They call it ‘Project Fear’. But Brexit supporters could use even more aggressive language, if they wanted to, to denounce the tactics that pro-EU campaigners are developing. And it would be fully justified.
For example, what the Airbus executives have done would be problematical even in countries with a weaker democratic tradition than Britain.
They have sent letters to their workers with terrifying messages such as: “We simply don’t know what ‘out’ looks like.” Or: “Should the British electorate have a different view then clearly we wouldn’t cease our activities in the UK, which are highly important and very prominent. However, our business model is entirely based on our ability to move products, people and ideas around Europe without any restriction (…). We all need to keep in the back of our minds that future investments depend very much on the economic environment in which the company operates.”
Aviva’s chief executive, Euan Munro, has been less diplomatic: “We believe there would be a significant and negative knock-on effect on business sentiment, which would likely push the UK economy into recession towards the end of this year.” Aviva estimates that the consequences for the national economy would not be temporary, nor would they be surmountable in the long term. The reduction in exports would be permanent considering that the EU market absorbs 50% of UK exports, representing around 15% of GDP.
JP Morgan Chief Market Strategist, Stephanie Flanders, uses the same argument but somehow in reverse: “I am less concerned about big market moves and sterling than I am about the individual companies that we are invested in. We especially worry about how skilled we think they are in navigating that new environment.”
The problem is that Brexit campaigners are using the same tricks to argue their case. Imagine that you want to convince public opinion that the government could save the steel industry in one stroke by decree. Ah, but the problem is that European Community regulation prevents Westminster from nationalising it. This is the explanation given by the ‘out’ supporters for the sale of India-based Tata Steel’s UK assets (almost 40,000 jobs in danger), as well as the sudden acceleration in steel production at Chinese factories. These have reached their limit in the domestic market (we are talking about more than 100 million tons) and have started to conquer the global market by inundating it with cheap products.
For the time being, what we know is that most CFOs in companies which make up the FTSE 350, as well as other large corporations, assure us that the economic climate is already beginning to get complicated.
About 75% claim to support the ‘in’ option, 12% more than in December 2015. Only 8% argue that they would be better off if the country abandons its seat in the European Union. In any event, all of them agree that plans to increase staff and invest new profits in the company are suspended. And in fact, 17% prefer not to even open their mouth for now which, once again, would seem more typical of countries less accustomed to freedom of thought and expression.