Brexit Vote a `Risky Bet,' U.S. Ex-Treasury Secretaries Say

Assessing the Consequences if Britain Leaves the EU
  • Summers, seven others write letter to Times of London
  • U.S. has a `critical interest' in outcome of referendum

Leaving the European Union would be a “risky bet” for the U.K. and the country should not “turn inward,” according to eight former U.S. Treasury secretaries going back to the era of President Richard Nixon.

QuickTake Will Britain Leave the EU?

The intervention in a letter to the Times newspaper in London published Wednesday came two days before U.S. President Barack Obama is set to add his voice to those warning Britons of the danger of backing a so-called Brexit. Prime Minister David Cameron is hoping that the swell of voices from overseas will sway undecided voters before the June 23 referendum.

“It would be unfortunate for the British economy, unfortunate for Europe, unfortunate for the U.S., and unfortunate for the world,” Lawrence Summers, one of the signatories to the letter, told the BBC. “It would do damage to London as a financial center, it would do damage to Britain as a gateway to Europe, it would remove the very positive influence that Britain has within European debates that strengthen the European economy. It would be a step toward a more closed, more protectionist, less effective and less prosperous global economy.”

The first week of formal campaigning has seen the “Remain” campaign, led by Cameron, turning its full fire on those arguing for a “Leave” vote. As well as seizing on global voices such as the International Monetary Fund, it deployed a U.K. Treasury analysis that suggested a Brexit would cause decades of harm to the economy.

‘Wouldn’t Dream’

Vote Leave, the official campaign for a British withdrawal from the 28-nation bloc, responded with anger to the intervention and said the U.S. would not be willing to give up sovereignty in the way Britain has to the EU.

“These U.S. politicians wouldn’t dream of agreeing to give NAFTA 350 million pounds ($500 million) a week, or handing power over to Mexican judges over which criminals they can deport or opening up the U.S. border to Mexican migrants,” Vote Leave Chief Executive Office Matthew Elliott said in an e-mailed statement. “They would have been laughed out the building if they suggested it. So why do they think that we should do the same with the EU?”

Challenged in Parliament about Obama’s planned intervention, Cameron replied that no friendly country is urging Britain to leave the EU. “It may not be the determining factor for many people, but listening to what our friends say in the world is not a bad idea,” he told lawmakers in his weekly question-and-answer session.

The latest published poll, conducted April 12-14 by TNS, found 38 percent of respondents backed staying in the EU, with 34 percent opposed and 28 percent undecided. That compared with the previous TNS survey carried out a few days earlier that showed the two sides tied at 35 percent.

‘Global Primacy’

The Treasury secretaries’ letter, which was highlighted on Twitter by Cameron and Chancellor of the Exchequer George Osborne, said that “while Britain will remain an attractive center for finance even if Britain exits, it should not take for granted its global primacy when it is no longer the gateway to Europe.”

A Brexit vote would “likely disrupt and reduce trade flows at least for a while, curtailing the scale and efficiency benefits from economic cooperation and integration.”

“Over time, Britain would no doubt be able to re-establish trade ties through negotiation of new trade agreements,” they wrote. “But as our own experience in the United States with trade negotiations shows, it is a difficult environment to negotiate and approve agreements and the risk of accidents is real.”

‘Decline and Failure’

Former U.K. Defence Secretary Liam Fox rejected the argument of the Americans, telling the BBC they had “failed to take into account the decline and failure of the European economy.”

As well as Summers, the other signatories were George P. Schultz, W. Michael Blumenthal, Robert Rubin, Paul O’Neill, John Snow, Hank Paulson and Timothy Geithner.

Stronger In, the campaign to stay in the EU, published a letter from more than 200 entrepreneurs, including Lloyd Dorfman, who set up Travelex Holdings Ltd., and Zoopla Property Group Plc co-founder Alex Chesterman, saying the opportunities provided by membership of the bloc encourage investment and innovation.

“The economic shock of a vote to leave the EU would also be hugely damaging to our businesses,” the executives said. “The U.K. is currently the best place in Europe to launch and grow a business; leaving the European Union will undoubtedly undermine the ability of Britain’s entrepreneurs to start up, innovate, and grow.”

‘Public-Relations Campaign’

Former Bank of England Governor Mervyn King said in a Bloomberg Television interview that he’s concerned that “proponents on both sides treating this as a public-relations campaign rather than a debate about the future of our country are inclined to exaggerate because they feel they’re selling a position.”

He urged a “calm and reflective debate about the role of Britain in Europe” and said “precise numerical estimates of what the consequences” are of a Brexit should be treated with caution.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE