Brexit 'the biggest political risk facing the world'

LORD PETER MANDELSON (above )
LORD PETER MANDELSON (above )PHOTO: EUROPEAN PRESSPHOTO AGENCY

Serious economic consequences if British voters decide to leave EU, warns Mandelson

Britain's possible departure from the European Union, or "Brexit", is nothing less than the biggest political risk facing the world today.

So says former EU trade commissioner and British Cabinet minister Peter Mandelson, who is firmly on the side of the "remain" campaign.

Lord Mandelson is in town this week to open the Singapore office of corporate advisory firm Global Counsel, of which he is chairman.

On Tuesday, he gave a speech at the Lee Kuan Yew School of Public Policy, in which he outlined the economic consequences, for Britain and the rest of the world, of Brexit.

Britain will hold a referendum on June 23 on the issue and the latest polls show that voters are almost equally divided between the "leave" and "remain" camps.

Speaking to The Straits Times on Tuesday, Lord Mandelson said that first, a decision by voters to leave the EU would trigger immediate market volatility.

"The Bank of England already has a heavy intervention planned to arrest a fall in the sterling's value and the euro is also likely to be affected," he said.

"We can't tell how long that market volatility will continue but the political and market uncertainty following Brexit would go on for very many years."

MARKET VOLATILITY

The Bank of England already has a heavy intervention planned to arrest a fall in the sterling's value and the euro is also likely to be affected. We can't tell how long that market volatility will continue but the political and market uncertainty following Brexit would go on for very many years.

LORD PETER MANDELSON

Secondly, Lord Mandelson said, Britain's role as a trading and investing base for access to Europe's single market would be affected.

Financial services firms all over the world would be affected as Britain would no longer have automatic passporting of financial services from London into the EU.

And foreigners with property investments in Britain would have to assess the impact of Brexit on the real estate market.

Demand for corporate headquarters in London might fall and the high-end residential segment might also be hit if immigration controls are tightened, Lord Mandelson added.

And finally, an EU without British influence could turn out to be a different entity in future, he warned.

"They would be losing British influence, which has been to make Europe a more open, liberal, free trading economy, more oriented to Asia and welcoming to foreign investors.

"I'm not saying that would end overnight, but Britain's influence has always been strong in the EU and the danger would be that without Britain, the EU would be more influenced by less open, more protectionist forces."

Far from being mere observers of the Brexit debate, Lord Mandelson said Singaporeans and others across the world should bring home to their British friends the massive economic consequences of Britain's departure from the EU.

"Brexiters" also have to be disabused of the idea that once Britain leaves the EU, it could simply renegotiate trade deals with other countries, he added.

"Sixty per cent of Britain's exports are covered by existing EU free trade agreements with the rest of the world.

"When we leave the EU, we cease to be covered by those agreements so we would have to persuade all those international partners to grandfather their contents, or renegotiate them," he noted.

A version of this article appeared in the print edition of The Straits Times on March 24, 2016, with the headline 'Brexit 'the biggest political risk facing the world''. Print Edition | Subscribe