fbpx

Brexit economists’ barrage of blather

by Sam Ashworth-Hayes | 28.04.2016

The Brexiteers’ economic case has taken a real kicking in the last few weeks. The International Monetary Fund, the Treasury, the OECD, the London School of Economics and President Barack Obama have all put the boot in.

So it might come as a surprise that Economists for Brexit (EfB), in a report released on Thursday, has declared that quitting the EU would see us better off by 4% of GDP. The problem is that the group’s prediction of huge economic gains relies on the UK removing all tariffs on imports and slashing regulation. We are unlikely to do either of these things.

The report says that EU social legislation, like rules on working time and gender equality, drags down the British economy. The working time directive is not a good piece of legislation. Britain has negotiated opt-outs from its most damaging aspects, but it seems fair to argue that it still presents a cost to us.

However, that doesn’t mean we would expunge all traces of it from our legal system post-Brexit. British rules guarantee an additional eight days leave on top of the requirements of the directive, a costly add-on of our own devising. That we have made no move to scrap the entitlement is a sure sign that it would be tough to sell shorter holidays to British voters. Attempts to remove protection against discrimination could also prove unpopular.

Trying to create a zero tariff regime would certainly be controversial. The recent outcry over the decimation of Britain’s steel industry underlines how strongly the people of Britain – the crucible of the Industrial Revolution – and their politicians are attached to manufacturing. Abolishing tariffs would expose British industry to intense competition. Yet Patrick Minford, an economics professor at Cardiff University and a member of EfB, has said we shouldn’t worry about the prospect of eliminating British manufacturing.

Finally, the report criticises single market rules for being a “one-size-fits-all regulatory regime”. In fact, the rulebook makes it easier for UK businesses to sell into the EU. Leaving the bloc and adopting different product standards would make trade with our closest neighbours more expensive. The report also says the single market covers agriculture and manufactured products, but does little for services. This is clearly wrong, as EU initiatives like the passport for financial services illustrate. Why else would bank bosses be warning of an exodus of jobs from the City of London if access to the single market was worthless?

The EfB’s statement that we “already sell all our non-EU exports and all our exports of services around the world under WTO [World Trade Organisation] rules” is flatly wrong. Via the EU, we have free trade deals, which improve on WTO rules, with over 50 other countries.

Want more InFacts?

Click here to get the newsletter

Your first name (required)

Your last name (required)

Your email (required)

Choose which newsletters you want to subscribe to (required)
Daily InFacts NewsletterWeekly InFacts NewsletterBoth the daily and the weekly Newsletter

By clicking 'Sign up to InFacts' I consent to InFacts's privacy policy and being contacted by InFacts. You can unsubscribe at any time by emailing [email protected]

The EU’s mooted visa deal with Turkey may well “add fuel to the debate” about “the ability of a country to control its own borders”, but omitting to mention that the agreement doesn’t apply to the UK is a regrettable oversight.

Saying that immigration cost taxpayers £100 billion from 1995-2011 is one thing. But the report fails to add that the research from which this figure is derived shows that immigrants from the European Economic Area actually made a positive contribution to the government’s finances.

The Economists for Brexit report makes strong assumptions. By doing so, it concludes that EU membership has damaged the British economy and that Brexit would boost growth. We disagree.

Edited by Alan Wheatley

6 Responses to “Brexit economists’ barrage of blather”

  • Please read and spread (from UK reuters article regarding the launch of the so called pro brexit “report”: Prof Minford words today at the launch ot the pro-brexit report: “Farmers, as well as car manufacturers, would suffer from lower exports to the EU, Minford said. But the economy as a whole would benefit from being able to SCRAP EU REGULATIONS ON WORKER’S RIGHTS and climate change, and focus on services where it had a competitive advantage” (emphasis on the worker’s rights issue made by myself, but still prof Minford’s words). So you will have it. These will be the people looking after normal UK people? “focus on services” – i.e: financial, insurance aspects – where it will be then left the average UK citizen? Answer: JOBLESS and with prospect of any UK Govt aid.

    Another HUGE FLAW in the quitters economic argument is: WTO rules are restrictive: if you trade with one country with x tariff or 0 tariff then you are obliged to trade with the rest of the world on the same x tariff or 0 tariff, whereas the partner country/bloc can either choose the tariff or will be obliged by WTO rules to abide by the tariffs this partner country/bloc places on different ones. This means: if UK trades WTO with EU at x tariff or 0 tariff, then UK has to do the same (obliged by WTO rules) to do the same with everyone else. However EU can trade with UK on Y tariff if it chooses or if obliged at the same Y tariff EU applies to other WTO trading countries. UK will never be able under WTO rules to apply X tariff to EU and Z tariff to China or US or whatever else. NO!! It has to apply the same X tariff to either EU AND the rest of the world (under WTO rules) whereas other countries are not obliged to place the same X tariff on UK or they simply cannot (same WTO restriction also on them).

  • Note that Reuters is also reporting that Brexit will be happening after two years, whether the UK likes this, or not. http://uk.reuters.com/article/uk-britain-eu-divorce-exclusive-idUKKCN0XP27A?il=0

    From the article: “Two EU sources familiar with the bloc’s latest thinking on a possible Brexit told Reuters on Thursday there was no appetite to grant any extension of the two years provided by the EU’s Lisbon Treaty for negotiating a withdrawal, while any new trade partnership would take many more years to conclude.”

  • When I read the words from prof Minford I thought that the phylosophy behind the “economics” for brexit are very dangerous for the UK people. What he and his “colleagues” are introducing is a sort of a total liberism with no control of what comes into (they are for blocked immigration but clearly in favour of total import-ation: more Chinese steel dumping in UK, please!!) (I imagine uncontrolled Chinese cancer drugs being dispatched in the UK Healthcare System as controls on quality, standards, origin and safety will be seen clearly as RED TAPE). Moreover: farmers and car manufactures would suffer but…(but he and his colleagues are accepting and willing to gamble with people jobs and livelihood – prhaps also in view of the non-EU related ECHR. Then the statement from prof Minford that there is a need to scrap the EU regulation (again seen as red tape) on workers rights!!! I am really saddeneded by the prospect that average working UK people clearly want to end up with such threats to be realized.

  • When I read the words from prof Minford I thought that the phylosophy behind the “economics” for brexit are very dangerous for the UK people. What he and his “colleagues” are introducing is a sort of a total liberism with no control of what comes into (they are for blocked immigration but clearly in favour of total import-ation: more Chinese steel dumping in UK, please!!) (I imagine uncontrolled Chinese cancer drugs being dispatched in the UK Healthcare System as controls on quality, standards, origin and safety will be seen clearly as RED TAPE). Moreover prof MInford said: farmers and car manufactures would suffer but…(but he and his colleagues are accepting and willing to gamble with people jobs and livelihood – perhaps also in view of the repeal of the non-EU related ECHR). Then the statement from prof Minford that there is a need to scrap the EU regulation (again seen as red tape) on workers rights!!! I am really saddeneded by the prospect that average working UK people clearly want to end up with such threats to be realized.

  • I agree that his set of assumptions are effectively drop all barriers, have uk firms compete directly with China etc, which they can’t as we like things like holidays, not being killed at work and the like.

    Of interest if Brexit want to crow about this, are several references to the EU contribution. In short they conclude that £350million is not the right figure…..

    If remain can sink the £350 figure and explain why, it’s a golden opportunity to ask “if leave lied about this, what else have they lied about?…”

  • Before we went in to the EEC all you had to do to show that there was no economic case for membership was to point out that all the arguments which were supposed to show that the UK could not prosper outside the EEC would also show that Switzerland could not do so either. Reductio ad absurdum. Now, all you have to do is to point out that the bodies like NIESR and the IMF and the British Treasury have no reliable track record in predicting the future course of either the British or the World economy. How life has changed!