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Brexit would hit special relationship, warns former US treasury chief

Published 20/04/2016

Former US treasury secretary Larry Summers has backed the Remain campaign
Former US treasury secretary Larry Summers has backed the Remain campaign

Brexit would badly damage Britain's special relationship with America, a former US treasury chief has warned.

Larry Summers, who served under president Bill Clinton, said Britain's influence with Washington would be diminished along with its standing in the world if the UK opted for withdrawal from the EU.

"It would reduce Britain's very positive influence as an ally of the US. I think the special relationship would translate much less into prosperity for both our countries, and I think the special relationship would have much less influence on the broad world.

"Much would be lost by the kind of split in the West that a British withdrawal from Europe would represent," Mr Summers told BBC Radio 4's Today programme.

Mr Summers insisted withdrawal from the EU would have a negative impact on the UK's standing in the G8 and G20 groups of industrialised nations, and reduce London's role in the global financial order.

"It would do damage to London as a financial centre," Mr Summers said as he warned Brexit would be "the most isolationist deed in the last century".

Mr Summers joined George Schultz and six other ex-US treasury secretaries in expressing concern that withdrawal from the EU would be a "risky bet".

In an open letter in The Times, they called the referendum a "consequential decision" and said the special relationship benefited from having the UK in the EU.

"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," they said.

The UK's ability to be a global centre of finance could also be at risk if the public voted for Brexit, they warned.

"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," the letter says.

The group of former treasury secretaries - which includes figures who have served under Democratic and Republican presidents - said that while trade deals would eventually be renegotiated, Brexit would "likely disrupt and reduce trade flows at least for a while, curtailing the scale and efficiency benefits from economic co-operation and integration".

They added that thanks to the special relationship, during difficult times, they had looked to Britain as "strong voice and partner" and claimed that "our collective efforts benefited from having a strong Britain within Europe".

Prime Minister David Cameron tweeted that it was an "important" letter, while Chancellor George Osborne said it showed Brexit came with an economic price "not worth paying".

Prominent Brexit backer and former defence secretary Liam Fox dismissed the intervention as misguided.

The Leave campaigner said the US financial experts were wrong to say that withdrawal would represent isolationism, and insisted that they overstated British influence in the EU.

Dr Fox told the Today programme: "I respect their authority, but some of them do go back a long way. The most important failure of the analysis is that they have failed to take into account the decline and failure of the European economy itself, with a falling share of world trade, a smaller and less important destination for UK exports, and with chronic unemployment.

"If you look at Britain's unemployment rate of 5.1%, the European Union averages 8.9%, and the eurozone is 10.3% - that is a failing European economy, where we are clearly not having the influence we ought to have, or they would be having falling unemployment the way that we have in Britain."

The ex-cabinet minister took issue with claims that Brexit would diminish Britain's role in the world, and fuel political instability in Europe.

"There are many other areas than just money where Britain matters, security being one of them - we have the world's fifth biggest defence budget.

"Unless there is fundamental change in that European leadership we will have an imploding continent, and a British exit may give them the shock therapy they require to make the change necessary to stop Europe falling apart," he said.

Mr Cameron used Prime Minister's Questions in the Commons to urge voters to listen to what the former White House officials had said.

Responding to claims from the pro-Brexit camp that America would lose "control and influence" over the UK if it remained in the EU, Mr Cameron made a pointed reference to US President Barack Obama's expected public backing for the Remain cause when he visits Britain later in the week.

"I am sure the president will take all of these calculations into account before saying anything he might have to say.

"Personally, I believe we should listen to advice from friends and other countries, and I struggle to find the leader of any friendly country that thinks we should leave.

"When it comes to the United States, it is worth looking at what so many treasury secretaries have said, going back over Republican or Democrat administrations; it may not be the determining fact for many people, or indeed for any people, listening to what our friends say in the world is not a bad idea."

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