Wednesday 30 March 2016

Brexit hopes v some facts.

Already we are being bombarded by both "remainers" and "outers" in the Europe debate by claims which may or may not be valid. There's a good deal of exaggeration and wishful thinking on both sides. In this post I shall try and distinguish between what is fact and what is speculation oropinion..  The facts quoted are based on the Springfield and Telford article summarised here and available in full in Prospect Magazine (January 2016).

The cost.

Brixit hope: we shall save our net contribution, which is generally agreed to be about £10bn per year.  Brexit likes to quote this daily outpouring, which I make to be about £2.7m a day.  (Oops!  Actually £27m a day.  Thanks to "Anonymous" - comment below - for this correction)

Fact: true, but Brexit also assume that we shall be able to continue trading with What  Remains of the EU (WREU) on favourable terms.  If we do so we shall have to pay, for the most favourable terms (the Norway option) about 90% of what we pay now, on less favourable terms (the Swiss option: tariff free access for goods but not for services) about 50%.

Opinion:   Being able to have  our cake and eat it seems rahter optimistic 

Trade with WREU after Brexit.

Brexit hope: the UK is an important market and WREU will be anxious to continue trading with us .

Fact: true, but they are a far more important market to us (45+% of our exports) than we are to them (c6% of their exports.)

Opinion:  WREU are likely to drive a hard bargain.  There is also a political factor: WREU will be anxious not to  encourage other countries which might be tempted to leave, so the bargain could be even harder that economics suggest pour encourager (or rather d├ęcourager) les autres.


Brexit hope:  Britain will reclaim control of its borders and be able to let in only those people we like.

Facts: 1) Both Norway and Switzerland have to allow freedom of movement  for EU citizens in order to obtain their favourable access to the market.  For reasons explained above WREU are unlikely to allow us favourable access without similar free movement.  So to close our borders to WREU citizens (other than those here already) we should have to trade with them on World Trade Organisation (WTO) terms – that is, over the external tariff barrier.  Some estimates of the loss of trade under these circumstances rise to £3 000 per household per year.
2)  We already have theoretical complete control over our borders for people from the rest of the world.  The fact that the control is a bit leaky is not due to the EU, but to the parsimony of the British government in starving the Border Force of both person-power and funds.
3)  The refugee and asylum seeker crisis will continue whether or not we remain in the EU, and we are required to play our part in caring for refugees and asylum seekers, both by international treaty obligations and for reasons of common humanity.
4)  Economic migrants, simply seeking a better life, will continue to try to come to the UK, again whether we remain in or leave the EU.

Opinion: 1)  Brexit  would  limit the freedom of  British  citizens to work in WREU as well as vice versa.  This is particularly serious for academics, highly qualified professionals  and students, but also for apprentices, artisans (remember Auf Wiedersehen pet?) and humble bar staff (Tony Blair). 
2)  For refugees and asylum seekers clearly an international response is essential and the EU as it exists should play a part in negotiating an equitable response with other safe and peaceful havens. 
3)  For economic migrations we need to adopt a 21st Century approach.  With modern communications and relatively cheap international transport the days of closed borders are long past, even if they ever existed.  We need a controlled but fair approach which will require international co-operation.

Trade with the Rest of the World.

Brexit hope:  freed from the shackles of the EU we shall be able to expand our trading relations with the rest of the world, especially the growing markets of India, China and South America.

Fact:  Britain would not inherit the existing terms the EU’s bilateral trade deals with the rest of the world: all would have to be individually renegotiated.

Opinion:  this could take years, adding considerably to uncertainty.  And it is difficult to see how the UK alone, with a market size of only 66 millions, could negotiate better deals that the EU with over half a billion.

Red Tape.

Brexit hope:  freed from regulations imposed by the EU British industry and commerce will  flourish and expand.

Fact: there are very few facts available.  “Red tape” is a very vague term.  As the great judge Lord Bingham said of the European convention on Human Rights (nothing to do with the EU of course):  “Which of these rights would we wish to discard?”  In relation to red tape, some EU directives are mythical (bent bananas and cucumbers), others relate to workers' health and safety and conditions of employment, others to our environment, pollution, condition of our rivers and beaches etc.  A list of what Brexit would like to discard would help the debate.

Opinion: not mine, but that of the still existing and relevant Ed Miliband who in a speech on 22nd March warned Labour voters that if they fail to turn out and vote to keep Britain in the European Union on 23 June, the country will become a laboratory for a rightwing, free market experiment. (my emphasis)

So working class voters lured by the siren call of UKIP, be careful what you wish for.

Inward investment.

Brexit hope: since they say little about it, presumably they think it will be unaffected.

Fact: at present Britain is by far the EU’s largest recipient of foreign investment.

Opinion:  many foreign companies invest here, or place their headquarters here, because of the language. The Japanese are also apparently attracted by what they regard as cheap and plentiful golf courses. But surely without the main attraction of tariff free access to the EU market the UK will become less of a lure.   Banks, and all other companies for that matter, will have to obey EU regulations if they wish to continue to trade with WREU.  The “advantages” of banks remaining in the city of London in order to profit by lighter regulation should, after 2007/8, fill us with horror.


Brexit hope: freed from the Brussels bureaucracy we British will subject only to our own laws made by our own freely elected political representatives.

Facts: again there are rather a lot.
1) The influence of the EU affects nowhere near the “majority” of Britain’s laws, still less 75%, as is the more extreme Brexit claim.  The true figure is about 13%, on matters both great and small.
2)  Only 4 out of 121 laws passed by the last parliament were exclusively to implement EU law.
3)  The EU's procedures may not be a model of democracy, but the parliament is democratically elected and we British  are represented according to the size of our population.  When regulations are made by the Council of Ministers our minister is there and until recently he/she had to agree as unanimity was required.  Today in the areas where Qualified Majority Voting (QMV) is permitted he/she has the opportunity to argue the British case and win over the others.

Opinion: 1) Given that “our laws” are made by a lower house where the party with an over-al majority has the support of less than a quarter of the electorate and only 36% of those who voted, and the upper house is a collection of hereditary aristocrats and appointees of the present and previous prime ministers, it is difficult to argue that that our democracy is all that superior to that of the EU.

2) Just as John Donne so memorably pointed out that “no man is an island,” but we are all both enriched and constrained by others, so no country is free to act independently.  All countries are entangled by a mesh of international and bilateral treaties and agreements.  Many of us feel that the loss of sovereignty to unelected and profit motivated national and international industrial and commercial conglomerates is a more unacceptable  loss of sovereignty than the voluntary and formal “pooling of sovereignty” entered  into by arrangements with other countries, the EU, WTO and UN.

1 comment:

  1. £10 bn / 365 days = £27 m per day.

    Unless you think Britain's net contribution is £1bn?