Why we’ve launched a prize to find a blueprint for Britain outside the EU

Within two years of entering the European Economic Community (EEC) in 1973, there was strong public support for Britain’s membership. In the 1975 referendum on the issue, 67 per cent voted to remain inside the organisation that would one day become the EU.

There were good reasons. Most people believed that we were in Europe for trade. British self-esteem was so low that the EEC was seen as the future. But neither is relevant today. While the UK has serious economic problems, the EU is clearly not the solution. And not only that, but the dream of free trade has been replaced by the nightmare of the unaccountable regulatory superstate.

Regulation produced by Brussels affects the City as much as any other sector of the UK economy. The EU has decided that the promotion of trade requires the creation of a level regulatory playing field and the centralisation of regulation in Brussels. This is flawed reasoning. Trade is based on consumers having different preferences, and different countries having different relative costs and advantages. A level playing field does not always promote trade.

The price is also high. Solvency II is likely to cost customers of UK insurers at least £3bn. Over two-thirds of respondents to a survey by Deloitte believed the Alternative Investment Fund Managers Directive would reduce the competitiveness of the EU fund management industry – when many are already concerned that fund management charges are eating into pensioners’ incomes. EU regulations on bankers seem designed to make the banking system more fragile.

Not only is Brussels strangling the financial sector, and sectors like food and energy, it is hard to see how the process can be reversed. The power of the European Commission means that it is easy for new regulation to be created. But the qualified majority voting system means that it is necessary to gather support from a huge number of countries to roll it back again.

As long as regulation does not seriously distort trade, there are good reasons for not centralising it in supranational authorities, even if some countries (such as Britain and Ireland) might choose to unify their approaches. Different countries have different market structures that demand different approaches. As we also saw in the banking crisis, unifying regulation internationally can magnify risks. And if it does go wrong at the national level, there is at least the possibility of change – there is always some measure of democratic accountability, however tenuous.

Of course, we do need to ensure that national regulations are not a serious impediment to trade. The European Court of Justice and the World Trade Organisation should have a strong mandate to ensure that regulation is not trade distorting. But we do not need to centralise regulation at the EU level.

It is the slow strangulation of our financial, energy and food sectors that is leading me to become ever-more Eurosceptic. But if there is one thing that prevents me from being a confirmed supporter of the “out” camp, it is that the alternative often does not look much better. Regulation at the national level might be better in theory than regulation at the EU level but, in practice, we often make a bad job of it in Britain.

UK regulators complain that EU regulation of insurance and banking doesn’t go far enough. George Osborne and the Prudential Regulation Authority want to tie the City up in even more red tape than the EU. Solvency II was effectively designed and promoted by the British regulatory establishment. Who killed the British occupational pensions industry? Where did the recent FSA 585 page mortgage market regulatory review arise from? It wasn’t Brussels.

So today the Institute of Economic Affairs (IEA) is launching a competition with a €100,000 prize to find the best blueprint for a Britain outside the EU, with a panel of eminent economists as judges, including Nigel Lawson, Roger Bootle, Ruth Lea and the Labour MP Gisela Stuart. This is an important and complex task. There is no point leaving only to find that we have to implement EU regulations in any case. And there is no point leaving only to find that we end up with a “Brussels plus” approach to regulation in Britain. Entrants are invited to write an initial submission of about 2,000 words. The deadline is 16 September, and around 20 authors will then be asked to make a full submission.

Can we exit and ensure that we have a freely trading, prosperous economy that is not bound up by excessive regulation conceived in Britain or in Brussels? How can we ensure that Britain takes its proper place in the world, looking outwards – and beyond the Urals? The British people need answers to these questions, and we hope that entrants to our competition will provide them.

Read the original article in City AM here.

Academic and Research Director, IEA

Philip Booth is Senior Academic Fellow at the Institute of Economic Affairs. He is also Director of the Vinson Centre and Professor of Economics at the University of Buckingham and Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He also holds the position of (interim) Director of Catholic Mission at St. Mary’s having previously been Director of Research and Public Engagement and Dean of the Faculty of Education, Humanities and Social Sciences. From 2002-2016, Philip was Academic and Research Director (previously, Editorial and Programme Director) at the IEA. From 2002-2015 he was Professor of Insurance and Risk Management at Cass Business School. He is a Senior Research Fellow in the Centre for Federal Studies at the University of Kent and Adjunct Professor in the School of Law, University of Notre Dame, Australia. Previously, Philip Booth worked for the Bank of England as an adviser on financial stability issues and he was also Associate Dean of Cass Business School and held various other academic positions at City University. He has written widely, including a number of books, on investment, finance, social insurance and pensions as well as on the relationship between Catholic social teaching and economics. He is Deputy Editor of Economic Affairs. Philip is a Fellow of the Royal Statistical Society, a Fellow of the Institute of Actuaries and an honorary member of the Society of Actuaries of Poland. He has previously worked in the investment department of Axa Equity and Law and was been involved in a number of projects to help develop actuarial professions and actuarial, finance and investment professional teaching programmes in Central and Eastern Europe. Philip has a BA in Economics from the University of Durham and a PhD from City University.

7 thoughts on “Why we’ve launched a prize to find a blueprint for Britain outside the EU”

  1. Posted 16/07/2013 at 12:10 | Permalink

    as long as We are rid of the EU/ECHR and the Joke Special Relationship the better We can and will prosper outside a Collapsing Bureaucracy also the LibLabCon Party in Parliament must go also

  2. Posted 16/07/2013 at 16:48 | Permalink

    Maybe we threw away too lightly our friendship with the countries of the Commonwealth. The idea that we have more in common with Latvia and Bulgaria than with Canada and Australia is laughable. As John Warman writes: ‘The EU is an easy target for criticism in this country…’ Yes it is; and one important reason is the EU’s fundamental objective of ‘ever closer union’ — which hardly anybody in this country supports.

  3. Posted 16/07/2013 at 18:17 | Permalink

    @John – I don’t really understand your comment. I do not really hold a strong view on Brexit (as I make clear) but it is an important exercise to see what it would involve so that alternatives can be compared. As you will see from our book on the euro, I am quite strongly supportive of some aspects of the EU that might surprise you. Also, as you will see from the article, I am also inclined to think that the UK may not do much better if certain regulatory functions are repatriated. You do not really make a strong case for your own position if you are essentially saying that you would welcome the EU restraining the freedom of speech of those who make reasoned criticisms (like mine above). It is that sort of threat that shoves those of us relatively neutral in the matter over the edge.

  4. Posted 16/07/2013 at 19:40 | Permalink

    Why do some see Scottish independence as an the only solution to a better life? Why do some Irish people want to unite Ireland for the same reason. I think the clue lies in those advocating whatever view that will give them individual power. It really makes no difference whether us ‘plebs’ are done unto by Parliament or the EU. So many places are nearer and easier to reach. Televisions are so much bigger. It is difficult to see what would change. Who would become better off? I am better off than my parents and my children are better off than me. I know there are exceptions to this progression, but local communities are so much more effective in dealing with those problems.
    Smaller is better. No, not better, more satisfying. Perhaps the EC should be the ECC. A community of communities. Micro Federalism. Perhaps I will enter the competition.

  5. Posted 20/07/2013 at 12:02 | Permalink

    “As we also saw in the banking crisis, unifying regulation internationally can magnify risks.” NOT having enough regulation, de-regulation and the foolish risks taken by Wallstreet and the City dragged everybody in the shit, NOT the EU, sorry. Yes, sure there are problems with many countries and economies within the EU, but they would never have been in that kind of trouble without the irresponsible behaviour of the financial sector. The financial sector needs to be kept in check by international agreements, be it EU, WTO, IMF or all of those together. Of course you have less affinity with Bulgaria then with Australia, but would you say the same if you had to choose between Malawi and Germany? All international organisations have their pros, cons, and above all limits, but denying you’re only 25 miles or so from the European shores, will not help you.

  6. Posted 20/07/2013 at 21:19 | Permalink

    @anonymous – I happen to disagree with you about financial regulation, but let’s leave that. Nobody is denying anything about our geography or about the value of economic relationships with other members of the EU. We would simply like to know more about the “out” alternatives. The “out” camp like to promote “out” on the basis that they do not like “in”, but if we can understand what “out” might look like we can have a sensible discussion and debate about the best institutional arrangements.

  7. Posted 18/08/2014 at 09:05 | Permalink

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