A vote for Brexit is highly unlikely to result in financial crisis and could actually have some benefits, according to liberal economist and Nobel Prize winner Paul Krugman.
Writing in his New York Times column, Krugman came down on the side of keeping Britain in the European Union (EU), but was deeply skeptical of the scare stories of financial catastrophe in the event of Brexit. (RELATED: How Low Millennial Turnout Could Swing UK Vote To Brexit)
“I would greatly discount claims about dramatic financial crisis or whatever. Maybe the pound would fall – but for a country that borrows in its own currency and has an excessive current account deficit, that’s a good thing,” said Krugman.
Brexit could also have a dramatically different effect on various income groups. “The City and those whose incomes are tied to its fortunes would probably lose badly, but some regions of the country might actually benefit from a weaker pound,” wrote Krugman.
London is the financial center of Europe, with hundreds of thousands of EU citizens living and working in and around the economic hub. Krugman supported the “Remain” campaign but was reluctant, citing the EU’s numerous failures including the disaster of the eurozone. (RELATED: Financial Legend Says Brexit Would Help The EU)
“The euro is the most obvious case: it was a mistake in the first place, and this mistake was greatly compounded by the handling of the post-2009 crisis. A big technical problem of adjustment after a sudden stop in capital flows was turned into a morality play requiring destructive austerity. And there is no hint outside the ECB that any of the major players have learned anything from the debacle. ”
Krugman adds the EU has been unable to come to grips with the migration crisis and how to move forward with Europe’s open border policies and strained welfare states.
“So I would vote Remain, but with some feelings of despair, because what I’d be voting to remain with is a system that desperately needs reform but shows little sign of reforming,” Krugman concludes.
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