Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

the scenes there was an effort by the Confederation of British Industry to persuade its leading members to put warnings about Brexit in their annual reports.31 The City of London Corporation overrode objections from Brexit voices to openly support Remain.32 Some business leaders worried, somewhat squeamishly, that to spell out the job losses and the cancellation of investment projects that would likely follow on Brexit might have the air of blackmail. At least as far as the trade unions were concerned, they need not have worried. Labour MP Pat McFadden, a former government minister and cochair of the Labour Party’s Remain campaign, insisted, “I think business has a legitimate voice in the debate and if they want to make their views known they have every right to do so.”33 Unite, Britain’s biggest trade union and principal donor to the Labour party, with around 500,000 members, sent a clear message: “The message to our members in BMW, Airbus, etc., is very straightforward—it’s jobs, rights, remain.”34 The same message was echoed from around the world. On April 12 the IMF announced that “severe regional and global damage” might follow if Britain voted to leave. ...

The G7 meeting in Tokyo let it be known that a “UK exit from the EU would reverse the trend towards greater global trade and investment, and the jobs they create and is a further serious risk to growth.” As Angela Merkel put it, the G7 intended to send “the signal that all who sat here want Britain to stay part of the EU.”36 Back in Britain the UK Treasury came out with a lengthy report claiming that the damage would be between £2,600 and £5,200 per annum per household. By 2030 GDP might be lower by as much as 6 percent, costing the governmen...

The Remain campaign was the legendary Clinton-era slogan “It’s the economy, stupid” transposed in the most literal and massive form. It echoed the determinism of Thatcher and Merkel’s “There Is No Alternative.” The

Chancellor Osborne

The total unanimity of authoritative opinion behind Remain, he told journalists, was “not a conspiracy. It’s called a consensus. . . . [T]he economic argument is beyond doubt.”

The loudest of all and the most committed to the Remain cause were America’s investment banks. Given their role in the City of London, they had a huge stake in Britain’s position in the EU and they were not afraid to say so. London was their gateway to the European economy and to eurozone business. As economists from Goldman Sachs pointed out, BIS statistics showed that US banks held $424 billion in claims (assets) on UK borrowers at the end of 2015, including $46 billion in loans to UK banks. Derivatives, guarantees and credit commitments brought the total to $919 billion. UK bank exposure to the United States was even larger, at $1.4 trillion of financial claims.40 Given these investments, it was hardly surprising that Goldman Sachs, J.P. Morgan and Morgan Stanley all made substantial and early donations to the Remain campaign.41 Jamie Dimon of J.P. Morgan campaigned openly alongside Osborne in favor of Remain.

That the United States was not indifferent to Britain’s position in Europe was the message that President Obama came to London to deliver in person on April 22, 2016. He made his visit at Cameron’s personal request. Obama was hugely popular with the UK public and he did not hold back. In the BBC’s words, the American president delivered a “full on, no-holds-barred effort to persuade Britain to stay in the EU.” The special relationship, World War II and the challenges of the present all demanded that the UK remain an integral part of Europe.43 Obama understood that it might be sensitive for an outsider to address Britain at such a delicate moment, but “I will say, with the candor of a friend, that the outcome of your decision

is a matter of deep interest to the United States.” Furthermore, the British public needed to know that the Brexit campaign’s hope that it would be able, rapidly, to strike a new trade treaty between an “independent” Britain and the United States was based on false premises. America’s focus in trade negotiations was on the big blocs. The Transatlantic Trade and Investment Partnership between the United States and the EU—the Atlantic counterpart to the TPP in Asia—was the key to the future. “Maybe some point down the line there might be a U.K.-U.S. trade agreement,” but “it’s not going to happen any time soon. . . . The U.K. is going to be in the back of the queue.”

American power and money were clearly signaling where it wanted Britain to line up. The extension of Wall Street to Europe by way of the City of London, which had defined international finance since the 1970s, was on the line. Little wonder that the leading intellectual journal of the Left put the choice as follows: “[A] vote to remain, whatever its motivation, will function in this context as a vote for a British establishment that has long channeled Washington’s demands into the Brussels negotiating chambers, scotching hopes for a ‘social Europe’ since the Single European Act of 1986.”

immigration and xenophobia were, in fact, winning cards.

The racial politics did not stop even at the person of the president of the United States. What right, Boris Johnson demanded to know, did Obama have to suggest to Britain concessions of sovereignty that the United States would never accept? Why should Britain trust a president who had removed the bust of Churchill from the Oval Office? “Some said it was a snub to Britain. Some said it was a symbol of the part-Kenyan President’s ancestral dislike of the British empire—of which Churchill had been such a fervent defender. Some said that perhaps Churchill was seen as less important than he once was. Perhaps his ideas were old-fashioned and out of date.” Johnson’s artfully placed dog whistle about the “part-Kenyan President” did the job. Johnson whistled and Farage came. Where Johnson prevaricated, Farage’s racist growl was unambiguous. As far as the leader of the UKIP was concerned, it was obvious that “Obama, because of his grandfather and Kenya and colonialization, bears a grudge against this country.”

In May, as the Brexit campaign gathered pace, it was immigration that came ever more to the fore.

Core Tory voters, the elderly, provincial middle class, voted en masse for Brexit. They probably always would have. But they were joined by a large cohort of lower-income, less-well-educated voters who had been drifting to the right since the 1990s. According to one polling group, 60 percent of people in the upper-middle- and middle-class socioeconomic groups—those in professional and managerial jobs—backed Britain’s EU membership, whereas among the unemployed and unskilled workers the percentage was reversed.50 Sixty percent of Labour voters turned out for Remain. But that went only to show that in much of the country, the Labour Party was largely divorced from poorer and less-well-educated voters. Apart from education, the other socioeconomic variable that weighed heavily in the balance was the pain inflicted by austerity since 2010, and that hurt worst where decline was a long-term phenomenon.51 But even more than low education and low income, Brexit voting was correlated with authoritarianism. On the kind of cultural maps drawn by marketing experts, Brexit voting sat in close proximity to values like security, support for the death penalty and a preference for the public flogging of sex offenders.