19 February 2015

Global markets are the future, not an outdated customs union


Is there a positive business case for leaving the European Union? There’s certainly a great deal of concern voiced about over regulation, power becoming ever-more distant and detached, and how the UK has to accept the oversight of the the EU’s one-size-fits-all bureaucracy. But are the economic risks not frightening? Do British workers not stand to lose as many as three million jobs if we choose to exit the EU?

The simple answer is yes and no. Yes, there is a positive business case for Brexit and no, we shall not lose three million British jobs. Before I go on to explain that positive case, how can I be so sure all those millions will not end up on a dole queue?

Firstly, because the idea that the pro-EU lobby is trying its hardest to have accepted is in fact a myth built upon a corruption of academic research that said no such thing.

When, in 1999, a report by the NIESR (National Institute of Economic and Social Research) looked at the risks to 3.2 million UK workers whose jobs related directly to exports to the EU, it reported that, allowing for significant limits on tariff barriers by the WTO, and in conjunction with potential gains from withdrawing from the Common Agricultural Policy and no longer paying net fiscal contributions to the EU: “there is a case that withdrawal from the EU might actually offer net economic benefits.”

This finding was ignored but the figure of 3 million became the story. Ever since it has been repeated by countless Europhile politicians as a mantra when they wish to strike fear into British voters.

But wait. If we apply the same logic of stating that export-related jobs will be lost in an EU-UK trade war then it must follow that the 6.5 million European jobs directly reliant on exports to the UK – the EU’s largest market bar none – must be at risk too.

Advocates of the trade war armageddon cannot have it both ways. The truth is that it is far more likely that German car workers, French cheese makers and Spanish wine growers would be demanding their markets are kept open without any new tariffs and their vote-conscious politicians will advocate for them.

There is also the not insignificant matter that under the WTO rules that the EU has signed up to it would be illegal to initiate such a trade war by raising tariffs. The overwhelming legal, economic and business case is that the EU would seek to do everything to ensure its ailing economy was not put at greater risk and agree deal that suited both the EU and UK. It has already arranged such deals with the likes of Canada, Australia, Mexico and Israel.

So the fear and anxiety spread by the scaremongers is baseless, and all the more despicable for that.

Instead, the UK can better develop on its own commercial relationships with the emerging markets such as China that are not allowed to establish free trade agreements with individual EU nations, but must spend years negotiating trade deals with the cumbersome EU. Establishing bilateral deals is far easier, and more appropriate to both parties, than when one country has to deal with a 28-nation bloc riven with self interest and disagreement.

Already UK exports are in a ratio of 40/60 with the EU and non-EU world – and the divide is growing in favour of trade with the wider world every year.  The distinct demographic problems that the rest of the EU faces, with ageing and shrinking populations, means the UK’s economic future lies in becoming more orientated towards global markets.

Given too our advantages of adhering to the rule of law, the growth of English language, an excellence in education, an enviable entrepreneurial spirit and our continued top rank in media, culture and sport, the UK’s lead as the world’s soft power gives us a sound basis for confidence.

The evidence shows that, rather than losing jobs if the UK leaves the EU, the greater risk is if we stay inside the EU – for its trajectory is to adopt more regulation, greater centralisation and increased conformity. Moreover, the option is not leaving the EU, reformed or unreformed; it is leaving the EU or eventually joining the Euro. For, if we given the chance to leave and opt to stay, then the scaremongers will next be saying we should be at the heart of decision making by joining the single currency.

Putting on the EU’s lead boots will not help us be fleet of foot in winning more business, it will cost us jobs and prosperity. And that’s not scaremongering.

Brian Monteith is co-author of the report “The Scaremongers” published by Global Britain and the Democracy Movement.