Philip Wade was born in Liverpool sixty-one years ago; he is a Professor at Birkbeck, University of London. He studied Elizabethian Theatre, completed a prestigious MBA in Economics, has a past as a strategist at the fixed income desk of J*** Bank and he is considered one of the most influential voices of the left-wing in England.
Mister Wade, let’s talk about what happened last Thursday, in the UK.
Surprisingly, against all expectations, Leave won.
We are. It was a heavy defeat that will bring even heavier consequences. From the economic point of view, the exit from the European Union is not going to work. Here in Great Britain, the Bank of England has already bought 40% of the public debt. And actually it does no longer receive Treasury coupons.
In other words, the Government does not pay interests on 40% of the debt.
Therefore, central banks are playing their game again?
The Bank of England prints currency and buys public debt. It does no longer requests Treasury coupons because they should be later returned as dividends. This practice is also used in Washington DC but it is far more dangerous here, because the Bank of England is weak: and in case of an attack, the Pound would not be strong enough to fight. It would be alone against all. Against the market that is aware its weakness, and against the other central banks that will not be immediately offer their help.
Can we say that England is fragile now, at least from a financial point of view?
Extremely fragile. And an attack on the Pound is highly likely. An out-of-control currency may devastate a country, in particular when such a country lacks raw materials. It may lead to hyper- inflation, block of capitals and much more.
Is it your forecast for the UK?
I think that, in order to avoid this situation, the UK will try to act as a – or better, to certify his role of – global recycling market. It will try to do that on the margins of Europe, which makes everything even more complicated. It is not going to be easy, and we don’t know if it is possible. But listen, I would not be surprised to assist to a speculative attack on the Pound and on CDS UK in the next weeks. When we will lose the triple A, we will end up on the radar screen of the biggest raiders. And the storm will start.
There are several petitions for a second vote. What do you think about a new referendum?
There is something good in this story: young people perceive themselves as Europeans. I think that the separation process will be so slow that someone, sooner or later, will try to bring the UK back to Europe. This is unavoidable. And I hope that the Labour Party will lead such an attempt. Nobody else is able to do it, but they need to avoid ambiguity and make clear moves.
It sounds like an attack to Jeremy Corbyn.
It is an attack to ambiguity, half-measures and not well-supported decisions.
If you were a young graduate from a foreign country, would you still come to work in London?
I don’t know. I will surely move somewhere in Europe, but there is a strong wind in the UK right now. As Sadiq Khan, the new mayor of London, member of the Labour Party, said: «I want to send a clear message to all European citizens living in London. You are welcome here. We value the enormous contribution you make to our city and that will not change as a result of this referendum. There are almost 1 million Europeans living in London who make a huge contribution to our city – working hard, paying taxes and contributing to our civic and cultural life».
Italian version: UK, l’inizio della fine. UE, la fine dell’Austerity