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Brexit: have we taken leave of our senses?

In his latest book, economist William Keegan highlights the ‘insanity’ of voting to leave the European Union

22 March, 2019 — By Peter Gruner

William Keegan: ‘I do not recall feeling so utterly depressed and furious as I – and, I think, many of my friends and acquaintances – feel about this whole Brexit business’

WILLIAM Keegan pulls no punches. The Islington writer, one of Britain’s most influential economic commentators, is convinced that Brexit is “unadulterated economic insanity”.

You may be fed up with the “B” word but in his new book, Nine Crises (Fifty years of Covering the British Economy from Devaluation to Brexit), Keegan argues that we can’t afford to ignore what could spell financial disaster.

Even at this extremely late stage in government negotiations the veteran Observer/Guardian journalist, who has lived in Barnsbury for 40 years, hopes there will be a second referendum.

“I know it’s a risk that people might vote Leave again,” he said this week. “But it’s a risk worth taking.”

He blames financial austerity, introduced by former Conservative prime minister David Cameron and chancellor George Osborne, for the result in which more people voted in the referendum to leave Europe than stay.

Keegan is sympathetic to Labour, but not a fan of party leader Jeremy Corbyn. He says he would prefer to see a more moderate and pragmatic leader, like Yvette Cooper or Sir Kier Starmer.

He even finds shadow chan­cellor John McDonnell an “interesting” alternative candidate for leadership.

“At least McDonnell is beginning to show signs of pragmatism,” he says.

However, Keegan is sad that Ed Balls, former Labour government economic secretary to the treasury, is no longer a Labour MP.

“I think he’d be an excellent leader. He knows his stuff and ever since BBC TV’s Strictly Come Dancing he’s won huge popularity with the public.”

Keegan’s book is peppered with anecdotes and memories from the past. He draws on his own experience to explore, for example, the 1967 devaluation, the three-day week, Black Wednesday and the 2008 global financial crisis. There’s some entertain­ment, too. When the Decimal Currency Act came in 50 years ago he told James Callaghan, then Labour’s chancellor, that his loose change, under the old currency, had become too heavy. To which Callaghan replied: “Why don’t you do what I do and get your tailor to reinforce your pockets?”

Other crises that figure prominently in the book include the “three-day week” in 1972 under Conservative Edward Heath’s govern­ment. Then in 1976 the Labour government under Callaghan was forced, by a collapse of confidence in the financial markets, to go “cap in hand” for a major loan from the International Monetary Fund.

Keegan also blames the monetarist phase of Margaret Thatcher’s government from 1979 for the huge and lasting pain inflicted on the British economy and many members of the population. It was, he writes, a badly conceived domestic economic policy, from which he (Keegan) coined the term “sado-monetarism”.

But Brexit is potentially the biggest crisis he has witnessed in 50 years.

“This was self-imposed by former prime minister Cameron, whose arrogant error of judgment in calling the referendum ranks with Anthony Eden’s over Suez in 1956 and Tony Blair’s over Iraq in 2003.”

Keegan writes: “I do not recall feeling so utterly depressed and furious as I – and, I think, many of my friends and acquaintances – feel about this whole Brexit business.”

He has two overriding reasons for concern. One is geopolitical rather than economic.

“It seems unwise, to put it mildly, to try and unhook ourselves from the rest of Europe when the United States, under Trump, has declared a trade war on the rest of the world and Europe is very concerned about a threat from Russia’s President Putin.”

The second concern is obviously economic. “We have spent 45 years being integrated into the wider European economy and in effect have become an economic region of the EU.

“So much industrial production is geared to intricate supply lines and delivery systems. I suspect that a lot of people who voted for Brexit do not realise that many things they take for granted, like the ability to buy fruit and vegetables delivered to their supermarkets overnight from France, Spain and other European countries, would be put at risk by customs restrictions imposed by Brexit.”

Nine Crises (Fifty Years of Covering The British Economy from Devaluation to Brexit). By William Keegan, Biteback, £20

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