Brexit: Some Random Thoughts on WTF and Now What?

So, that didn’t work.  On several levels; one of which is illustrated by the photo above. That’s LGM’s Senior Correspondent on British Politics holding the sign. While British politics suddenly became a hell of a lot more interesting, it’s also significantly less important.

After working GOTV all day yesterday, I skipped the count (where I was due to be a verification agent in Plymouth, but I was too spent to stay up until the declaration which happened around 4AM), and fell asleep by 10PM to Radio 4. When I went to sleep, one of the last tweets I read was that it would take a polling failure “worse” than 2015 or 1992 for leave to win (by whom I do not recall, but it was either a pollster or an academic psephologist). Both Boris Johnson and Nigel Farage were reportedly in negative spirits. Farage would later (around 4AM) say on R4 that he didn’t expect to win. I fell asleep easily.

I woke around 2:30AM with R4 still on, to several gloomy, dire texts, and the first authorities had been called.  They were not going as expected for a 50/50 national result as per this guide to expectations as the night progressed. If Sunderland had a leave vote of +6%, we’d be roughly at 50/50 nationally.

Sunderland came in at leave +12%.

I’m somewhat relieved that I didn’t go to the count in Plymouth. While leave was going to win in Plymouth under even the rosiest scenarios, the final result here was Leave 79,997, Remain 53,458 on 71% turnout.  That’s a 59.9% leave vote in Plymouth.

It’s difficult to say what happened. Turnout was a mixed bag; reports from Scotland indicate it was lower than expected, and significantly lower than the independence referendum in 2014. It’s likewise possible that my alternative hypothesis hedge from yesterday morning was more accurate than my working hypothesis: that the increase in registration and the relatively high turnout nationwide (72%, higher than any UK-wide election since 1992) was more due to lower socio-economic classes, relatively electorally inactive, being mobilised by the referendum.

I’m not sure we can call this a polling failure, given the polls were all over the place.  Clearly, however, on-line polls did better than telephone polls, to which I strongly suspect social-desirability was the cause (in Brit-speak, “shy Brexiters”). NCP did not do nearly as well as in the 2015 general election. As for myself, at least I was consistent: shit at the 2015 general and equally shit at the referendum. In my defense, I only missed the final result by 4%. Which is no defense at all.

But then, the bookies got it very wrong, as did the markets.

Some observations:

• North of the M4, remain under performed. However, in the south, remain over performed.
• The class dynamic was huge, and bigger than expected.
• The pound tanked, and is at its lowest level since 1985.  Ronald Reagan was just starting his second term. I was in high school. My trip to New York City in October will be just a bit more expensive.
• The FTSE futures anticipates a 9% fall in both the FTSE and DAX when the market opens.
• London retaining its status as a financial capital is in doubt, which is one of the key drivers of the British economy.
• There was the expected regional divide. While Wales voted leave 53%, Northern Ireland was 56% remain, and Scotland . . . not only was Scotland 63% remain, but remain won every single Scottish local authority.
• It’s pretty clear that a greater than 35% share of Labour Party membership voted for Brexit.
• David Cameron gambled in 2013 on a short term electoral tactic. His “luck ran out”.
• There will be a surge of experts on Article 50 of the Lisbon Treaty.

I don’t see how David Cameron can continue as Conservative Party Leader or PM.  Rumors abound right now of course, including Michael Gove and Boris Johnson in a huddle about Cameron’s future. Likewise, there’s now a real possibility of a snap election before Christmas. This would require overturning the Fixed Term Parliament Act 2011, but that won’t be a problem. That said, the Labour Party are not ready for it.

Martin McGuinness has called for a poll in Northern Ireland to choose between a united Ireland and remaining in the UK.  The SNP see Scotland’s future as “part of the European Union”. It doesn’t take a genius to get the hint. While in 2014 I was solidly opposed to Scottish independence, one of the key arguments for remaining with the United Kingdom was that it presented the easiest and safest route to EU membership. It can be argued that England and Wales did not hold up their end of the bargain.

In terms of why 52% of the population voted to leave the European Union, this dovetails neatly with a class that I teach here on the effects of globalization on domestic politics. Yes, part of it was racism, xenophobia, and nationalism. But I don’t believe that 52% of the British (and Irish) population are those things (however, they are those who speak the loudest).  To quote my friend, Cllr. Bill Stevens (Labour), “It means England (especially the poorer areas) have felt ignored and saying the only reason they voted that way was due to hate, nationalism, racism etc. will make it worse.”

I don’t have the link, but a couple days prior to the referendum, Michael Gove was confronted with the question of market reaction, and he promised (in the glib manner that the Leave campaign responded to any critique or bothersome fact) that we would wake up on Friday morning, and there would be no crash.

Alas, here’s the reaction of the markets: