BREXIT — THE CURIOUS CASE OF THE MISSING CONTINGENCY PLANS

Have you wondered why, as U.K. parliamentarians did yesterday, that the British government seems to have no contingency plans for a Brexit? According to my sources in and close to Downing Street, it’s because it would be an impossible can of worms to manage.

Firstly, U.K. civil servants don’t have the time or the expertise to create a full contingency plan — because, Greenland aside, no one’s ever left the EU before and it would all be guessing at this point, and because the civil service has been slimmed down so much there weren’t enough people to run a renegotiation and a contingency plan simultaneously.

Secondly, there’s no political incentive to write the plan. The more you can specify what you expect to happen, the harder it is for “In” campaigners to argue that “Out” is scary and unknowable. Donald Rumsfeld had “known unknowns”; the U.K. has “desired unknowns.”

Thirdly, the U.K. government is different from the Bank of England, which does have contingency plans. Why? The bank needs to deal with instantaneous market reactions just before and after the referendum. The government would be stuck with much a slower moving exit negotiation.

 

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