by Patrick Collinson
If Britain leaves the EU, the impact will be "seismic", said Neil Kinnock, a former EU commissioner, this week. Brexit would be "a jump off the edge of the cliff ... in which our economic stability is hugely put at risk". The message couldn't be clearer: leaving would be economic suicide. Over in the Eurosceptic camp, we're told our liberation from the tyranny of Brussels will bring us a new era of prosperity, saving billions on payments into a wasteful and corrupt EU bureaucracy, slashing immigration and restoring the country's economic independence.
The scaremongering on both sides of this debate becomes more preposterous by the day. Anyone keen that we have a reasoned national conversation about the merits of EU membership should welcome the intervention of asset manager Neil Woodford, the darling of small investors, whose giant funds have big stakes in lots of major British companies. His view is that both the pro- and anti-Europe camps are employing bogus arguments. The mundane reality is that a Brexit is likely to result in either a small net economic benefit or a small net economic loss. Nobody can know for sure which outcome we'll see. But the least likely outcome is economic catastrophe if we leave, or if we remain.
Woodford's analysis, supported by research from consultancy Capital Economics, ties in with a separate report from thinktank Open Europe. It said quitting the EU could cost the UK 2.2% of GDP by 2030 – or it could add 1.6% to GDP, depending on how the exit negotiations are handled. Neither sum justifies the frothing fulminations of Eurosceptics and Europhiles alike.
What will Brexit mean for the pound in your pocket? Like the economy, the boring answer is that it probably doesn't mean much at all. Your pension, if you're a private sector worker, is largely down to the performance of the stock market. Most of the big FTSE 100 companies are already fantastically globalised; the profits and dividends from the likes of BP or Glaxo have relatively little to do with the UK economy. Britain in or out of the EU will have a limited impact on their earnings.
There could be localised falls in rents following a Brexit, with a knock-on impact of reducing house prices. Buy-to-let landlords are probably most exposed. You only need to read how Britain's biggest buy-to-let landlord, Fergus Wilson, relied on EU migrants to fill his property empire to know that if the door shuts to immigration, rents are likely to fall. But any impact is likely to be mild nationally.
Holidays could become pricier. Sterling has fallen a long way from its €1.44 peak, though that's largely down to interest rate expectations. Add in uncertainty over the referendum and it will weaken further. That said, at €1.44, sterling was looking overvalued. At €1.25 to €1.30 it's probably close to purchasing power parity.
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Some of the important advances for consumers could be threatened by a British exit. It was the EU that ordered the giant telecoms companies to cut absurd data roaming and call charges. But it took Brussels far too long to tackle an obvious cross-border issue. It's perhaps totemic of why so many left-leaning voters are uncomfortable with the EU. Too often it appears to be an institution run for the benefit of big business. The fact that the CBI is so ardent in its desire for Britain to remain in the EU says all you need to know about how Brussels works for it.
The next few months will see hysterical claims about the economic impact of a Brexit by both sides, and both can be safely ignored. My vote will come down to the pros and cons of the EU political project. This is one issue where it's not about the economy, stupid.
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