Monday, 7 March 2016

I don't buy Any of the Arguments for Brexit

If you listen to Brexiteers, the EU is holding us back from trading with the world. The only thing stopping the UK having free trade with everyone is the EU. Upon leaving the EU, we'd lose none of the trade advantages with the EU (on which more later), nor the 50-odd trade agreements we've currently got with EU membership, and everyone who doesn't already have an agreement with the EU would be clamouring for a trade agreement with the UK. Let's think about it for a second, and does it seem remotely plausible? 

Now, Pete North argues that out of the EU, the UK would sit in the WTO and have more influence than as part of the EU. No-one (with the possible exception of Lord Owen) who's actually been there agrees with this view, which even if true, isn't the slam-dunk he thinks it is. The EU is influential as the world's largest market, and the UK is influential in the EU. There *may* be advantages to leaving the EU in our ability to negotiate trade agreements, but you need to be wildly optimistic to imagine the short-run disruption wouldn't be greater than the benefits of extra trade agreements.

The short-run effects of Brexit will be a recession, probably costing 2% of GDP or so. Not disastrous. But I don't believe the mechanisms by which faster growth can be achieved will work over the longer term. Simply because there's little that does, bar free trade, something Brexit risks impeding at least as much as we'd gain with trade agreements elsewhere. Because of the single market the UK economy is 10% or so larger than it probably would have been absent EU membership. If you do the maths, that's a tiny, tiny increase in annual growth over 40-odd years, but such is the power of compounded returns. The UK would need to work very hard to maintain trade advantages with allies to whom brexit would represent two fingers, and take advantages elsewhere. It is possible Brexit could benefit the UK in trade terms. But it's moot, and there is certainly a risk brexit could damage the UK's trade.

"The EU needs the UK's  market more than the UK needs the EU". This is just mercantilist fallacy. Even accepting the silly idea exports, not imports, are the purpose of trade, the EU takes 45% of UK exports. The UK takes 10% of EU exports. Who is more important to whom?

"We're shackled to a corpse"? Well the UK has been the best performing advanced G20 economy for some time, during which the Eurozone has lurched from crisis to crisis. It doesn't seem to have held us back, any more than any other major trading partner being in trouble would have done. In 1972, the UK was the sick man of Europe. It isn't now. It's simply not credible to argue the EU has held us back in any significant way, and nor is it credible to argue on this basis, "the real risk is staying".

"Immigrants, waaaa!" Most of Britain's migrants come from outside the EU, and under most Brexit scenarios in which the UK retains access to the Single Market, we'd accept free movement. Like the Norwegians. So I don't think #Brexit would have much effect on immigration, unless it caused an economic catastrophe.

The UK is impotent in the EU because "We lose more votes in the Council of Ministers than any other nation"? The second "least influential" country by this measure is....

....is....

....is....

Germany.

In any case, the UK is in the winning majority 87% of the time. But these lost votes are a measure of assertiveness, not supplication. France, like the UK did under Blair, votes for stuff with which it disagrees, in order to preserve consensus. It's France, not the UK running up the white flag in Qualified Majority Voting. France disagrees with the EU on free trade, and has to suck it up, mainly because the UK and Germany won the argument long ago.

Does anyone still buy the "£[insert made-up number] billion we send to Brussels" argument? Most of which, if we want access to the single market, we would have to pay most of our current contribution anyway. Most of the gains from leaving will have to be spent subsidising British farmers.

"It's NATO not the EU that has kept the peace in Europe". Of course NATO was the shield, but the EU helped win the peace. Enlargement (another British win against the French who feared rightly it would prevent "ever closer union") pulled former Warsaw pact countries firmly into the Western orbit, and made them richer and free. Brexit will at best, change nothing bar a slight reduction in contributions, at risk of antagonising allies, and emboldening our principle adversary, at a time when the west needs to present a united front to prevent WW3. The carrot of potential EU membership has been used to improve the behaviour of Governments for many years. Watch, as the carrot got snatched away, Governments in places like Ankara and Kiev backslide on democracy, corruption and human rights. To imagine the EU had no role in the successful transition to democracy in Poland, the Balitc states, and central Europe is ridiculous.

"The EU is open in its plans for a Superstate".... and this has been a dream of the more starry-eyed official and Europolitician since its inception, but this has been resisted by... all its nation-state members. The Eurozone may yet become a superstate, if the Germans can be persuaded to allow fiscal transfers to Greece. I'm not holding my breath. As for the UK, we can leave at any time, if the dastardly plot to take over the British army becomes any more than a pipe-dream of a few Brussels eurocrats. An EU superstate, even one which the UK is not a part of, would be harmful to British interests. Staying in, we can continue to prevent it happening.

"The UK would gain influence if we left" The EU is one of the Major clubs of the west. The UK is the only country in all of them: NATO, 5-Eyes and the EU. We are the hinge on which the alliance of democracies turns, a vital cog linking the USA, Europe and the Commonwealth. If you don't think that position brings influence and advantages then I've a bridge to sell you.

Brexit will diminish both the EU, which loses a major commercial, diplomatic and military power, and the UK, which loses its position at the pivot of western alliances. It's difficult to see much in the way of benefits from leaving, and much in the way of risk.



6 comments:

Richard T said...

It is also worth giving some thoughts as to what is going on in the USA Presidential campaign where Donald Trump is loudly proclaiming his intention (if elected) to set up strong US protection barriers. It is conceivable at a minimum that any other Republican will follow a similar policy and, as this seems to strike a chord with a large portion of the electorate, the Democrats may not be able to resist a similar platform. Put simply this is not a good time to posture about the UK's ability to stand alone and negotiate free trade deals.

Anonymous said...

What about... sovereignty?

Eddie Temple said...

All superb points - I get it it: but dear God, the one overarching thing I hate about the EU is that it's a strictly top down institution. Have a look on Spiked Online for the counter argument as they make a strong point.

I've always disliked this project, and have consistently smelled the whiff of stale fish (what am I writing??) off this turgid, easily solvable bloated crime-scene of a bureaucracy.

OL.. I', going to bed, great points, but I really hate the way that left leaning types generally dislike capitalism, but happily say: 'economy wheee!!' when it comes to foreigners...

Dioclese said...

Nice to see somebody actually make an argument for staying in the EU rather than just scaremongering.

I actually disagree with a lot of what you say. I don't believe we're either better off in or out and I certainly don't want to join the Euro (yes I know we're not being asked to - yet) or carry on with unrestricted immigration. It's border control and red tape that I think we'd be better off without.

I'll be voting to leave - but the campaign has a long way to go yet and needs to concentrate on the issues rather than scaremongering and bullying. The Eu is dying and I don't want Britain to die with it.

rapscallion said...

I disagree with just about everything you say, and most especially about Brexit diminishing the EU. It's share of world GDP is dropping and has been dropping since 1973. Then is was 26%, now, its less than 20%. So much for the world's largest customs union - because that is what is (It's not a market) Moreover if you think that the EU has aided peace in Europe then I have a Louis XVI DVD player to sell you. Croatia? Bosnia?

You forget that the UK is the world's 5th largest economy, it is a member of G8, G20 and NATO. It is also a permanent member of the UN security council. We are hardly going to be isolated.

However it's the one subject that you don't mention that is the most important of all - Sovereignty. You are either sovereign or you are not (and currently we are not). Be aware that should we remain in the EU, the status quo will not be maintained. You can be pretty sure that Herr Druncker will insist that we implement a full range of measures, and all to our detriment.

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