US Treasury Secretaries: UK economy and influence stronger in Europe

Former US Treasury Secretaries have today written a letter in support of Britain remaining in the EU, stressing that the UK economy and UK influence is stronger as part of Europe. The full letter is below:

"British voters face a consequential decision on June 23 when they vote whether or not to remain in the European Union. That decision is, of course, theirs to make. But, as Americans, we have a critical interest in the outcome of their vote. A strong Britain, inside the European Union, remains the best hope in our view for securing Britain’s future, creating a more prosperous Europe and protecting a healthy and resilient global economy.

The special relationship between the United States and Britain has been at the heart of US economic and foreign policy throughout the post-war period. During our times as US treasury secretary, when confronting difficult global challenges, we often looked to Britain as a strong voice and partner. We often found that our collective efforts benefited from having a strong Britain within Europe — often representing views we agree with, but unafraid to disagree when perspectives diverged. In more recent years, whether leading the response to the financial crisis or confronting Russian aggression in Ukraine, Britain has played a leading and critical role in building a European consensus for action.

We also find compelling the argument of the Remain camp that a vote to leave Europe represents a risky bet on the country’s economic future. Brexit could call into question London’s role as a global financial centre. For many financial institutions, London has served as the financial springboard into Europe. EU membership allows banks based in London to sell their services across Europe without needing multiple regulatory approvals in each country. While Britain will remain an attractive centre for finance even if Britain exits, it should not take for granted its global primacy when it is no longer the gateway to Europe.

Brexit also threatens trade with Europe’s large common market, where currently over half of the country’s exports are destined. A UK exit is likely to disrupt and reduce trade flows at least for a while, curtailing the scale and efficiency benefits from economic co-operation and integration. Over time, Britain would no doubt be able to re-establish ties through new trade agreements, 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.

The uncertainty surrounding Brexit already appears to be acting as a drag on investment and market sentiment, and a vote to leave could introduce an extended period of uncertainty that could hinder growth even further.

Thus it is no surprise that the International Monetary Fund very recently described Brexit as a critical risk to the global economy, and argued that if the UK were to leave the EU there would be a substantial short-term impact on stability and a long-term cost to the economy.

Conversely, supporters of Brexit describe a Britain that liberalises markets freed from the constraints of European law. Britain might benefit in some respects, but the better alternative seems to us to work for progress within the confines of EU membership, without incurring the significant economic risk of Brexit: a smaller, slower-growing British economy for years to come.

Europe has a similarly powerful interest in a UK vote to remain on June 23. The departure of one of the EU’s strongest economies would hit its finances and boost populist anti-EU movements in other countries. Some even fear that opening this Pandora’s box could be a major setback to the European project more broadly.

Europe has more work to do to complete its economic and financial union, but it is more likely to be successful with Britain inside rather than out. A UK turned inward and less engaged in Europe is less able to lead on the critical challenges Europe faces — macro and structural — and risks a difficult transition for Britain at a time of already threateningly slow global growth.

The interdependence and interconnectedness of nations has increased greatly and will continue to grow as we face hugely consequential transnational issues that no country, however powerful, can effectively address alone. These challenges include a paucity of global demand, financial crises when they occur, nuclear proliferation, pandemics, climate change and other environmental issues. A strong and resilient Europe, with Britain at the core, in our view would be an important force in addressing these challenges together."

George P Shultz (US treasury secretary, 1972-74), W Michael Blumenthal (1977-79), Robert E Rubin (1995-99), Lawrence H Summers (1999-2001), Paul H O’Neill (2001-02), John W Snow (2003-06), Henry M Paulson Jr (2006-09), Timothy F Geithner (2009-13)