Facts and figures are flying in both directions. For every assertion one side makes, the other makes an equal and opposite counter assertion. Emotions are running high.

In cases like this it can be useful to take an outsider’s view. After all, outsiders are a little bit less emotional. And they are less likely to have vested interests.

In the case of Brexit, the outsider’s view is remarkably consistent. As far as I can tell, every leader of a foreign country that has expressed an opinion so far has come out firmly against Brexit. The same is true for the IMF, the OECD and respected international economists.   Barack Obama, no less, is taking time out of his busy schedule to visit the UK and support the case against Brexit.

It is not often in life that such a disparate group reaches absolute consensus. ‘What are they [the British] smoking?’ one Canadian authority figure exclaimed last week. In contrast to the finely balanced arguments for and against presented by the BBC, the outsiders seem to view it as a ‘no brainer’.

This very unusual consensus tells us something. Foreign leaders seem to be seeing something which is absent in the frenzied media debate within the UK.   What is it?

I think perhaps world leaders are concerned about the rise of populism in so many countries. There seems to be something in the air at the moment. The astonishing rise of Donald Trump in the US is a good example. Then we have Marine Le Pen in France, Geert Wilders in the Netherlands, PEGIDA in Germany. Almost every developed country has its populist movement these days. In some countries, populist politicians have risen into government itself. Vladimir Putin in Russia is the best known example.

All of these parties broadly speak the same language – they blame many of their country’s problems on foreigners, they mistrust existing institutions and they seek to reduce cooperation with other countries.  Many of them want to erect walls and trade barriers, or to close the borders.

From an outsider’s perspective, the Brexit debate simply appears as part of this overall global trend.

The last time populism was so widespread was in the 1930s, where it cropped up in a very large number of countries at the same time. The populism of the 1930s didn’t work out very well – it made the great depression much worse and then unleashed an unprecedented storm of violence. The behaviour of Russia over the past two years is not an encouraging sign. This is why mainstream political leaders everywhere tend to argue against all forms of populism, including Brexit.

I think world leaders are genuinely quite afraid. Is the world order that has delivered peace and prosperity over the past 70 years about to unravel, with Brexit a further nail in its coffin? Will it be each country for itself from now on, and to hell with the rest?

Credit insurance started in Europe as part of a British government initiative to get trade going again after the horrors of World War One. I can’t remember how many times over the past 35 years I’ve heard people in our profession say they don’t think our product is as relevant as it used to be in our ‘safe’ modern world. But recent events show that political risk is alive and well, even in the EU and the US. Indeed the populist actions of Vladimir Putin have already caused several political risk claims over the past two years.   Human nature doesn’t change. A reduction in demand for our product is one threat we don’t need to worry about right now.

Mike Holley

21 April 2016

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