What Leave are campaigning for won’t happen if they win – here’s why

Now that a Leave vote is looking a real possibility, I thought it was worth writing down what I think is likely to happen if they win, since there has been a lot of exaggeration on both sides, as well as significant misinformation from the Leave camp. Of course, the actual outcome is essentially unpredictable, because it depends heavily on a long series of choices by both sides in any subsequent negotiation.

The one thing that is absolutely clear is that there is a zero prospect of it working out how the Leave campaign has promised, because their policies and promises are in conflict with each other.

Farage did at one earlier time say that the Norwegian deal would be acceptable, and a French minister today has said that that would be the only offer on the table if Leave win.  For the EU to offer any other deal would require the renegotiation of the Norway and Switzerland agreements, for why would they accept anything less than the UK?

What exactly is the Norwegian deal?  In brief, return for open access to the single market, Norway agrees to the following:

  • accepting and implementing essentially all EU rules and regulations
  • free movement of EU citizens
  • a contribution of slightly more per head into the EU budget than the UK does after the UK rebates are applied.

Norway also accepts the rulings of the European Court of Human Rights. The ECHR isn’t actually an EU body, but it’s worth mentioning, since some Leave campaigners seem to think that leaving the EU would change the UK’s position re the ECHR, which is not the case.

So, accepting the Norway deal for the UK would probably have very little impact on the UK economy, and wouldn’t have the dire economic effects that the Remain campaign have predicted.  But it also wouldn’t achieve any of the aims of the Leave campaign.

After rebalancing what the UK pays and receives there would be no or very little extra money to spend on the NHS, though there might be a (very) small saving from the cost of (no longer) running any European Parliament elections.

There would be no relief from any of the rules or regulations that people object to – in fact, the impact of the rules would potentially be greater in future, since the UK would no longer have a vote on any of them, let alone the veto on many major decisions that the UK has as an EU member.

There would be no impact at all on immigration. In fact, Norway and Switzerland are both members of the Schengen passport-free travel area, so have less control over their borders than the UK does.

So, all in all the Norway deal would make almost no difference to the daily lives of UK citizens, which would no doubt come as a complete surprise to those who thought that they were voting for change in these things.

The Norway deal would therefore clearly be unacceptable to the Leave camp, whatever they might have said.

Senior politicians and officials from many EU countries have made it pretty clear that the only deal on the table that includes access to the single market would be the Norway / Switzerland package.  In any case, access to the single market on any terms at all requires following the single market regulations, and these make up the overwhelming majority of the rules and regulations people want to be freed from.

Leave campaigners have suggested that a different deal might be available because manufacturers in other European countries sell much more to us than we sell to them. However, there would also be benefits to European manufacturers from the UK being excluded from the single market, since UK manufactured goods (eg Nissan and Toyota cars) would be more expensive, while many exporters of luxury and high-quality goods to the UK – BMW, for example – might well be of the opinion that UK buyers won’t be put off by a customs tariff that put prices up by a few percent. Pro-Leave economists have said that the future UK economy could be better in an open free-trade environment: but that won’t happen unless everyone else – and particularly the rest of the EU – agree to that happening.

So, to do any of the things the Leave campaign have promised would almost certainly also leave us outside the single market. Then things do indeed change.

Some Leave campaigners have suggested that it wouldn’t matter if we didn’t have access to the single market because, quote: “we’d still have access to the rest of the world market, which is many, many times bigger.” The EU is about one-sixth of world GDP, so it’s just five times as big – and we already sell as much to them as they currently want to buy. The USA (another sixth of the world) has made it clear that the UK would be “back of the queue” for any new trade deal  and any new deal would be negotiated from a much weaker position on our own than as a member of the EU.

A large number of employers in manufacturing and finance have said that their current levels of employment and expenditure in the UK are dependent on access to the single market. Others have reserved their position, but have also made it clear that they would have to reconsider their future in the event of a Leave vote. No-one at all has said that they would increase employment and investment in the UK if we Leave.

Controls on immigration can only be effectively implemented if every EU citizen has to apply to enter the UK. This would potentially deter many tourists, let alone other visitors, who would find it much easier to go elsewhere in Europe. Since it’s hard to imagine France accepting visas for French people to visit London without reciprocating, perhaps all of us would have to apply (and pay) for visas to visit France – and Spain, Greece, Germany, etc? There would also likely be much stronger rules (and taxes?) applied to UK citizens who own European property. I don’t recall any Leave campaigner mentioning this potential outcome.

All forecasts are guesses, but the one thing that all forecasts of the impact of the UK leaving the single market (as opposed to leaving the EU and remaining in the single market) have in common is that they are very negative. The UK economy, employment and public finances will all be very much weaker. In that case, we probably won’t need new rules on immigration, because no-one who wants a job and a better life will want to come here.

 

7 thoughts on “What Leave are campaigning for won’t happen if they win – here’s why”

  1. Already voted leave. Does not matter as we will remain. Don’t panic.

    Were we to leave it would be a trigger event for the collapse of the EU and a lot more besides. Someone somewhere will fall over and drag others with it. It will happen anyway so the vote is just a matter of timing. (Fear of an exit might be a sufficient trigger!)

    For me it is not remotely about economics or immigration. There is much more important stuff at stake.

    As for good information or even information there is little around. I can (and do) pick holes in both sides. For example George Osborne has said we will have a depression and he will have to slash spending and up taxes. There is an example of a recent attempt at that: Greece. I thought that upping spending and cutting taxes was considered the way to get out of a recession? How long would he keep his job if he did what he said? Then he said that the pound would collapse. So the rest of the world will rush to shop in the UK. Sounds good to me. Which side is he on?

    It puzzles me that the remain campaigners do not seem to stand up and shout about big benefits we have had from being in the EU. Why not? The leave campaigners do shout lots…but all of those claims can be questioned.

    What about the EIB. We are into that for 40bn (I think GBPs) and they have put that money out in loans of a very dubious nature at a ratio of 5/2. Getting that £40bn back would help and avoiding another £60bn call would be very nice.

    I want to be in a European Union. I just don’t want to be in this one.

    1. You might have had a good point if there were any likelihood at all of the EU collapsing if we leave, but there really isn’t. For the core Europe, Jean Monnet’s original ambition for the EU – “to so tie together the economies of Europe so that war between countries is more expensive than peace” (paraphrase) is still a key motivation that would come up in the unlikely event of anyone else having a referendum like this. The periphery gain much more than they lose. It follows that if you want a different European Union, the only way is to Remain and persuade the rest to reform: if you couldn’t persuade them, then that different EU couldn’t be created from outside either.

      1. Wasn’t it Monet who sai it had to be done by stealth as the general populations would never let it happen? He meant well but I think I want to choose!

      2. I really don’t know enough as per my comments. What I ‘see’ is a pretty well stretched system. I think that Brexit (which won’t happen) would catch someone out. When just one organisation fails there is good potential for it to bring another one down and we are off to the races.

        Just heard today that UK voted against 34 directives that still went ahead. That gives a measure of how much our voice is heard if, say, 68 were proposed. However if 9,000 were enacted that we agreed with then that changes perspective!

        1. Over the last few years we voted against 58, and voted for 2500+.

          Some of the ones we voted against were things like a regulatory regime for white sugar (really).

          1. PS: probably the most significant one was where the UK voted against the EU ban on genetically modified foods – and many (including me) would say that’s a prime example of why the UK being overruled by Brussels can be a Good Thing!

    2. PS on the EIB: although the nominal/approval capital of the UK in the EIB is €39.2BN (EUR not GBP), most of the subscribed capital is uncalled, and the actual UK subscription at 31/12/15 is 16.1% of €22.7BN, or €3.65BN / GBP2.9BN (see http://www.eib.org/attachments/general/reports/fr2015en.pdf). Getting it back would be a help, but we could only get it back if they called in some loans. If they called in the current loans to UK businesses so they could repay the UK government capital, that would take €8BN out of the UK economy, or a net loss of €4.3BN.

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