Britain really would be better off out of the EU
British business would thrive globally if Britain left the European Union. According to a new study, the benefits could be astronomical
Over the past few months, Prime Minister David Cameron has been talking a lot about trade. Whether it is through trips to India or initiating EU trade negotiations with the USA, the understanding has been that global trade helps the UK in the so-called “global race”.
Well, The Freedom Association in association with The Hampden Trust have launched a new publication that shows one way that UK businesses could thrive in this race: for the UK to leave the EU.
Setting Business Free: Into the Global Economy by Professor Patrick Minford CBE shows why the ongoing crisis in the EU - especially the Eurozone - is real cause for concern. Professor Minford argues that, over the coming decade, there will be a growing desire from the EU to centralise and integrate, with the UK expected to play ball.
This ball game is something the UK did not sign up to. Even in the ensuing treaties after its entry into the EEC, the UK has never signed up to the single monetary policy. Yet, Professor Minford argues that, regardless of this, the EU will wish it to comply with yet more debilitating rules and regulations.
This is concerning because the EU already makes the majority of the laws in this country. The knock-on effect of this has been an increase in the cost of regulations for businesses across the UK. This culminated with the British Chambers of Commerce estimating that EU regulation made up approximately 70 per cent of the total cost of regulation to British businesses.
Indeed, Professor Minford's assessment is that EU regulation now costs at least six per cent of UK GDP to implement, which would mean that EU regulation is costing the UK roughly £90 billion a year.
This is, quite frankly, unacceptable. Yet, the options are there. Outside the European Union the UK could join the near 40 other states that have trade deals with the EU. Indeed, given that the UK is the largest consumer of goods with the EU (now with a £55 billion annual trade deficit) it is hard to believe that the EU won’t deal with its largest customer.
Minford suggests we embrace global free trade. He argues that outside the EU the UK would immediately benefit by about £50 billion through being outside the Common Tarriff Area. Nonetheless, this doesn’t compare to the benefit the UK would accrue through becoming part of a global -- rather than regional -- economy.
The current free trade structure has problems. At the moment we negotiate our trade deals through the European Union and not independently as an individual nation. This means that the current negotiations with the United States have been dogged by exclusions and potential time delays. It should be noted that the EU has been locked in trade negotiations with Canada since 2009 -- the year Switzerland, which is not in the EU, signed a free trade deal with the Canadians.
With Britain now having to deal with 27 other nations, free trade negotiations are not just delayed, they end up being compromised. Inevitably, some measures will go against the UK -- such as the apparent exclusion of items related to “culture” in the latest EU-USA trade talks.
This poses a problem as the UK enjoys not just cultural links but many other links with the U.S. that the EU does not. By excluding things like culture, and potentially other items too, these sorts of deals would not reach the maximum potential benefit for the UK and, ultimately, this means that the deal is no longer “free”.
Professor Minford’s idea shows how things could be different -- it could be a model to lead the world. The beauty is that it’s simple and straightforward: free trade. This is a basic point which, if adopted, could see the lowering of prices, increased consumer demand and a more competitive economy -- leading to higher private investment.
Today’s debate is not about a nationalised nation being slowly introduced into the global market. The UK is a developed country with a broadly liberalised market and already established trade links. On the contrary, the current choice might be framed as between trading in an increasingly integrated regional market arrangement, or being free to integrate into a global market arrangement.
But as the regional market obstructs key elements of our comparative advantage by pushing prices away from world prices -- thus denying us the ability to exploit to the utmost this comparative advantage -- I would suggest that, integrated into a global system, the UK, its businesses and its people would be Better Off Out.
Rory Broomfield is Deputy Director of The Freedom Association and Director of the Better Off Out campaign. He tweets @rorybroomfield
Read more on: brexit, Patrick Minford, Better off out, Freedom Association, European Union, european union stifling business, and Hampden Trust
We are wholly dependent on the kindness of our readers for our continued work. We thank you in advance for any support you can offer.