Opinion: it makes financial sense to have another EU referendum

I’d like another referendum on leaving Europe before we finally leave.

Not because I am a Europhile, but because I think the public need to have their say on the massive financial decisions being made on their behalf.

We voted on a single, simple question – leave or remain – but the economics of Brexit are unfathomably more complex.

Leaving the EU could affect our household finances directly, whether by devaluing the pound, weakening the economy, hiking taxes or even raising unemployment.

None of these issues were seen on the side of a bus, but they are now being brought sharply into focus.

The cost of a second referendum

Referendums (there’s a debate over whether it’s referenda or referendums that is almost as passionate as the Brexit debate itself) are not cheap.

The Cabinet Office estimates that the price of the actual poll itself – the counting officers’ expenses, the Royal Mail delivery charges, the cost of the central count – came to £142.4 million.

On top of that, the two official campaigns were allowed to spend £7 million – other registered campaigns were limited to £700,000.

However, that did not include donations from the electorate and UK businesses, and The Guardian newspaper worked out that something like £28m was the combined total donated to both sides.

So more than £180 million was spent on that democratic jolly, most of which was funded by the state purse.

No one could argue that is cheap or the kind of thing we should do regularly.

However, a lot has changed in the last few weeks.

We have learned far more about Prime Minister Theresa May’s plans for a so-called hard Brexit and we are gaining an understanding of the impact that might have on our economy and quality of life.

I argue that £150 million is small change compared to the massive potential cost of exiting the union – and I think that the British public have only now started to realise the full extent of those costs.

It’s only democratic to allow them a second say and it’s easily worth £150 million to make sure it’s the public’s will being done.

What we know now

We now know that May is willing to sacrifice membership of the single market in order to stem freedom of movement.

There’s plenty of evidence that not all Leave voters wanted to leave that market or to stop immigration.

But even those who did may want a chance to pause and reflect on the potential financial impact doing so would have.

Take trade

Say we leave the single market without a new trade agreement. Trade with the EU would then be carried out under terms set by the World Trade Organisation.

That would mean paying tariffs and imports and exports and it has been suggested this would cost us more than £45 billion in tax revenues alone after 15 years.

As perspective, that’s almost twice what local councils spent funding social care last year.  

Take the settlement

We can’t just up and leave the EU.

Like a divorcing couple, we still have to separate our finances and that will mean making an exit payment to the EU to cover our shared liabilities, such as the EU’s pension scheme and future infrastructure projects agreed while we were members.

No one knows what the final agreed figure will be; it’s part of the negotiations.

However, The Economist has reported whispers in Brussels that we could face a demand for €60 billion (£51bn).

To put that in context, that’s five times what we paid to host the Olympics.

Take immigration

Plenty of people do not like immigration and there’s a perception that newcomers to the UK take benefits but give little back.

The financial truth may well come as a shock in the event that immigration is halted.

Last year, the Office for Budget Responsibility said that the Government will need to borrow an extra £16 billion by the year 2020/21.

That’s to make up for the reduced tax income caused by a tighter post-Brexit migration regime.

Take the eye-watering total

If you want to put a number on the potential cost of Brexit to the nation’s coffers, the Office for Budget Responsibility is a good place to look.

Last year it predicted that there will be £58.7 billion of borrowing over the next five years that directly relates to the referendum result and the impact of exiting the EU.

So that’s a potential hit to the public purse of almost £60 billion.

That’s a far cry from the £350 million a week to the NHS promised during the campaign, and will come as a shock to many voters who believed they were voting for more money to stay in the UK.

Finally

When you take out a new financial product you have a 14-day ‘cooling off’ period, during which you can reflect on whether you have made the right choice for your finances.

Are we really going to exit the EU, with all the resulting financial fallout, without asking the British people if they are genuinely resolved to do so now they better understand the financial impact?

Have we changed our minds?

There is certainly evidence to suggest that the British people have started to wonder if they made the right call last year.

A poll published in the Daily Mirror over the weekend suggests that, if the referendum on EU membership was held again, 51.2% would vote Remain and 48.8% would vote Leave.

Closer to home, a poll of loveMONEY readers (pictured below) late last year found 12% of you would vote differently if there was a second referendum.

The debate leading up to another referendum would be far more informed than the last one, where we were promised everything from punishment Budgets to £350 million a week to spend on hospitals.

I think both sides stretched the truth and neither really understood exactly what future we were debating.

A second referendum would be conducted with real information and a real understanding of the financial impact of a vote either way.

Firm resolve

Perhaps the British people feel so strongly about leaving the EU that we would still vote leave a second time.

If that were the case then there would be nothing left but to accept that Brexit means Brexit and crack on with making the best of it.

I’m not in favour of continuing to poll until the country gives the answer I want – but I am in favour of polling now there is more information and people have had a chance to see what a future outside of the EU might entail.

There is sufficient and growing evidence that people may be rethinking their position now the way forward has become clearer.

It’s only democratic to give them an informed choice.

What do you think? Do you agree with me that we should have another referendum? Vote in our poll and share your thoughts in the comments section below.