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Telegraph: We must resist so-called transitional arrangements

Date: 05 09 2017

We must resist so-called transitional arrangements

JOHN MILLS

We have heard plenty recently about the problems which Brexit may cause but not nearly enough about the opportunities it will create. No doubt there will be difficulties to be overcome but there are also major advantages to be secured.  

A new joint publication, entitled New Model Economy, produced jointly by Leave Means Leave, Labour Leave and Economists for Free Trade, explains what they are and how much there is to be gained by a well-managed clean Brexit.

Crucially, will the UK economy grow more quickly outside the EU rather than inside it? We believe it will. The EU is a heavily regulated and protectionist organisation and there is much to be gained by getting rid of tariffs and regulations which are not needed – let alone freeing ourselves from the heavy membership cost which, ever since we joined the Common Market in 1973 – we have been paying every year but one – in 1975 when the last referendum was held.

Do we really want to tie our export strategy for the future to the EU which, partly because of all he difficulties there have been with the Eurozone, is a very slow-growing area? We are not helping ourselves by being tied to a market which has hardly grown since the 2008 crash – and where several countries are still worse off now than they were then. About 40pc of our trade is with the EU, on which we have a large deficit, but 60pc is outside it – and here we are in much better shape with a comfortable surplus.

Food prices are much higher inside the EU than on world markets and there are big welfare gains to be made, especially for poorer people from the UK being outside the Common Agricultural Policy. Getting rid of agricultural protectionism will be much better too for poorer countries which want to trade with the UK. To do this we have to be outside the EU Customs Union.

The Common Fisheries Policy has been both an ecological and economic disaster, hugely damaging our fishing community. We badly need to rebuild our fishing industry and now we will have the opportunity to do so. Brexit will provide us with the opportunity to do so.

While social and employment legislation needs protecting, as our report makes clear, there is plenty of other regulation which costs more than its benefits are worth. Much of it raises costs unnecessarily which, in the end, has to be paid by the consumer. This needs to change.

Add to this the big savings made by our not having to pay the EU billions of pounds a year in net contributions to its various budgets, and you can see why we are likely to be so much better off after Brexit.

Economists for Free Trade, one of the groups authoring our report, have calculated that the total gains to the UK economy from these changes could be as much as 7pc of our national income.

That is why we believe that everyone, but especially poorer people, will be better off once we are outside the European Union, particularly since they have most to gain from reductions in agricultural tariffs and thus cheaper food. They will also be helped by a new deal on immigration which prioritises skilled and high earning workers instead of people who are used to earning much less than people born in the UK.

Will all this be possible? Yes, it will be provided we are prepared to stand our ground and revert, if necessary, to trading with the EU on World Trade Organisation terms – i.e. with no special deal that is different from what the EU already has with its major trading partners such as the USA, China, Japan, India and Australia. This will enable us to trade with the Single Market countries on the same basis as they do – at worst with only low tariffs to pay which we can offset with a rather lower exchange rate. We don’t have to be in the Single Market to trade with it, any more than any of these other countries do.

The crucial requirement is for the UK to avoid being compromised into accepting arrangements for the future which mean that we never gain the full advantages of independence. This is why we are concerned that supposedly transitional arrangements which keep us in the Single Market via the European Economic Area Agreement are both unnecessary and may finish up being permanent. We will then be no better off than we were before the Brexit decision was taken – and worse off if we are still caught up in the EU, but with no say in the way it develops.

The 3.5 million Labour voters who voted for Brexit in June 2016 made the right decision as well as the other 14m people who voted with them, as the future will show.

John Mills is the founder and chairman of JML, and chairman of Labour Leave and Labour Future

September 4th, 2017: Telegraph