Government and Institutions

Let’s hear the positive economic case for Brexit

Conventional commentariat wisdom has it that the EU referendum pits those concerned about economics versus those concerned about immigration. But a quick perusal of the leading intellectual voices supporting Leave shows this is nonsense. Many have long thought the UK outside the EU would not only be more free and democratic, but more prosperous too.

That’s why a group of eight economists (including professor Patrick Minford, Capital Economics’s Roger Bootle, Dr Gerard Lyons and me) have got together to launch “Economists for Brexit”. Each of us has our own views on the short-term implications of leaving. Where we all agree is that, provided the UK adopts sensible policies outside the EU, there is no reason why we cannot enjoy more robust growth than if we remain in. This positive economic case for Brexit is not currently being heard.

In the Treasury’s official forecasts published last week, George Osborne just assumed away any benefits of leaving. In the scenario where we had a Norway-style relationship and could sign our own free trade agreements, he assumed we’d sign none. We’d fail to harness opportunities for deregulating under Canadian or World Trade Organization arrangements. If we did not agree a trade deal with the EU, Osborne assumed we’d increase protection rather than go for unilateral free trade. And the government assumed the EU remained the same – ruling out the possibility of the UK being subservient in an EU dominated by Eurozone interests with deepening integration.

Perhaps under an Osborne-led Britain, we would not be able to reap Brexit benefits. But just because the chancellor wouldn’t do the right things, it doesn’t mean the options are not there. We will put forward the case for an open and globalist Britain – with free trade as wide as possible and sensible economic regulation. We’ll also seek to debunk myths peddled by the Remain campaign.

The first is that the EU is “good for jobs”. Given three of the four European countries with the highest employment rates – Iceland, Switzerland and Norway – are not actually in the EU, and Greece and Spain have unemployment rates over 20 per cent, EU membership is clearly neither necessary nor sufficient for a healthy labour market. What really matters is domestic policy. And what is clear is that a vote to Remain will give the green light to further harmonisation of social, employment, tax and regulatory policy – risking abandonment of more liberal policies that have facilitated robust job creation in the UK.

Perhaps the most laughable claim is that the EU delivers “lower prices”. The EU by its nature is a customs union – creating a protective wall around the Single Market which, coupled with other non-tariff barriers against non-EU countries, substantially raises prices for agricultural and manufactured goods. Estimates by Patrick Minford suggest electrical machinery is 24 per cent above world prices, cars 22 per cent and furniture 54 per cent. Paddy Ashdown let the cat out of the bag last week by moaning that Brexit would deliver “cheap food”. Heaven forfend! And add to this the economically disastrous renewables and biofuels mandates which drive up energy and food costs further.

A third myth is that the EU has been good at delivering free trade deals. Managing the competing interests of 28 member states means we shamefully still do not have free trade with obvious allies and mature economies, such as Japan, Canada, Australia and the US. These have been delayed by objections from countries elsewhere in the EU, not us. And despite all we hear about the importance of being in a big bloc, smaller independent countries such as Iceland (China) and Switzerland (Canada, China, Japan) have signed important FTAs that we do not have.

A final myth, that the mere existence of our group should debunk, is that there are no economists or economic studies favouring Brexit. Many important studies, from the mayor of London’s economics team, Capital Economics, Open Europe, the Centre for Economics and Business Research and the IEA, have suggested that there would be no long-term material losses from Brexit, and in some cases gains. Well-known figures, such as former Bank of England governor Lord (Mervyn) King, have said that our leaving the EU is not primarily an economic question, with the impact of leaving greatly exaggerated.

The Leave campaign, therefore, should not be afraid of taking on Remain on the economy.

Ryan Bourne is the IEA’s Head of Public Policy, and Director of the Paragon Initiative. This article was first published in City AM.

Head of Public Policy and Director, Paragon Initiative

Ryan Bourne is Head of Public Policy at the IEA and Director of The Paragon Initiative. Ryan was educated at Magdalene College, Cambridge where he achieved a double-first in Economics at undergraduate level and later an MPhil qualification. Prior to joining the IEA, Ryan worked for a year at the economic consultancy firm Frontier Economics on competition and public policy issues. After leaving Frontier in 2010, Ryan joined the Centre for Policy Studies think tank in Westminster, first as an Economics Researcher and subsequently as Head of Economic Research. There, he was responsible for writing, editing and commissioning economic reports across a broad range of areas, as well as organisation of economic-themed events and roundtables. Ryan appears regularly in the national media, including writing for The Times, the Daily Telegraph, ConservativeHome and Spectator Coffee House, and appearing on broadcast, including BBC News, Newsnight, Sky News, Jeff Randall Live, Reuters and LBC radio. He is currently a weekly columnist for CityAM.

3 thoughts on “Let’s hear the positive economic case for Brexit”

  1. Posted 26/04/2016 at 16:33 | Permalink

    Quite right. If the ‘Remain’ side still have to trot out that tired old line about 3 million jobs being ‘linked to our trade with the European Union’ [it actually says 3.3 million jobs],we can be pretty confident that serious arguments are thin on the ground. And I was genuinely shocked by the Treasury document last week. To choose to talk in terms of ‘households’ rather than the usual ‘per head calculations smacks of a desperate attempt to make the relative annual loss of income from leaving the EU look bigger. And in all 201 pages of the document, I couldn’t discover exactly how the notorious £4,300 calculation had been arrived at. It is fair enough to express money amounts in terms of 2015 pounds; but by using the phrase ‘in 2015 terms’, it looks as if the total ‘shortfall’ according to the Treasury calculations has been divided by the number of households today (rather than in 2030, when the population is expected to be about 3 million higher than in 2015 — I don’t know how many households that would amount to)), which is simply disgraceful. All in all — not for the first time in my lifetime, I must admit — I was ashamed of the behaviour of the British government. More and more I come to sympathise with Hayek’s remark that in the course of a long lifetime his opinion of politicians had steadily gone down.

  2. Posted 28/04/2016 at 12:28 | Permalink

    It is essential that these excellent analyses get into the public consciousness, but I am deeply concerned that the Eurin bias of the BBC will not give these arguments the airtime they need in order for the UK population to make a properly informed decision, to its great cost.

    I tried to find the Economists for Brexit website but it doesn’t come up either in seraches or in iterations, so the word won’t get out that way, is there anything that can be done to get their website visible?

  3. Posted 22/05/2016 at 14:20 | Permalink

    Cameron and all stay in players continually make the same statically damaging error by saying that we, by staying in the EU, do business with the single market of which there are 500 000 000 people. (500 million)

    There are in actual fact roughly 900 000 000 people in Europe taken from July 2015 projection which reads 851,605,800 Does that mean we are in actual fact only dealing with about half of Europe.

    Either way it is peanuts to the business we could be doing in the rest of the world of roughly 7,415,317,737 (7.5 Billion) Surely more services, manufacturing industries and people in work is of a more economical benefit to our country than the miserably failing EU.

    Visit here for today’s population.

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