A bad bet for Pembrokeshire

When I stood in the general election in Preseli last May one question I was frequently asked was what I thought about the European Union. This week Prime Minister Cameron has at last provided some substance to what he is trying to re-negotiate before the in/out referendum, likely to take place next year. So it is a good moment take stock of whether being part of the EU is good for Pembrokeshire.

I think that it is, for three reasons. First, in recent years we have benefited hugely from EU funding, initially the Objective 1 programme and now the continued Convergence funding which takes us until at least 2020. Take three examples: there has been £20m contributed by the EU towards the A40 by-pass around Robeston Wathen – more than half the £37m cost; Pembrokeshire County Council has received £5m towards its recycling programme; and Pembrokehshire Association of Voluntary Services has received £3m in the last few years to develop its activities.

 Robeston Wathen by-pass - brought £20 million EU funding to Pembrokeshire

The second reason is because the EU’s Common Agricultural Policy has been of enormous benefit to Pembrokeshire farmers. If Britain were to leave the EU I doubt that the Treasury in London – committed to reducing the amount of state spending - would give such priority to agricultural support.

And thirdly the consequences to the Pembrokeshire economy if we were to leave the EU would be dire. We would lose unfettered access to our main markets and there would be even less incentive for investment in new business to take place.

I was promoted to revisit these arguments by revelations last week by the shenanigans of some financiers in the City of London who are supporting the No campaign. I’m thinking of a number of very wealthy hedge fund managers who are looking to make a killing out of the stock market if, as they anticipate, it takes a dive following a No vote. These are some very unsavoury people indeed.

It’s worth taking a moment to understand the scheme they’re hatching known as ‘shorting’. Last week the US investment bank Morgan Stanley predicted that if the UK votes to come out of the EU, shares in the FTSE 100 could drop by as much as 20 per cent. For hedge fund managers that prospect has profit potential. Any predictable drastic movement in the shares of Britain’s biggest listed companies offers them scope for the following classic hedge fund manoeuvre. A fund ‘borrows’ shares from a City investor for a set period for a fee. The fund then sells the shares in the expectation of buying them back more cheaply when the price falls, and then returning them to the original owner.  The difference between the two prices is pocketed as profit by the hedge fund. That, in short, is ‘shorting’.

Can it be a coincidence then that a number of very prominent, and very rich owners of London hedge funds were reported last week as poised to give large sums to the Vote Leave campaign? This is seeking designation from the Electoral Commission as the official voice of the Out campaign. Amongst its backers is spread betting tycoon Stuart Wheeler, UKIP’s treasurer. It appears the No people are a betting crowd, but they’re a bad bet for Pembrokeshire.