connect with us

CapX: We can’t afford to let vested interests wreck Brexit

Date: 21 09 2017

We can’t afford to let vested interests wreck Brexit

By John Longworth

Events this autumn should determine whether the UK will be economically better off outside the EU. They may also dictate whether we actually leave at all, or if we do so in name only.

This is because the cheerleaders for “project fear” – the doyens of the establishment – are still fighting a concerted campaign to ensure that we do not leave the EU, or at least leave in name only. The CBI is asking for a three-year transition; the Bank of England is set on raising interest rates and thus undermining our competitive currency; and while the Treasury remains publicly silent, it is set on salvaging as much of what we have now and changing as little as possible in order to protect vested interests.

But all this will result in us being worse off. This sort of Brexit will come at huge cost: not only in the monetary contributions to the EU, but also in the restrictions preventing Britain from accessing the benefits of Brexit: the transition period, no tax cuts, no removal of tariffs, no deregulation. It would be utter madness. “Access” to the Single Market would come at way too high a price.

Let’s not forget that only 13 per cent of our economy is directly related to exports to the EU. Seventeen per cent is exports to the rest of the world and the remainder, a thumping 60 per cent, is domestic. The benefits of a clean Brexit break would benefit the whole economy – yet all of the anguish and argument in the current discourse is focused on preserving in aspic that hallowed 13 per cent. If ever there were a case of the tail wagging the dog this is it. And it worryingly demonstrates the power of vested interests in our country.

It’s obvious that if we make a clean break and cease to obsess about a free trade arrangement with the EU, we will be better off. That’s why the Government needs to clearly state the nature of our post Brexit economic policy. We are perfectly able to do this unilaterally, without reference to the EU, and it would provide absolute certainty for industry and boost business confidence – irrespective of the outcome of the negotiations.

It will also have the added advantage of increasing the leverage of the UK in negotiations with the EU since it will quickly become clear that Britain can prosper, deal or no deal. Because the combination of the reinvestment of our net contribution (generating growth and taxes to pay for the NHS), repatriation of fisheries, repeal of the Common Agricultural Policy, free trade arrangements around the world and unilateral tariff removal, control of migration, and deregulation, will together net up to a whopping, additional 7 per cent of GDP growth.

The choice is stark and the choice is simple. On the one hand we can choose the Treasury model and be a dull, also ran, vassal state of the EU in which the establishment maintain a big slice of shrinking cake. Or we can be a dynamic, outward looking, global Britain, with a burgeoning economy in which everybody gets a bigger slice from a larger cake.

It’s a no-brainer.

John Longworth is co-chair of Leave Means Leave

September 21st, 2017: CapX