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Brexit, Europe

The (ABC) Economics of Europe and ‘Brexit’

Anthony Woods Woodhart (AW), a dear friend of ABC Economics, volunteered to exchange views with the portal’s founder Stefano Francesco Fugazzi (SFF) on Europe and Britain’s upcoming Referendum on the European Union.

Mr Fugazzi is the author of ‘Brexit?’, a book which remarkably spent 4 weeks at Number 1 in Lulu’s ‘Business & Economics’ UK Chart (available in Paperback and eBook).

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AW – First things first. Congratulations. Last week ABC Economics celebrated its second birthday. How is the project coming along?

SFF – Thank you. I think we are doing well. I originally established ABC Economics with the purpose of sharing with readers my views and analyses on the state of the economy in addition to any valuable research material, generally academic papers, published by third parties. For a while we tried to diversify into news reporting but let’s face it, we do not have the human resources and the time to do it day in and day out. So I had to pull the plug on that one.

AW – What is ABC’s philosophy?

SFF – I always claimed that ABC Economics is an independent and non-politicised think tank… and I truly mean that. We aim to provide an objective viewpoint. Obviously this does not mean we do not feel strongly on a given subject. This is the reason for us being “independent” rather than “neutral”.  You cannot remain silent and express no views at all “when there’s blood in the streets” (a Warren Buffet quote, A/N). I feel so sorry for those former ABC Economics staff members who did not grasp our philosophy and perhaps were seeking for media exposure or keen on political affiliations. Quite clearly they were in the wrong place. Nonetheless I would like to thank them for the contributions they made over time.

AW – You mentioned that it is impossible to express no views at all “when there’s blood in the streets”.  Could you articulate your economic views in less than 100 words?

SFF – Let us just say that I am a free market enthusiast; however I believe that a State needs to play its role and intervene and retain control where and when required. I also remain sceptical about TTIP as I believe it is a step too far. In terms of Europe, I am pro-EU but critical of a number of its mechanisms, including the way the monetary union was assembled and subsequently run. As far as Britain is concerned, I am in favour of the UK staying in the EU.

AW – Let us talk about the EU Referendum and the Brexit scenario. In June you published  a book called “Brexit?”. Why do you have a question mark in it?

SFF – Because I deliberately did not share with the reader my own definitive answer on the matter. Why? Because my view, my vote doesn’t count. Therefore the aim was to put side by side contrasting views on Brexit, reporting on those analyses which claimed that by 2030 Britain would be better off without Europe and those claiming the opposite. My view is that it is impossible to say whether a GDP increase  or fall in 2030 will be a direct consequence of “Br-exit” or “Bre-in”.

AW – Why did you publish “Brexit?”

SFF – Simply because I noticed that even amongst British citizens there was a lot of confusion, or lack of knowledge, on the legal framework. That is, really, the main reason for publishing “Brexit?”. I wanted to explain what the EU Treaties entail, the procedures and how legally they would remain associated with Europe even in the event of Brexit.

brexit sf 1AW – Let us assume Britain goes. Does this mean we would leave Europe for good?

SFF – Not at all. Unfortunately for Farage and his Eurosceptic mates, you can leave the EU but not Europe and, to some extent, EU laws. Assuming that Britain re-joins as an EEA (European Economic Area, A/N) member, EU regulations and directives may still impact Westminster’s policies. I appreciate that most people, and most EMPs (European Members of Parliament, A/N), have never read EU regulations; however they should be made aware that EU directives and regulations apply to EEA members as they often say this is a “text with EEA relevance”. So if you plan to leave the EU on regulatory grounds, then I am so sorry to disappoint you.

AW – Okay. Someone then would say: “Let us forget about regulations. Surely if we ‘Brexit’ then we won’t have to pay the EU £55 million a day”, as Farage claimed last year at LBC Radio (see LINK).

SFF – Farage is an experienced politician and – quite frankly – should know better than I do that politics is a broader field than accounting. If you were to arrive at decisions solely on an economic cost-benefit basis, then you would accomplish very little in life. Look, the truth is that you cannot assess the success or failure of a relationship, in our case with Europe, on an accounting basis. There are costs and benefits which cannot be precisely quantified. And usually when it comes down to intangibles, benefits outdo costs. Let me give you a few examples. It was thanks to Europe that Britain modernised. It was thanks to Maastricht and the single market that today this country finds itself at the forefront of the financial sector. It is the liberalisation of trade and the free circulation of human capital that unquestionably helped Britain in attracting, retraining and developing qualified professionals. Without Europe and the exercise of political influence in Brussels, Britain and the City of London would not be where they are now.

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