14 April 2016

Utopian Brexiteers need to answer some basic questions

By Jonathan Hill

It’s time for more scepticism in the debate about Europe – scepticism in the original sense: asking hard, practical questions, wanting evidence, not relying on wishful thinking.

Thirty years ago it was the Euro-enthusiasts who were the utopians. When people like me asked what the Euro might mean for Britain’s economy, we were told not to worry and that everything would be fine.

But today the Outers are the utopians. It is Leave campaigners who give sweeping assurances and try to close down the argument about what might happen after June 23rd if Britain votes to leave.

We needed scepticism before and we need it now. It’s always a sign that you need it when the arguments to justify a position keep shifting.

A month ago Outers were saying that Brexit would be brilliant because Britain would be able to forge our own free trade agreements across the world. Now they’re saying that Brexit would be great because we could put up tariffs, start a trade war with China and block TTIP.

When asked how things would work post-Brexit, we’ve been told that we could have a relationship like Norway’s, or Switzerland’s, or Canada’s, or just WTO rules, or a special relationship with the US, or the Commonwealth. I’m reminded of the enterprise that advertised itself at the time of the South Sea Bubble as ‘a company for carrying out an undertaking of great advantage, but nobody to know what it is’.

Let’s take six claims often made in Britain’s European debate and examine them sceptically.

First, that in the EU Britain is ‘shackled to a corpse’, but if Britain left it would be free to link itself up to the fastest growing economies.

Europe’s been through tough times but does the claim stack up?

The European economy is growing again – if not fast enough. Compare that to the BRICS: three out of the five countries – Brazil, Russia and South Africa – are now in recession.

The EU has more free trade agreements than any other trading bloc or country in the world; more trade agreements are being negotiated.

And nearly three out of four inward investors into the UK say that Britain’s being in a Single Market of half a billion people is one reason they invest here.

Second, that Britain is drowning in EU red tape. “Drowning”?

According to the OECD, Britain has the second freest product market and one of the most flexible labour markets in the world.

In financial services Britain’s surplus has more than doubled over the past ten years. Last year London was again voted the world’s most competitive financial centre. That doesn’t sound like drowning.

Third, that Britain always loses. In her Bruges speech in 1988 Mrs Thatcher made some big arguments: against a superstate. The February settlement ends a single political destination for EU countries and Britain is exempted from ‘ever closer union’.

She made the case for a Single Market, and that market is now far broader than then. She made the case for free trade, and trade is now far freer.

On votes in the EU Britain is on the winning side 90 per cent of the time. Britain has been more successful in shaping today’s EU than most people think.

Fourth, that the EU has never done anything for us.

Well, there’s open access to a market of half a billion of the most prosperous peoples on Earth, free trade deals, collective weight wielded for international security, such as on Iran’s nuclear weapons programme, the abolition of roaming charges, cheaper flights through liberalised air travel, compensation rights if your holiday’s cancelled, and visa-free travel, free healthcare and the right to work or retire anywhere in the EU.

And that’s leaving aside its contribution, alongside NATO, to peace in our continent.

Fifth, that the EU controls everything we do. But where are the big decisions taken on which general elections are fought: decisions on war and peace, over, in almost all cases, what to tax, how much to tax, over what and how much to spend it on, over how our schools and hospitals and welfare state should be run, over what should be a crime and over border controls? Here in the UK.

Sixth, that leaving the EU would be quick and easy, that the 27 other EU countries would give Britain everything it wanted. Here we really need to be sceptical. Normally in life you cannot have something for nothing. All experience says that if something sounds too good to be true then it is too good to be true.

Negotiations take time, and uncertainty hits investment. Last month I reached an agreement with the United States on the narrow issue of equivalence negotiations on central counterparties. Those talks took four years, despite good will on both sides.

Sadly, I don’t think that would be the case were Britain to leave. Britain’s European partners would feel a sense of rejection – particularly since some Leave campaigners have spent years running them down. If Britain chooses to become a competitor rather than a partner, why wouldn’t they themselves seek a competitive advantage?

Britain has great strengths. The right question isn’t: would Britain survive outside? But rather whether it would flourish.

No one denies that the EU faces great challenges. But before turning our backs on our neighbours and taking a step that would mean a profound change to Britain’s economy and place in the world, I hope that voters will be sceptical, and listen to that little questioning voice in the back of all our minds and ask, is this idea of leaving actually going to work out for the best?

Lord Hill is EU Commissioner for Financial Stability, Financial Services and Capital Markets Union.