• December 6, 2023

Destination unknown

 Destination unknown

Tobacco after Brexit

Britain’s decision to leave the EU raises serious questions about the country’s future.

By George Gay

brexitThis, I’m afraid, is a true story. Longer ago than I care to relate, an acquaintance of mine, in my presence, told a young woman friend that he and his wife were going to Greece for their holiday. The young woman’s response was to ask, in all seriousness, whether Greece was in Spain.

I couldn’t get that incident out of my mind in the lead-up to the U.K. referendum on whether we should remain within or leave the EU. As a Brit, I hoped desperately that the middle-aged woman, as she would now be, and all the other people like her, were brushing up on the EU ahead of casting their votes.

I suspect they didn’t. We voted to leave by 52 percent to 48 percent. We had succumbed to the wisdom of Baldrick and decided that the only way to solve the U.K.’s low-ceiling problem was to cut off our own heads. And those who dreamed up the idea of the referendum—surely, it couldn’t have been thought up during waking hours—made it easy for us by setting the bar for this monumental constitutional change at a tad over 50 percent. They might just as well have called in Luke Rhinehart’s Dice Man.

Some people will take issue with this. A lot of people who voted to remain will have had little idea about the EU either, they will say. This is true, but to vote to remain was to vote for the status quo; it really didn’t require anybody to know very much apart from the fact that they wanted to keep going in the same general direction. But it was surely beholden on anybody who wanted to alter the ship of state’s heading that they were aware of where the new course would take them—and the rest of us.

A more reasonable complaint might be that I am being elitist, poking fun at somebody just because she couldn’t put Greece on a map. And I accept that it wasn’t altogether her fault. In the U.K., we have had compulsory secondary education for about 100 years and compulsory elementary education for longer than that. However, successive governments have meddled and muddled with the education system and, in doing so, failed the woman mentioned above, countless other people and, ultimately, the state.

But the problem went deeper than that. Why were the people of the U.K. asked to vote on such a complex issue? Take me for example. I could probably reel off 20 of the 28 nations that come together as the EU, but I would stumble and even struggle with the other eight. I have a rough working knowledge of what goes on within the European Commission, the European Parliament and the Council of the European Union, but I have no in-depth knowledge. And I, along with 99 percent of the population of the U.K., have never read one of the treaties that bind the whole EU edifice together.

Was I supposed to judge the competing claims of expert economists (in truth, the “leave” campaigners were a little short on such experts); was I supposed to know whether the U.K.’s security was better off with its being a part of the EU? And what of the wider geopolitical situation? How could I be sure that the environmental and animal-welfare concerns I have would be best addressed by being inside or outside the EU? What was I supposed to make of an in/out decision on health, education, collaborative research …? And even if I could make sense of these and the countless other issues that arose in my mind, how could I know what weight to give to each when summing up?

Or perhaps it was just the economy, stupid—though I would hate to think that the EU project was only about that. Certainly, I based my decision mainly on the words of the poet John Donne: No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less ….

In fact, I would guess that most people made their decisions on the basis of sound bites, though mostly those issued by living politicians rather than by long-dead poets. And the three sound bites that won out seemed to have been the “leave” camp’s “take back control,” and those that claimed that withdrawal from the EU would allow us to reduce immigration and provide us with an additional £350 million ($458.76 million at press time) a week to spend on the National Health Service. Of course, the facts were that we already had control over nearly all of those issues for which we hadn’t agreed to pool responsibility, that there was very little that could be done to reduce immigration assuming that, post-exit, we wanted to keep within some sort of single European market, and there never was an extra £350 million a week to spend.

Interestingly, even many of the people who led the “leave” campaigns seemed to have thought little beyond their own sound bites. They seemed to be as surprised/shocked as anybody when they won; so as soon as the result was declared, they went to ground, presumably while they thought things through for the first time. And when they did emerge, they started to row back from their promises. Indeed, on reappearing from his bunker, Boris Johnson, the Conservative member of Parliament, former mayor of London and one of the leaders of the “leave” campaign, seemed to indicate that what the “leave” side wanted was something that sounded very much like membership of the EU.

Hitting out

Many U.K. companies believe their prospects have dimmed in the wake of the EU referendum.

But the “leave” campaign strategy was clearly more effective than was the “remain” camp’s attempt to scare people into voting for continued EU membership. Experts from various international institutions were lined up to explain how the economy would tank should the U.K. leave the EU, and we were threatened with yet another £30 billion—it’s always £30 billion for some reason I cannot explain—in tax rises and austerity cuts. But whereas such threats might have worked with a few leafy-suburb southerners, they were never going to work on people living in the regions already ravaged by Conservative austerity measures—the people existing on the charity of soup kitchens, food banks and skips. The figure of £30 billion would have been meaningless to them. It might just have well have been £3 trillion. You might just as well have threatened that the major banks would relocate to the moon and Iceland would knock England out of the Euro 2016 football competition.

In fact, the people running the “remain” campaign could have learned a lesson from tobacco. Anti-tobacco campaigners have made huge efforts in trying to scare smokers away from their habit without success simply because they have no idea of who they are dealing with and what their lives are like. They offer people imprisoned within sink estates 10 years of extra life and wonder why the ingrates don’t accept.

I find it easy to understand why people living lives blighted by incompetent bankers and economists, greedy company directors, and unsympathetic, unhearing politicians took advantage of the referendum simply to hit out. That, in the main, they struck the wrong target couldn’t be helped. Sure, most of what had happened since 2008 was the fault of the U.K. government, but the EU has to take some blame for having failed to protect these people from the worst effects of globalization.

After the vote, there seemed at least to be some recognition that the EU needed to change, and there were murmurings to that effect. But then the EU has been talking about change for as long as I can remember, and little of substance seems to happen. So as the headless politicians and bureaucrats ran about in the wake of the “leave” vote, the main areas of concern seemed to be getting the exit negotiations underway as quickly as possible and promising tough negotiations, so as to prevent the anti-EU contagion spreading farther and wider. You have to ask yourself what message this sends out. I was reminded of the old joke about the person who went to an elite English public (read “private” if you live outside the U.K.) school that was difficult to get into, and even harder to get out of.

Reckless gamble

Whatever. It all ended, not with a bang but a whimper. In what a Guardian newspaper editorial described as a graceful little speech tendering his resignation, the prime minister, David Cameron, apparently said: “I will do everything I can as prime minister to steady the ship over the coming weeks and months, but I do not think it would be right for me to try to be the captain that steers our country to its next destination.”

Captain Graceful? Cameron had steered the ship of state—by this time viewed as Votey McVolte-face by the rest of the world—toward Continental Europe for a better look, grounded it, and was in the process of slipping into the resignation lifeboat. This was a man who had tried to sort out a long-standing division over the EU within the ruling Conservative party by putting the future of the country at risk, who, being at such a remove from ordinary people, had failed to judge the mood of the nation, and who, unsurprisingly, had failed to convince with his “remain” message.

The Guardian went on to say that no speech could salvage his standing in the history books. “Mr. Cameron will go down as the man who gambled the country’s future as a way out of a party difficulty,” it said.

But it was not only the U.K. that Cameron was willing to use in his high-stakes game. In trying to unite the Conservative Party, he had further divided it into the nasty party, which was in charge, and the really nasty party, which is going to take charge. He had divided families, divided regions of England, divided the U.K. and divided Europe. As President of the European Parliament Martin Schulz said, it was difficult to accept that “a whole continent is taken hostage because of an internal fight in the Tory party.”

And while all this was going on, the opposition Labour Party, which had campaigned tepidly for “remain” and which, in line with honorable political tradition, should have been putting the boot into the injured Conservatives, instead set out on a bloody internal feud as it enacted the anarcho-syndicalist scene from Monty Python and the Holy Grail.

The whole story was a tragedy played out in the theater of the absurd, but it made for compulsive viewing. The media had a field day, and social media was afire. As somebody said in the movie No Country for Old Men, if this wasn’t a mess it would do until a mess arrived.

But then again, Michael Gove, the justice secretary, who was another of the lead leavers, was quoted as saying that Cameron had led the country with courage, dignity and grace, and that he deserved to be remembered as a great prime minister. And this being the U.K.—for the time being at least—Cameron will have his time in the sun again, no matter that the U.K. is ripped asunder, the economy is broken, and the poor and powerless enter another round of paying for the follies and catastrophic failures of the rich and powerful. Sometime in the future, Cameron will be ennobled by the establishment, probably for his services to chaos theory—and practice.



Tobacco provides safe haven amid Brexit turmoil


Keep calm and buy tobacco
Keep calm and buy tobacco

It’s an ill wind that blows nobody any good, and tobacco companies were, when this story was written, providing something of a haven for investors as stock markets weathered the storm whipped up by the U.K.’s decision to leave the EU. A story in the Winston-Salem Journal in late June quoted analysts as saying that dividend-seeking investors were turning to U.S. tobacco companies such as Reynolds American Inc. (RAI) that lacked international exposure, particularly in Europe.

Dan Caplinger of The Motley Fool reportedly said that the Altria Group and RAI “are as close to Brexit-proof as you’re likely to find in today’s stock market.” However, he warned that the U.K.’s exit from the EU could have a substantial economic impact in the U.S., adding that “anything that hits discretionary income in Americans’ wallets could hurt tobacco companies.”

But it wasn’t only U.S. companies that benefited. Shares in British American Tobacco were up as investors turned in part to defensive consumer stocks. According to a Reuters story, those stocks’ resilience was underpinned by the combination of dependable profits, dividends and expectations of earnings upgrades for companies that sold to consumers outside Europe.

And on the basis of a small TR straw poll of tobacco companies and suppliers operating from the U.K. and in other parts of the EU, it would seem that while there was disappointment at the outcome of the referendum, the most common reaction was that, no matter what happened, it was business as usual. In fact, in the short term, some suppliers operating from within the U.K. were feeling the benefits of a weak pound; although, looking farther ahead, such gains are likely to be canceled out by increased import costs and the general political and economic uncertainties.

Perhaps Barnaby Page, writing the day after the vote for ECigIntelligence, summed things up best when he said that while there was panic in some quarters and rejoicing in others, “the wise if boringly sensible approach is to sit tight, wait and see what happens.” The decision to leave the EU would have little immediate impact on either vapers or the industry.

“With the timing and shape of the U.K.’s departure from the EU still supremely unclear, and the details of the latter at least unlikely to be known for many months, we believe any firm forecasting of longer-term effects at this stage would be close to meaningless,” he said.

“The full response of Brussels and Britain’s European neighbors to the Brexit vote is still uncertain, and to further complicate matters, the U.K. will have a new prime minister within about three months, whose approach to the long process of negotiating exit from the EU also remains to be seen.”

Nevertheless, Page wrote that for the time being—perhaps for two years—within the U.K. there would be little practical change for vapers because the country would not be able to repeal or very substantially alter its legislation based on the Tobacco Products Directive before formally quitting the EU, even if the new government wanted to do so. (Clearly, this is something that would seem to hold in respect of the tobacco industry also.)

Further, Page said that there were unlikely to be any important new vapor restrictions, simply because the government would have more pressing matters to deal with.

And looking to the EU, Page made the point that Britain’s moderate voice on e-cigarettes and related policy—along with its influence generally—would rapidly become close to irrelevant, even before the nation actually left the EU.

“For the industry both in the U.K. and in the rest of Europe, a likely short-term effect is that international companies looking to expand will be less interested in Britain as a base or British firms as acquisition targets, bearing in mind the risk that the EU departure negotiations could end up with British exporters facing European tariffs and other obstacles to trade,” he said.

“In the longer term, although a plausible outcome could be more liberal e-cigarette regulation for British vapers along with a less favorable international business environment for U.K. e-cig companies, there are so many factors at play—the departure negotiations, British internal politics, and of course larger trends in the e-cigarette market itself—that about the only sure bet is that there will be unanticipated developments.” —G.G.