London has nothing to fear from leaving the EU – but much to gain
THE EUROPE Report: A win-win situation, authored by Boris Johnson’s chief economic adviser Dr Gerard Lyons and released yesterday, is a major contribution to the “in/out” EU debate – a debate that will simply not go away. I welcome its measured, positive and undogmatic analysis of the main scenarios facing Britain and our relationship with the EU.
Lyons is right to at least consider the scenario in which the UK stays within a radically reformed, highly competitive EU. Indeed, it is his favoured “winning” scenario, and he argues that the gains of EU reform are potentially very significant. Unfortunately, our EU partners seem to have little desire to tackle the burdensome regulations that contribute much to the EU’s economic underperformance. Incidentally, they seem to have even less desire to make any meaningful concessions to the UK. I would not bet my life on EU reforms amounting to much and, as Lyons wrote on Tuesday in an article in the Evening Standard, “the status quo is not a winning option”.
Given these circumstances, the only realistic route for Britain is to negotiate with our European partners an entirely new relationship, based on trade and mutually beneficial agreements, outside the political institutions of the EU. As Johnson made clear in his EU speech yesterday, there is nothing to fear from EU exit. Indeed, there is much to gain.
Lyons is correct to point out that our fortunes post-EU would depend on our relations with the EU and the rest of the world. But we can be confident that his second “winning” scenario – good EU relations and an outward-looking UK – would almost certainly be the most likely outcome. This is the most significant and crucially important implication of the Lyons Report: we can prosper outside the EU.
Our exports to the EU, not least of all from the City, are still very important, of course, even though our total export share to slow-growing EU markets is in secular decline, as exporters look outward to buoyant non-EU markets. But we would surely secure a mutually beneficial trade deal if Britain left. We are a rich country and run a huge trade deficit with the EU, especially with Germany. Brussels would not wish to destroy this profitable state of affairs. The notion that “they” wouldn’t trade with us is scaremongering at its very worst.
Regrettably, there is also much scaremongering from some business leaders, including in the City, about a possible Brexit. It seems that many would stay in at all costs. And this is despite the increasing regulatory burdens and the brutal fact that, as the Eurozone integrates politically, the UK’s influence in matters affecting the City, for example, can only decline.
Outside the Eurozone, we are simply not part of the club. The choice for the UK is not so much being in the EU or out, but being a marginalised and decreasingly influential member of the EU or out.
As a veteran of the euro campaign, I remember apocalyptic cries of anguish from the City and big business if we did not join the Single Currency. They were wrong then – dangerously so. Many of the same voices now utter similar cries of anguish about Brexit. They’ve got form.