The spectre haunting Europe today is, of course, the result of the UK referendum on EU membership. Today’s ghost is accompanied, arm in arm, by the ghost of Brexit future, the likelihood of contagion if Leave wins: the loss of market confidence in the UK, the jittery reaction of markets elsewhere to other populist insurgencies led by the likes of Donald Trump in the US and right-wing parties in Europe, and the concomitant gain in political confidence for any anti-establishment movement, which will draw oxygen from instability.

But let us not forget the ghost of Brexit past – the UK’s exit from the European Exchange Rate Mechanism (ERM) on ‘Black Wednesday’, September 16, 1992. Whatever the result, I think historians will look back at Black Wednesday as an important factor in making the UK the first State to hold a referendum on EU membership.

Why the UK should be the first seems a no-brainer, initially. The country has a longer history of entrenched Euro-scepticism than other member states, a scepticism with roots in both the Labour and Tory parties. And, in this campaign, Leave has been unabashed in playing the immigration card and papering over the uncertain economic environment that would follow Brexit.

At second glance, however, things are more complicated.

There is no doubt that Leave has been led by political opportunists feeding on bigotry. One of them, Boris Johnson, built his career on lies about Europe.  In an early job as Brussels correspondent of The Daily Telegraph, he was accused by colleagues of making up stories and quotes about the European Commission, and his then editor, Max Hastings, once thought fit to write an op-ed saying he finds Johnson untrustworthy.

However, Brexit wouldn’t have come so far by feeding on bigotry alone. The real question – and it finds echoes across Europe – is how a bigoted campaign has nonetheless the support of so many people (and politicians) who are neither xenophobic nor inward looking.

Indeed, right-wing nationalism has made far less inroads in UK electoral politics than it has in countries like France, the Netherlands and Italy. Not only is UKIP not quite the National Front, but Nigel Farage has not made anywhere the gains made by Marine Le Pen, who is poised to be a serious contender in France’s presidential elections next year.

Moreover, the UK is the country that is least bound by EU-wide rules. It is not a member of the Schengen area or the Eurozone. It has a significant rebate on the money it contributes to Brussels. When the Maastricht Treaty was signed, it negotiated several opt-outs from the social charter.

Those opt-outs were not just fine print. They were credited with contributing to the growth of the UK economy from the mid-1990s (the last years of the dying Tory government) to the heyday of Tony Blair, before his credibility was shattered by his complicity in the Iraq war in 2003.

While France and Germany struggled with stagnating economies and politically difficult economic reforms, the UK benefitted from European inward investment, including in manufacturing.

The UK is the country that is least bound by EU-wide rules. It is not a member of the Schengen area or the Eurozone

The credit was given to the flexibility its economy already had thanks, it was said, to long-undertaken Thatcherite reforms. It was the prelude to London as the capital of Cool Britannia.

In this success lies one of the major reasons why even some decent politicians, and two former chancellors of the exchequer, believe that the UK can go it alone.

For this period of economic growth was preceded by a ‘Brexit’ that seemed cataclysmic at the time: the humiliating exit of the UK from the ERM on Black Wednesday at a cost of circa £3.3 billion.

The Conservative government led by John Major never recovered politically. The Eurosceptic wing within his political party grew in strength. Economically, however, the exit was beneficial, as it gave the UK more control over its monetary policy.

As the years went by, Black Wednesday began to seem less disastrous and more beneficial. Is it a coincidence that a recent poll shows that only just over a third of Britons agree that Brexit would leave them worse off? (In fact, the experts say it might leave households some £3,000 to £5,000 shorter per year.)

It shouldn’t surprise us that the events of a quarter century ago should be influencing politics today. That same period saw the break-up of the former Yugoslavia, with a brutal civil war fought between various militias. A generation of then young politicians were scarred by the inaction of Europe, while Germany had to face, alone, with no help from its European allies, a sudden influx of 400,000 refugees.

It was a formative experience from which today’s leaders drew lessons that were, alas, the wrong ones.

When David Cameron justified the UK’s role in quickly intervening in Libya in 2011, he explicitly referred to his searing memory of Europe shamefully sitting on the side lines 20 years before.

And while Angela Merkel, to my knowledge, has never referred to Germany picking up almost half a million refugees alone in 1992, it must have played a part in Germany’s long reluctance, until the Syria crisis, to acknowledge the principle of burden sharing.

Just as the wrong lessons were learned on foreign policy, with devastating consequences for our part of the world, a 2016 Brexit basing its optimism on that of 1992 would be foolish.

This time round a Brexit would be followed by capital flight, not inward flows. And no manufacturer would invest significantly in the UK until the uncertainty surrounding the conditions of leaving was lifted. What would therefore happen, in all likelihood, is that the UK’s dependence on foreign investment in real estate and financial services would grow. But that would exacerbate the very conditions that would have led to Brexit: unaffordable housing for people on wages, and economic policies driven by a need to please unelected foreign oligarchs – what some have called the ‘Guernsey-fication’ of the UK.

Whatever the result that emerges between today and tomorrow, are there any lessons that one can usefully draw from this referendum? Yes, two.

First, the UK got to this point despite having an economy with virtually no unemployment (five per cent). Nonetheless, there is a strong sense of economic resentment, with a large proportion of Brexit supporters having the same profile as supporters of Donald Trump and European right-wing political parties: working class with low educational attainment.

A service economy may be more ‘sophisticated’ but many of its wages are low and its terms of engagement are precarious. Economic growth meanwhile fuels importation of foreign labour, which both keeps wages low and puts strain on state services like health, schooling and housing.

Second, the temptation to make up for shortfalls with ‘Guernseyfication’ or, more to the point, ‘Dubaification’, will only paper up the cracks: the UK is a living example of how revenues from those sources will not be enough to make up for the strain on health and housing budgets, while giving people a sense of decreasing control over important decisions.

Do the parallels with Malta need spelling out? Perhaps we’ve had enough commentary about the implications of the Brexit referendum for the EU and its workings. Our mainstream politicians should begin to consider what lessons it has for our democracy, economic resilience and political stability.

ranierfsadni@europe.com

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