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Brexit viewpoint: generational differences

European equities manager Tim Stevenson gives his personal views on the UK referendum, assessing some of the current arguments around EU membership and the impact of a potential Brexit.

Article also available in : English EN | français FR

How do you quantify the value of cultural integration? It seems rather anachronistic, but young people in the UK seem to appreciate far better than their elders the value of this – which is why they are overwhelmingly in favour of “Remain”. What we do know, is that uncertainty around the referendum has already caused the UK economy to weaken. No-one can responsibly avoid taking a view ahead of such uncertainty.

There are plenty of facts that show how the UK economy has benefited from access to the European market. A marketplace of more than 500 million people is hugely valuable to UK industry. We have discussed the referendum with many of the European (and UK) companies we invest with and have yet to find a single one that thinks the UK would be better off out.

So what impact could some of the key factors surrounding the referendum debate have on the UK economy?


  • The majority of European Union immigrants are young, healthy and motivated – and pay taxes. There may well be additional strain on schools and maternity units, but this is an investment in the future of the UK and should be encouraged if the intention is to build a stronger economy.


  • Many Swiss and US banks are based in the UK as it gives them a “passport” to financial services (and markets) in Europe. That is why Jamie Dimon, CEO of JP Morgan, said recently that, if the UK leaves the EU, the company may have “no choice but to reorganise our business model here”, with a threat to thousands of jobs across the UK. That was not a threat – it was a statement of fact.
  • There is no certainty over what access the UK could have to European markets in a post-Brexit world. It was not long ago that French farmers were burning imported British lamb – what co-operation would it be reasonable to expect if the UK votes to leave? It is absurd to expect countries like Germany to offer more favourable trading terms than they do at present.
  • No-one knows what a Brexit vote would mean, how long it would take, or whether we even have enough specialists to renegotiate current treaties. If we do leave, then a recession will likely follow – one factor that does not matter for the retired, the wealthy – or the anarchists.


  • The vast majority of rules and regulations proposed by the EU are entirely logical, from the prevention of child labour to limits on pollution. Even if the UK does vote to leave Europe, we will continue to apply such rules.
  • The problems the UK is highlighting in terms of the way that Europe is working (and where it is not) are actually widely accepted across Europe, from Denmark and Germany, to the Netherlands, Italy, Spain – and Ireland in particular. The referendum has acted as a huge wake-up call worldwide, and the reform process which has started will continue after the vote. It needs to – and the UK can provide valuable input into that debate. Rather than smash the edifice to the ground, what about rolling up our sleeves and helping to improve it?

The currency question

Is the euro really a flop? It might be controversial, but there is a lot of evidence that, in spite of its obvious shortcomings, the creation of the euro has introduced discipline on its members. It has forced Ireland to reform (it is now one of the strongest European economies again), is driving Spain to reform, while Italy, under Renzi, is making progress.

Not adopting the euro has enabled the UK to avoid facing similar reforms – harsh medicine that one day will be necessary anyway. Measurable data suggests that the economies of those countries in the euro are improving – and to suggest the EU has the weakest level of growth globally is arguably incorrect. It is not great, certainly, but growth is returning and unemployment is down. All world economies have morphed into low-growth regions as an obvious result of demographics and saturation. The stress of low growth is causing political uncertainty in every country in the world, and weakening the economy in the UK and Europe, would accentuate that problem.

Greece may be an exception, but to paraphrase a leading former member of the UK government, with whom I recently shared lunch, Greece should never have been in the euro to begin with, but it is now because it is in the euro that it has survived. Without it, [Greece] would long ago have sunk into the Aegean Sea!

To summarise, there is evidence to suggest it could be a disaster for the UK economy if the vote is to leave the EU. In my view, this vote is about the younger people of this country, whose future could be hijacked by older voters with less to lose.

Tim Stevenson , June 2016

Article also available in : English EN | français FR

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