Millions of Britons will head to the polls on June 23 to vote in one of the world’s most important referendums in decades. The question, as phrased, is a simple one: Should the United Kingdom remain a member of the European Union or leave the European Union?
The outcome could have massive economic implications. No nation has ever left the European Union. The 28-member bloc is the world’s largest economic-political unit, boasting a combined US$16.2 trillion economy. EU President Donald Tusk has said an exit by the U.K. could lead to the end of “western political civilization itself.”
That kind of language has fuelled what has been an emotionally charged campaign by both sides. The Leave camp argues that membership offers few benefits, while forcing the U.K. to adopt unwanted EU laws and a flood of migrants. The Remain camp points to the economic damage an exit would create and the loss of Britain’s influence on the European mainland.
For international observers, the focus has been on what a departure will do to the global economy and financial markets, with many leaning toward more harm than good. Here, we look at the potential economic fallout from a Brexit.
Pummelling the pound
Jason Alden/BloombergBy Matthew Fisher
It seems I struck a raw nerve in examining the Liberals’ foreign and defence policies last week. Marc Garneau, their foreign affairs critic, rebutted my column at length in Saturday’s [itals]National Post.[enditals]
I greatly admire Mr. Garneau. He has a distinguished record of public service in the Royal Canadian Navy, as an astronaut, as leader of the Canadian Space Agency and now as a parliamentarian — a far more robust résumé than that of his leader. As a Canadian who spent 31 years overseas and in conflict zones, I welcome Canadian politicians speaking out on foreign and defence issues. They usually dodge or fudge on these subjects, fail to follow up, or talk nostalgic nonsense about Canada’s purported halcyon past in foreign and defence policy.
I am certain Mr. Garneau had no part in advising Justin Trudeau when he said he admired Communist China because “their basic dictatorship is actually allowing them to turn their economy around on a dime.” Nor can I imagine he briefed the Liberal leader before his puerile joke about the Harper government’s intention to “whip out our CF-18s and show them how big they are.”
Mr. Garneau called me out for saying the Liberals had not spoken out against China’s aggressive policies in the South China Sea when, as he rightly pointed out, the Harper government had done “precisely nothing” about this. Perhaps he had not read columns I wrote only last month from Australia about the Harper government’s woeful inattention to security issues in the Pacific Rim.
On Iraq, Mr. Garneau questioned the efficacy of the coalition’s bombing campaign, of which Canada is a part, and suggested Ottawa should play to its strength by training Iraqi troops to defeat the Islamic State of Iraq & Al-Sham and by being involved in humanitarian aid.
The truth is that the bombing campaign opposed by the Liberals appears to have stopped ISIS's rapid march across Iraq. It has made a crucial difference to besieged Yazidis and seems to have been the key factor in liberating an important dam from what are arguably the most ruthless jihadists ever.
Moreover, a modest number of Canadians is already helping train Iraqi troops and, as UN officials have told me when I visited refugee camps in the region, Canada has been a model nation in supporting humanitarian efforts there.
I guess it is churlish to recall the Liberals who support training Iraqi forces opposed Canada taking a lead role in training Afghan troops after the combat mission in Kandahar ended. They wrongly predicted this assignment would lead to more Canadian casualties.
To support his contention the Liberals are internationalists, Mr. Garneau cited a party proposal that Canada send a peacekeeping mission into the dangerous quagmire of the Central African Republic. Good luck selling that idea to voters after Canada’s peacekeeping experiences in Somalia and Rwanda.
Nevertheless, I guarantee you a Trudeau government will send troops on a mission to Africa whether or not it makes sense — and likely will not — because they are desperate to resurrect “peacekeeping” and “multinational” initiatives as the foundation of Liberal foreign policy. Back to the future!
Mostly, though, Mr. Garneau criticized Conservative initiatives rather than fleshing out his party’s thinking on international matters. That thinking can be found on the Liberals’ official website. Under “What we Stand For,” they share their leader’s vision on “foreign affairs and defence.”
There’s little there. Liberals say they would treat veterans better. They say Canada should be a world leader in multinational institutions, exporting expertise, providing development aid — things we already do. There is not a single word on defence, although the defence spending is the biggest departmental expenditure, nearly $19-billion this fiscal year.
The only web reference to foreign affairs or national defence at the Liberals' biennial conference in Montreal last year is a resolution demanding undefined “tangible support” for Ukraine to assist its transition to democracy, and the admonition the prime minister should “make clear to any foreign power not to interfere with nor undermine the will of the Ukrainian people.”
The conundrum for the Liberals is that to wrest power from the Conservatives they have to convert New Democrat voters, mostly neutralist/pacifist types. That goes double for Quebec, of course, where the Liberals must take dozens of NDP seats to have any chance of forming the next government.
Next month’s gathering of the Conference of Defence Associations Institute brings together senior military officers, diplomats, bureaucrats, academics and industry heavyweights to discuss Canada’s place in the world.
That conclave would provide an ideal opportunity for Mr. Trudeau to outline his international vision for Canada and to answer questions about his admiration for China’s dictatorship and why he used a juvenile sexual reference to dismiss the dispatch of CF-18 Hornets to help fight Islamic terrorists in Iraq.
Postmedia News
Most analysts expect the pound sterling to drop in the immediate aftermath of a Leave vote. The worst-case scenario has the pound declining for a prolonged period against major international currencies, which could force the Bank of England to act. With the buying power of the currency greatly diminished, there could be a sudden spike in the cost of goods across the country. That would require the central bank to increase its benchmark interest rate in an effort to stabilize prices (the country’s interest rate has been 0.5 per cent since 2009). Brexit campaigners have pushed back against this claim, however, arguing the pound would not be weakened and inflation wouldn’t be an issue.
London falling
The City of London is considered one of the world’s most important financial hubs, but analysts warn that a withdrawal from the EU could put that status in jeopardy. Goldman Sachs is one top bank that has said they will shift their European headquarters out of London if the country leaves the EU. There are also already signs that London is losing its desirability as a top destination for real estate investment. A recent KPMG survey found that property investors have been hesitant to invest in U.K. housing and real estate companies in the lead-up to the vote. George Osborne, Chancellor of the Exchequer, has warned that house prices could fall by nearly one-fifth following a Brexit. The current situation mirrors the 2014 Scotland’s referendum to leave the U.K. Supply and demand both fell prior to that vote, only to rebound in the following months after the country voted to remain.
Great migrations
Wikimedia CommonsPart of the DC-10 that crashed in 1979 into Mount Erebus, Antarctica
One of the biggest benefits for citizens of EU countries is the ease of travelling and settling in member states. Nearly three million EU citizens are living in the U.K. and a Leave vote would put their residency status in murky territory. The Leave camp has heavily campaigned on the idea that current EU rules mean the country is being flooded with far more immigrants than it can handle. Net EU migration to the U.K. has been rising and totalled 184,000 in 2015, an increase of 10,000 over the year before. Meanwhile, more than 1.2 million British expats live in EU countries. In the event of a Brexit, many expect there will be a grace period as U.K. politicians negotiate what will happen to their citizen’s existing rights. Some point to the potential for Britain to be part of the European Economic Area, the same as Norway and Switzerland, which has allowed them to have the migrant benefits of EU membership without the influence of voting on policies. But until such a deal is worked out, the residency status of millions will hang in limbo.
Political upheaval
U.K. Prime Minister David Cameron has strongly campaigned for Britons to remain in the EU, and a repudiation of that stance will result in pressure on Cameron to step down immediately. This scenario would probably be most advantageous for Boris Johnson, the former mayor of London who has advocated for the Leavers from within Cameron’s divided Conservative party, and who could be elevated to the post of Prime Minister without facing a general election. Brexit could also embolden other anti-EU politicians in Europe — both Germany and France set for federal and presidential elections in 2017 — and produce a wave of political and economic instability. Perhaps one of the biggest political aftershocks could take place with the U.K. itself, where the question of Scottish independence could be reignited. The Scots are some of the strongest supporters of the EU, with 59 to 75 per cent in a recent poll saying they would like to remain part of the bloc. Scottish First Minister Nicola Sturgeon warned this past week that she would consider “all options” to protect Scotland’s relationship with the Europe in the case of a Brexit.
Carney’s fate
Every renovation is an investment that should pay you backIt’s a new year and you're starting to think about taking on a renovation. Be smart; make it a good investment.
Focus on renos that help increase value, by improving the energy efficiency, durability, comfort and performance of your home. Some people think if they invest in a new kitchen or bathroom that will increase value the most. Not always the case. What if you get a leak or moisture intrusion, which then results in mould? To fix it, you might have to tear out that new kitchen or bathroom.
That’s a huge waste of money and materials.
My top advice is to work from the outside in. Take care of your roof, attic, windows, exterior and foundation first to make sure everything you do on the inside is protected. Some people think that’s pointless, especially when it comes time to sell because people can’t actually see those kinds of improvements. Or you’ll get more bang for your buck by focusing on the lipstick and mascara — the finishes.
But that’s like trying to sell a car with a weak battery, blown head gasket and faulty brakes by throwing on some new rims and a paint job. You might get someone to buy it, but only after some serious renegotiating on the selling price. You could even end up losing money on what the rims and paint cost you. Instead, if you present a solid package, you'll get your full investment, for the selling price you want.
A good start is a maintenance inspection to help prioritize what should be done first. For example, if you can see large cracks in your brick exterior, especially along windows, your bricks are spalling, flaking or the mortar is being eaten away. Getting this fixed should be at the top of your list. Otherwise, you risk moisture getting in behind the brick and into structure, rotting the substrate.
By investing in your building envelope first — that’s everything that separates the inside of your home from the outside — it will pay off in energy efficiency, durability and protection.
Insulation plays a big role when it comes to your building envelope. A properly sealed and insulated home saves money every month.
Closed-cell spray foam insulation is a top product for energy efficiency and airtightness — as long as the right professional installs it; that’s key. I like blown-in batt insulation in the attic with a minimum of R60. A stone wool insulation, like Roxul, that is fire-, mould- and moisture-resistant is also smart. It’s great for basements, plus it can also absorb sound.
Once you take care of the outside, you can start having fun with the inside. There are simple upgrades that homeowners should consider. For example, consider switching carpeting for engineered hardwood; it looks good, is durable and low maintenance, and can also help improve indoor air quality and reduce allergens.
We can also start looking at better, smarter interior products that work for any renovation, like quality drywall. Given the right environment and the right conditions, regular drywall will get mould. Luckily, there are drywall products that have been designed to protect against mould, moisture and mildew. Some drywall even absorbs and locks in volatile organic compounds, which helps create safer and healthier indoor environments.
Think about sub-floor systems that protect your final flooring choice. For example, insulated sub-floor panels with raised drainage and air-circulation channels allow air to move freely and dry out any moisture.
When these panels are placed over a concrete basement floor, not only do they help reduce surface moisture but also temperature fluctuations, which could lead to mould and mildew problems. They also provide a continual thermal break across the entire floor surface, meaning you get warmer floors and use less energy for heating.
Keep a record of every upgrade you make, especially the ones you can’t see, like premium roofing materials, drywall and subflooring products or extra insulation. And keep a copy of all warranties! You never know when it all might come in handy, especially if you ever want to sell your home.
A smart reno is an investment. It should pay you back.
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Cameron is not the only person likely to face scrutiny in the event of a Brexit. Bank of England Governor Mark Carney has ramped up his warnings in the past month about the damage the Brexit campaign is doing to Britain’s economy, noting consumers are delaying purchases of houses and cars, and businesses are waiting to make any investments. His warnings have drawn the ire of Leavers, including Conservative MP Bernard Jenkin, who sent Carney a tersely worded letter about the issue. But the governor hasn’t kept quiet. He made clear that the central bank currently views Brexit as ‘‘the biggest domestic risk to financial stability” in the country. Carney still has another two years left in the five-year term he committed to in 2013, so his job won’t necessarily be in jeopardy in the event of a Leave win. But guiding the central bank through a Brexit with a new government that sees him as a hostile entity would be his greatest challenge to date.
Football failure
The potential consequences of Brexit extend to the cultural realm as well. Many of Britain’s Premier League teams fill their rosters with foreign players, including a good chunk who are from other European Union countries. Under EU rules, they can play in Britain without visas or work permits, but a Brexit could change that. “Leaving the EU would hurt our leagues, create uncertainty for European transfers and be a step back for the next generation of footballers,” West Ham chief executive Karren Brady warned earlier this year. The BBC notes that about 400 footballers in the Premier League are from other EU countries and its analysis suggests that up to 322 of them would fail to qualify under Home Office criteria to remain in the country if existing rules are not kept in the event of a Brexit. Player agent Simon Bayliff told the BBC, however, that one benefit of fewer EU nationals in the league would be that more homegrown players would likely be scouted.
Sobering thoughts
Bob Mitchell, now 73, is a man who knows this all too well. Mitchell was in charge of attempting to recover the bodies of 237 passengers and 20 crew who died when their aircraft crashed into the side of Mount Erebus on Ross Island, in Antarctica, 35 years ago. It was a sightseeing flight that went terribly wrong and which still attracts conspiracy theories today. Just over a week ago, AirAsia flight 8501 plunged into the Java Sea off Indonesia, and the search for the plane and its 162 passengers quickly began.
Since then, the Indonesian navy has battled high waves and strong winds in an attempt to recover the victims’ bodies.
It was a grim and dangerous way to end a year in which 1,320 people perished in air crashes. While, in the long-term, such disasters have become increasingly rare, 2014 was the worst year for fatalities in nearly a decade. And recovering the missing bodies is one of the more unpleasant, and sometimes perilous, jobs around.
Bob Mitchell, now 73, is a man who knows this all too well. Mitchell was in charge of attempting to recover the bodies of 237 passengers and 20 crew who died when their aircraft crashed into the side of Mount Erebus on Ross Island, in Antarctica, 35 years ago. It was a sightseeing flight that went terribly wrong and which still attracts conspiracy theories today.
But the search and recovery of the bodies became the template for all subsequent air disaster recoveries, from the 1988 Lockerbie bombing to the shocking crash of the Malaysian Airlines plane shot down over Ukraine last year.
Mitchell was immediately aware of the significance of the Erebus crash. On Nov. 28 1979, he was an inspector in the New Zealand police force and a specialist in search and rescue. He had, by chance, spent the day teaching a course on victim identification, before heading off to an early Christmas party.
[youtube https://www.youtube.com/watch?v=XtwkKR7JFPg&w=620&h=349%5D
"I had just got home and was sitting down to dinner when the phone went. It was my boss, who told me I had better come in. At the time it was the fourth-largest air disaster in history, and I knew straight away this was going to be a biggie."
In New Zealand, search, rescue and recovery of bodies is a police job. The fact that the plane had crashed 2,500 miles away in one of the most inhospitable areas on the planet was not relevant. The plane was an Air New Zealand DC10 and the great majority of the passengers were Kiwis. Mitchell had just a few hours to gather a small team of policeman together, collect some cold weather kit from a Polar expedition base, and fly to Antarctica on a Hercules.
"I was quite keen to go," he says, speaking from his flat in Kent, having retired to Britain a few years ago. "It was an opportunity to put into practice all that we had learnt. I suppose I was crazy." His mission, and the tales of his team, are recounted in a riveting new documentary film <em>Erebus: Into the Unknown</em>, released this week, which splices their memories with dramatic recreations of the fortnight they spent on the glacier.
[caption id="attachment_670818" align="alignright" width="210"]<img src="http://wpmedia.news.nationalpost.com/2015/01/air_new_zealand_flight_901.jpg" alt="Wikimedia Commons" width="210" height="243" class="size-full wp-image-564568" /> Wikimedia Commons[/caption]
While Mitchell comes across as a level-headed leader, many of his team were overwhelmed by the scenes of death and destruction they encountered. Stuart Leighton was just 22 at the time, and Mitchell says that, in retrospect, he was probably too young to be part of the mission.
Leighton says in the film: "We had no idea what Antarctica would throw at us. We just knew it would be dangerous."
Even for the experienced policemen, the scale and the freezing temperatures were something they had never encountered. Leighton recalls: "There was a lot of mutilation with a lot of the bodies. It was grotesque. It was overwhelming. I personally felt a little bit out of my depth. I had the thought; ’I don’t belong here. This is for the big boys.’"
The team leader’s main concern was not the sight of corpses scattered across the glacier, but his team’s safety. "The bodies didn’t bother me a great deal because it goes with the territory," he said.
His biggest dilemmas were how they would cope with the sudden winds that hurled bits of metallic debris like missiles across the site, how they would avoid falling into the numerous fissures in the ice and how they would be able to recover 257 corpses, bag them up and return them to the New Zealand mortuary to be identified before the ice runway at the McMurdo base camp melted.
Mitchell instituted an efficient system, dividing the crash site into a grid. Each corpse, or body part, was numbered according to who had found the victim and where they were found. "I am a chess player. So I used the international correspondence chess method of numbering the grid of the crash site."
<blockquote class="pullquote">We had no idea what Antarctica would throw at us</blockquote>
The former policeman remains a serious international chess player. And his method is still used at disaster sites. It helped the team back in New Zealand to match dental records and fingerprints with the passenger list.
After setting up the operation, he spent most of the fortnight at the McMurdo base camp - 70 miles from Mr Erebus. Meanwhile, his team slept in tents at the crash site itself. Every day they would laboriously pick through the wreckage, with the help of a team of mountaineers and photographers.
Viewers of the documentary are left in little doubt about how gruesome the job was. Mitchell says: "If anything, the film understates it. There is no easy way to deal with a body. You have to pick it up, put a label on it, and you have to handle it. You can’t airbrush it. And some of those bodies were very difficult to get to."
Some corpses had fallen down a ravine, as the burning engine had melted the glacier. Many were difficult to put into a standard body bag. Leighton recalls: "These bodies were frozen solid. Whatever shape they landed in, that’s what they froze into."
All of the team remember the stench of the disaster. Mitchell says: "The smell of kerosene - jet fuel - takes me straight back to Erebus. It’s not that I get flashbacks, but I immediately remember."
[caption id="attachment_564577" align="alignright" width="300"]<img src="http://wpmedia.news.nationalpost.com/2015/01/police-019.jpg?w=300" alt="New Zealand Police." width="300" height="199" class="size-medium wp-image-564577" /> New Zealand Police.[/caption]
There were other challenging aspects of the mission, not least the endless presence of loud and aggressive skua gulls, carrion-eating birds of the Antarctic. The team resorted to burying the bodies again under the snow, once they had been bagged up, to stop the birds getting to them. They were there for 14 days and never stopped working. The perpetual daylight of the South Pole meant that they worked around the clock, 12 hours on, 12 hours off, but never properly resting, nor escaping the tragedy, even when having a meal.
Leighton says: "We had one set of gloves while we were there. They were baked with the fatty human remains, the soot, the whatever, and you ended up having to use the same set of gloves to put food in your mouth."
It is perhaps unsurprising that the policeman, who was then just a young man, was mentally scarred by his work.
"I remember thinking, ’Oh my God. I hope this is not going to traumatise me. I hope this isn’t going to completely screw me when I get back.’ Because I knew it had the potential to do so. And unfortunately it did." At the time there was no counselling provision for the team when they returned. He says he has spent most of his life trying to come to terms with that fortnight.
Mitchell, for his part, says he does not like to dwell on the past "but there needs to be an opportunity for people to unwind. Stu Leighton’s life has been stuffed up by the fact he did not get the full opportunity to let people know." Today, counselling for search and recovery teams is routine.
[caption id="attachment_564567" align="alignright" width="620"]<img src="http://wpmedia.news.nationalpost.com/2015/01/erebus.jpg?w=620" alt="Ross Land-Pool/Getty Images" width="620" height="465" class="size-large wp-image-564567" /> Ross Land-Pool/Getty Images[/caption]
For all the scars some of the team were left with, it was a successful mission. Of the victims, 213 were successfully identified. The Royal Commission into the causes of the crash ruled in its initial finding that it was not pilot error, but rather errors by Air New Zealand in allowing sightseeing flights to fly too low and for changing the course of the flight, without telling the crew so the aircraft was re-routed by computer into the path of the mountain. It proved a controversial conclusion and was challenged. The police, however, were universally praised for their recovery mission.
And Mitchell is clear that air crashes, and body recovery, will remain part and parcel of modern life, despite improvements in aviation design.
"The airliners are getting bigger and they still crash."
Sadly, as events of this week show, he is correct.
The U.K benefits significantly from the 35 free trade deals the EU has set up with different countries, and the alcohol industry is a key example. Britain currently exports some 1.8 billion euros worth of wine and spirits to the European Union. Prime Minister Cameron has warned that liquor businesses, which employ about 600,000 people directly or indirectly in the country, will suffer as Britain stands to lose access to those free trade deals. The millions of Brits who currently bring back duty-free alcohol during trips outside the country — up to 110 litres of beer and 90 litres of wine per trip to EU countries — could also find themselves out of luck.
Labour pains
EU laws set minimum requirements on everything from holiday pay to maternity/paternity leave. The Remain camp has warned some of the generous workers’ rights benefits could be clawed back if Britain leaves. The Leave camp has shot back that the laws would unlikely be changed in an exit, particularly because some — such as those that prevent discrimination against sex, race and age — have become common in all countries in the Western world. Britain also has separate laws that protect workers in other ways, including minimum wage and unfair dismissal laws.
Arresting developments
EU policymakers have simplified a wide variety of social and criminal laws, including easier divorce proceedings and the ability for British nationals to challenge parental child abductions. Britain also participates in a number of criminal justice treaties under the EU, including the European Arrest Warrant. The EAW means that any member state can issue an arrest warrant for a person to all member states and have that person extradited. These would have to be renegotiated if Britain were to leave the current EU framework.
Years of uncertainty
If the Leave camp wins, legal and political changes will take the rest of the decade to finalize. Brexit supporters have noted that a formal withdrawal would likely not occur until 2020. The referendum merely gauges the nation’s sentiment, requiring politicians to formally enter into separation discussions with EU officials. This allows plenty of time for its citizens and rest of the world to absorb the news. “This means that there would be plenty of time for negotiations to clear up some of the most important uncertainties about the wider impact, notably the arrangements which would govern U.K. trade with the remainder of the EU and the rest of the world,” notes Capital Economics. But that would also mean that the political uncertainty of a Brexit could stretch on for decades — making the vote on June 23 all the more important.