‘Brexit’ Would Splinter World Structure

May 17, 2016

[Editor's Note: An earlier version of this interview incorrectly identified Lord Hague's side of the referendum.]

The upcoming referendum on June 23 as to whether the UK should leave the European Union has caused heated debate. The “Leave” campaign says it is fed up with red tape and are worried about the surge in migrants, while the “Remain” camp argues the UK would be significantly weaker outside of the union—and even vulnerable to threats from its enemies.

One man firmly entrenched on the Remain side is William Hague, the conservative Yorkshire politician and former MP, leader of the Conservative party, and most recently secretary of state for foreign and commonwealth affairs. He believes that rather than make the UK stronger, separating from Europe would only cause great uncertainty—the biggest enemy of the financial services industry.

Hague, keynote speaker at the upcoming Inside ETFs Europe conference in Amsterdam on June 13-15, recently talked to ETF.com about Brexit, implications for capital markets and how the UK would have to renegotiate trade deals “with half the world from scratch.”

Voters often say they are confused or undecided on Brexit because the debate often relies on rhetoric rather than fact. Does voters’ indecision worry you?

I think it’s true that people are looking for facts and truths on how to decide how to cast their vote, and that includes listening to both sides of the argument.

In the case of both the “Leave” and “Remain” scenario, there are very few hard facts about the future and whether the country would be more prosperous or secure.

In some way, this debate has been going on for many years. But voters do often make up their minds late in the day. In my experience, they will probably do so on the weekend before the election, but it doesn’t mean they haven’t been thinking about it for a long time.

As we speak, it’s six weeks to the referendum. That’s longer than we spend on UK election campaigns. I think by June 23 people will have heard enough of the arguments, and any more time would not shed more light.

In the Scottish referendum in 2014, one of the biggest uncertainties was the future of the sterling currency in Scotland. What is the biggest uncertainty around Brexit?

Here, the biggest uncertainty is what would be the relationship with the EU if we were to leave.

The “Leave” campaign side does not have a clear answer to that. Some say we should have a different trade agreement with Europe. Some say we should somehow keep access to the single market, but they don’t explain how we would achieve that. Some say we would not have any agreements and we would rely on the free-trade rule.

The uncertainty would severely affect decisions for businesses and the financial services industry.

The real cost here is uncertainty. That is the one fact we do know. There's no doubt it would affect investments in businesses.

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