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Leaving the EU and entering a new economic paradigm

Despite being a Remainer, CHRIS WILLIAMSON MP now believes what really matters is how we enact modern and visionary socialist policies outside of the EU

THE votes have now been cast in the European election and counting will begin on Sunday.

Whatever the outcome of this election, I believe we must respect the result of the 2016 referendum, even though the margin of victory was relatively narrow. That’s how democracy works.

I lost my parliamentary seat by just 41 votes in 2015, before winning it back with a majority of more than 2,000 in 2017. Being voted out by such a small margin, from a constituency in my home city where I grew up, was a bitter pill to swallow, but I had no choice.

The same is true of the referendum. I opposed the calls to hold a referendum after the 2015 general election, but I lost my seat, and the Tories won an overall majority in Parliament. Moreover, their manifesto contained a commitment to hold a referendum, so they had a mandate to do so.

I vigorously campaigned to remain and reform the EU. I knocked on doors almost every night in the referendum campaign, and when I wasn’t, I was speaking at public meetings across the East Midlands urging people to vote remain. I organised weekend street stalls in Derby city centre to promote the remain campaign, and was up at the crack of dawn on the day before and the day of the referendum, to leaflet early morning commuters at Derby’s bus station and railway station respectively.

But despite my best endeavours, 57.2 per cent of those who voted in Derby opted to leave, a bigger margin than the country as a whole. That is why I believe we must uphold the wishes that were expressed in that democratic exercise.

Democracy isn’t a “take it or leave it” proposition. The voices demanding a so-called “people’s vote” in a confirmatory referendum and those calling for the repeal of Article 50 are playing a very dangerous game.

But despite all the hand-wringing and hyperbolic claims of impending doom, the issue of our membership of the EU is in many ways irrelevant.

For a start all the economic forecasts state that Britain’s economy will continue to grow, even if we leave without a deal. The question we should therefore be asking politicians is, what is their vision for life outside the EU?

I believe we should be talking about the need for a substantial fiscal stimulus to address any economic shock of leaving; having our own central bank gives us the flexibility to do that. Creating self-imposed constraints like the “Fiscal Credibility Rule” are a trap that we should avoid. It’s a throwback to neoliberalism, which is utterly discredited.

The British economy is not like a household budget and it operates within a fiat monetary system. The pound sterling is a sovereign currency that can only be issued by the Bank of England, in other words it has a monopoly over currency issuance. It’s important not to confuse the creation of money by private banks, when people take out loans, with currency issued by the Bank of England.

Unlike a household, the constraints on government spending are not financial but real and are only limited by the goods and services that are available for sale in that currency. Unlike a household, governments with their own sovereign currency can never run out of money, and they will not create inflationary pressures by targeting spending where there is spare capacity that can be purchased in their own currency. We should therefore be focusing on a bold and ambitious programme of public works, a green new deal and world class public services, underpinned by a job guarantee scheme.

We also need to recognise that taxes do not fund public services. Taxes are necessary to create a value for the otherwise worthless currency, drive behaviour change, tackle inflation and address inequality. Gaining a better understanding of how the monetary system works will prevent the neoliberal establishment from pulling the wool over our eyes to justify austerity and forces a different conversation to take place.

That different conversation frees us to consider a much bigger and a more ambitious agenda than the one that won such acclaim in the 2017 Labour manifesto. It would allow us to realistically commit to delivering some big ticket and totemic policies such as writing off the historic tuition fee loan book as well as scrapping new tuition fees. It would also enable us to make good the betrayal of the Waspi women and realise the ambition of the “#BackTo60” campaign that has fought against women being cheated out of their expected pension entitlement.

And we need to commit to a huge and unambiguous redistribution of income and wealth. Britain is the world’s fifth biggest economy, yet 14 million citizens are living in poverty, so where are the fruits of that economic growth going? The answer is, to the country’s rich elites. Research published last month shows that less than 0.045 per cent of the country’s population literally own over half of England! If we had a fairer distribution of income and wealth, the rich would still be rich, but we could lift the living standards of the other 99 per cent of the population.

In my opinion, this is the alternative hopeful vision we should be focusing on, instead of the interminable Brexit battle, which has given Nigel Farage and the far right the chance to hijack that debate. We need to seize back the initiative — and quick.

Chris Williamson is MP for Derby North.

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