all ultimately serve our self-interest I cannot criticise anyone telling themselves to vote ‘Stay’. It is
when their narrative tells others that it is in the ‘National Good to Stay’ and very much ‘Bad to Leave’ that I
take issue, for the economics of these twin claims is unproven. Indeed, whilst one cannot claim with certainty
that the UK economy would be no worse off leaving and very most likely better served Leaving, one can do so
with a great deal of confidence.
Having spoken on platforms and debated against ‘Stayers’ I have been frustrated by the ‘lack of disclosure’.
After all, when asked to comment on financial markets, one is expected to make any monetary involvement,
either way, clear to listeners. Why then should not the same convention be demanded in any public
utterances on such a momentous issue as the EU referendum? One wonders how the audience would respond
were it aware of the personal motivations involved, assuming there are any.
Let me make clear that neither am I in the pay of either side nor have in any conscious way positioned myself
to exploit a particular outcome. Nor too do I seek any reward in the event of Brexit. Whether it is to be
believed or not, my views are objective. They are formed out of the rational economic thinking that I have
been fortunate to have been educated in, taught widely, and long practised.
I cannot imagine how any other than the few who benefit at the cost of the many can be unwelcoming of the
‘disruption’ Brexit would trigger. Why George Osborne and Mark Carney fear this, I simply cannot fathom.
Now, it has been claimed that I, as a partner of a “hedge fund” am encouraging economic disruption because
volatility brings with it exploitable ‘trading’ opportunities. This is about as abject nonsense as the
anachronistic title of ‘hedge-fund’ since Toscafund is a multi-asset wealth manager which holds cornerstone
investments across the UK economy, ranging from property to telecom assets. Be in no doubt, that our best
interests are aligned with what is best for Britain.
At best the EU has been about wealth rotation not creation. A rotation, however, that has rarely been about
equitable redistribution, but all too often about serving political ambitions, helping national cliques and
advancing regional hegemony. When the EU has encouraged production it has frequently led to excess supply
and where it has stifled competitive forces in the name of strategic product protection is has led to excessive
pricing. True, these failings can all too commonly be found in the policies pursued by national Governments.
At least here there is a degree of electoral accountability which the ‘European Parliament’ is largely and so
frustratingly protected from.
In short, the canvas over which the EU paints seemingly indelibly, gives it an influence which is becoming
unprecedented in European history. We need to leave the EU before its infantile brush strokes paint over the
hard earned efficiencies and flexibilities the UK economy uniquely boasts across its 28 nations. Let them
become 27 and make Us One again.

22
14. The disgrace of not disqualifying oneself
From a barrister to a bricklayer, across to an estate agent and electrician, indeed across all services and crafts
we expect impartiality in the advice we are given and professionalism in the work provided. The contract we
enter into in all cases is that we will agree with the experts in their fields as to what we need, and pay them
for their work accordingly. The implicit assumption is that pride in their work and their sense of professional
responsibility will stop self-serving behaviour.
Where a ‘professional’ senses a conflict exists or may even be perceived to exist he or she is expected to
disqualify themselves without hesitation. In short, we expect those presenting themselves as professions to be
like Caesar’s wife and be above suspicion and beyond reproach.
At the beginning of this increasingly febrile referendum campaign I hoped those presenting a professional
rather than personal view would only do so if they could legitimately claim to be impartial. I had expected
those who were conflicted either way of the Remain or Leave issue to either adopt a form of purdah or failing
self-censure, to make clear their conflicts whenever venturing forth an opinion. Well, we have not had such
disclosure from the IMF or OECD, nor from PwC or Ernst & Young. Neither had we had it from HM Treasury or
the Bank of England. In fact I could denounce many others from Goldman Sachs to the CBI for concealing their
conflicts in a cloak of indignation, at the MERE suggestion they may be anything other than impartial. Some
may point to the extremely cautionary outlook expressed by the Institute for Fiscal Studies, whose forecasts
were for a long time seen as far more objective than those of a too politicised HM Treasury. I do not disagree
that the IFS was once the independent arbitrate of UK growth. What I would stress is that the Office for
Budgetary Responsibility was created for the very reason that Treasury forecasts were so discredited. The OBR
in effect is the official blue-ribbon UK growth forecaster, to all intense and purposes making the IFS redundant
and so keen to be noticed. For me at least the decision by those in the OBR to decline entering the forecasting
fray says much about how truly professional it is and how lucky we are to have it. I would thank George
Osborne for creating the OBR but for the fact he seems to have forgotten why he did; the Treasury’s
forecasting had lost all credibility.
As to why there are so many institutions which are conflicted one does not need to call upon Sherlock Holmes
or forensic science to uncover the reasons; every institution I have named has financial interests aligned with
not upsetting the EU and its myriad institutions. For my part, it greatly upsets me that we are being spun a
great many untruths by those we are expected to continue to trust after June 23rd, when they are sure to be
exposed either way.
As for my conflicts I do have to admit to them. I am a UK taxpayer and have all my assets here, and am geared
entirely in sterling. In fact, I do not simply have some skin in the UK game, I am entirely immersed in it.
Therefore, what I unashamedly want is what is “best for Britain’s economy”.

23
The EU and the Kinnocks: A family business
In the early hours of April 10th 1992 Neil Kinnock was forced to accept defeat in the General Election which
had been contested the previous day, the culmination of weeks of canvassing and Mark Twain-esque stories of
the death of the incumbent Government. The exaggerated end of John Major’s premiership and Kinnocks
capitulation came against the backdrop of opinion polls all the way through to election-day suggesting that he
would become the UK’s new Prime Minister and John Smith our new Chancellor. As it was, John Major
remained Premier and Norman Lamont continued as his neighbour in Number 11 Downing Street for five more
fateful months. Within three days Kinnock announced that he was standing down as leader of the Labour
Party, a position he had held for eight and a half years, replaced by the man who would have become his
Chancellor.
What marks out Neil Kinnock to me isn’t that he holds the record of the UK’s longest serving leader of the
opposition, but the course his ‘career’ took following his defeat of 1992, and how his family shared his
adventures.
In early 1995 having served as an MP for 25 years, Neil Kinnock left Westminster to join the European
Commission as Transport Commissioner. The move ‘united’ him with his wife Glenys, who a year earlier had
been elected to the European Parliament. The Kinnock family connection with the European Parliament did
not end there, though. It extended when their son Stephen began work as a research assistant there. Whilst he
returned to the UK where from last year he is now an MP, Stephen Kinnocks connection with the European
Union continued when he married Helle Thorning-Schmidt, who he met rather notably in the College of
Europe. What makes Helle Thorning-Schmidt so noticeable is that she too spent time as a member of the
European Parliament before going on to become the Prime Minister of Denmark.
What is my fascination with the Kinnocks and the EU? Well, I would argue quite frankly that for a while the EU
practically became a “family business”, and a very generous one at that. For along with the salaries, came the
expenses, notably the appearance money, for not much of an appearance on most occasions. The Commission
and its superstructure provided the Kinnock family with a place to escape to until its members could return to
the UK; in the case of Neil and Glenys, so as to take up unelected roles. As for The Honourable Stephen Nathan
Kinnock, whilst he does indeed have an elected mandate, his entry to Parliament came in the extremely safe
Labour seat of Aberavon. Now were Plaid Cymru to someday reproduce the success in Wales the SNP has
enjoyed in Scotland, I have little doubt Stephen would evacuate himself back to the bosom of Brussels as his
father did over twenty years ago.
My point in all this is that when you hear any of the Kinnocks canvassing against ‘OUT’, bear in mind that they
are some of the EU’s biggest ‘INsiders’.

EU Referendum Part II: Even Further Out

EU Referendum Part II: Even Further Out

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