It’s beginning
to look as though neither side in the debate about the EU referendum can allow
a single day to go by without producing more inflated and sensational claims about the effects
of either remaining or leaving.
Today we have a
warning
from Cameron about the cost of European family holidays. Reading the headlines, one could be forgiven
for believing that this is a proven fact – which is, of course, what Cameron
wants us to believe – but in fact it’s little more than a back-of-an-envelope
calculation based on an unsubstantiated assertion about the impact of Brexit on
the value of the pound in the immediate aftermath of an exit vote. So how valid is the assertion?
It does seem
probable that Brexit would lead to an immediate short term drop in the value of
the pound on international markets. That’s
partly based on those people trading in currency believing the gloomy
predictions, and partly on them seeing the gloomy predictions as an opportunity
to bet against the pound and make some money.
Whether such a fall in value would be sustained is a much more difficult
question to answer.
But if indeed,
it turned out that the new ‘normal’ value of the pound was indeed lower for an
extended period, then the claim that it would increase the price of holidays
would be a valid one. But not just in
Europe, of course; a lower pound would increase the cost of holidays anywhere
where people need to pay for things in a currency other than sterling. And indeed, Cameron could legitimately have
gone on to say that, assuming his guesstimates are right, any goods or services
purchased from ‘abroad’ would be more expensive.
That’s only
half the equation, though – because whilst a cheaper pound would make foreign
purchases more expensive, it would also make foreign sales more competitive. A fall in the value of the pound isn’t
necessarily a wholly bad thing, and as well as exaggerating on the basis of
broad unsubstantiated assumptions, Cameron is also guilty of gross
over-simplification of a complex question in an attempt to appeal to people to
vote on the basis of a very narrow interpretation of their own self-interest.
As a supporter
of the 'remain' campaign, I find the arguments being made in favour to be
increasingly disappointing. I almost
wonder if some of them might actually want to lose.
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