Would Britain thrive outside the EU?
By Szu Ping Chan
16 February, 2015
The Institute of Economic Affairs believes the UK could be better off outside the EU.
The question of Britain’s future in the European Union has recently been overshadowed as a topical concern by the possibility of a Greek exit from the eurozone.
But while “Grexit” is at the forefront of investors’ minds, “Brexit” isn’t far behind. The Conservatives have promised Britons a referendum on EU membership if they win the next election, while the rise of UKIP has led London Mayor Boris Johnson and former chancellor and Europhile Ken Clarke to call for the referendum to be brought forward to 2016 so the question can be settled once and for all.
But what would Britain look like outside the EU? The Institute of Economic Affairs has outlined a blueprint for Brexit:
= Become more like Switzerland, Iceland and Norway =
Eurosceptics often wheel out the success stories of Switzerland, Iceland and Norway in their arguments for Britain leaving the EU. All three countries lie outside the bloc, but are members of the European Free Trade Association (EFTA) – which mean they still enjoy the benefits of the EU’s internal market.
According to Article 50 of the Lisbon Treaty, any member state can leave the EU – it just needs to tell Brussels. It states:
The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
While the IEA says it remains neutral on the prospect of a UK exit from the EU, Iain Mansfield, winner of the IEA’s “Brexit” prize last year, said that in the event of a British exit, the UK should take full advantage of this cooling-off period in order to sharpen its negotiating skills and get the best deal for the country.
No matter whose Brexit blueprint you look at, there’s one common ingredient: trade. In order to be a successful economy, Britain must look beyond its borders and send a clear signal that it is open for business, especially to the EU. As Mr Mansfield puts it:
Even if current trends continue, it is likely that until at least the end of this decade the EU will remain the UK’s single most important trading partner. The highest economic priority should therefore be to ensure that zero tariffs are maintained in bilateral trade between the UK and the EU in all areas other than agriculture.
As the eurozone has highlighted, playing happy families is hard when there are so many members to please. According to Mr Mansfield, one advantage Britain has in going it alone is that it would not be constrained by the concerns of more protectionist EU members.
Switzerland and New Zealand have secured free trade agreements with China, the world’s second largest economy.
Securing a free trade agreement with countries such as China and Russia, are key, according to Mr Mansfield. However, a free trade deal with Russia is unlikely, in the near term at least. The country is facing economic turmoil, while its annexation of Crimea in Ukraine has led to a series of tit-for-tat sanctions between Russia and the West.
There’s also the issue of British payments into the EU budget. The UK paid €10 bn [£8.5 bn] more into the EU pot than it got back out in 2013. In principle, once Britain was out, it would no longer have to make payments, although Mr Mansfield said the UK government might have to step in and fill the void left, once EU farming subsidies stopped.
UK businesses often complain about the amount of EU red tape they have to grapple with. But leaving the EU doesn’t necessarily mean there will be a “bonfire of the regulations”, according to Robert Oulds, who also believes Britain should turn to EFTA. According to Mr Oulds, in 2013 there were in force:
• 8,937 EU regulations
• 1,953 EU directives
• 15,561 decisions
• 2,948 other legal acts
• 4,733 international agreements
• 4,843 non-binding legal acts, which may, however, bind if agreed
• 52,000 agreed EU international standards
• 11,961 verdicts from the EU Court of Justice
Not that he’s counting or anything. As Mr Oulds puts it:
There will then be a monumental task for parliament and the civil service of repealing unwelcome EU-inspired rules, while retaining the necessary and acceptable ones. It should not be presumed, however, that leaving the EU will necessarily create a significant repeal of laws and regulations. To begin with, the UK’s civil service does not favour deregulation. Furthermore, it does not regard the regulatory burden as being as much of an encumbrance as others, including members of the European Commission, believe. The British Civil Service impact assessments attributed far lower costs to EU regulation than other analyses.
With complex supply chains involved in production, it is difficult to identify, let alone regulate, only a final end point in the production process. In such circumstances, British civil servants may conclude that it is easier to continue applying EU regulation to many sectors of the British economy, especially since the EU will remain Britain’s largest trading partner.
= So where would that leave Britain? =
Mr Mansfield has outlined the following scenario for Britain.
The best of both worlds:
Britain would maintain its free trade agreements with existing EU trading partners, and strike a range of new agreements with major countries including China and India.
Stronger trade outside Europe would compensate for a slight reduction in trade between the UK and EU.
Britain’s EU budget bill would be reduced to almost nothing, while MPs would successfully cut more than half of the red tape imposed by the EU on business.
In this scenario, the economic benefit to Britain would be £16.1 bn – or 1.1% of GDP.
The first order of business in the new parliament, that will assemble following the general election on 7 May, should be to hold a free vote on a motion repealing the Act of Parliament that took Britain into the European Union (then called the Common Market) in 1973.
We don’t need a referendum, the favourite device of dictators, on the issue. The whole point of leaving is to reassert our national sovereignty and independence of action. What better way could there be to do that than via a free vote in our national parliament?
I challenge Nigel Farage, not to a ‘downing contest’, I leave that to the pub landlord, but to second Patria’s call for a free vote in the new parliament, after the general election, on a motion to leave the EU unconditionally and within eighteen months of the vote.
Patria is the one and only party with both the courage and the intelligence to put our people first.
To save the country for your grandchildren: Vote Patria on 7 May!