I did not expect to have to spend time rehearsing all the arguments we made to leave the EU so soon after we left in 2020. When we joined the EEC those of us who lost that referendum did not call for a new vote six years later. Treaty after Treaty went by taking ever more powers to Brussels fundamentally changing what the public had voted for. We waited until Maastricht and its radical changes. A “Common market” was evolving into a political and economic Union. We finally got a vote 41 years after the first.
Too little has changed since we left. Successive UK governments have been slow to make the good changes an independent country can make. We still live under reams of EU laws and taxes which slow our economy down as they did when we were in the EU. We do however enjoy some good wins from no longer paying huge sums to the EU. Much more than the £350 m of savings a week on the side of the Brexit bus has been allocated in extra spending to the NHS. The UK has ducked having to pay a share of the £750 bn the EU is now borrowing in its own name. As we have plenty of debt of our own that is a blessing.
There are some ironies in the Brexit freedoms the Labour government have been able to use despite their hostility to the UK going it alone. The damaging VAT on school fees policy beloved of the left and the more sensible cut in VAT on electricity were only possible thanks to Brexit. The government has enjoyed taking credit for trade deals with countries like India and with the Pacific countries TPP which were well advanced when they took over. They were only possible because we have regained control of our trade policy from the EU.
Remain politicians have wrongly claimed UK GDP took a 4% or an 8% hit from leaving , based on a misinterpretation of forecasts that said no such thing. One said over fifteen years we might have 0.25% less growth per year, making 4% less growth in total by 2035, whilst the UK economy would still carry on growing. The other said if we grew like the USA and a few other faster growing countries we would be 8% better off. That of course would never have happened if we stayed in slow growth EU usually managing only half the US growth rate. Neither forecast said GDP would fall after the vote. The Remain campaign wrongly claimed we would see falling GDP, falling house prices, rising unemployment if we voted Out. The opposite happened in 2016.
UK GDP tracked EU GDP fairly closely from 2016 and from leaving in 2020. Like EU economies there was a sharp fall in GDP in 2020 with covid lockdown, and a big recovery in the following two years. The UK did not suffer an additional Brexit fall. The UK has been growing faster than Germany and a little faster than France since 2016. Our trade, especially with the rest of the world and in services, has grown well. The majority of our trade is services, and a majority is with non EU.
Some say we would grow faster if we rejoined the Customs Union. The opposite would be true. We took tariffs off non EU imports of food and goods we cannot produce for ourselves. We took tariffs off raw materials and components industry needs to import to add value and make things here. The Customs Union would increase the squeeze on consumers, put prices up, raise industry’s costs and make us less competitive. We would need to give up our Free Trade Agreements with non EU countries, slowing trade growth with the rest of the world which is now the majority of our trade.
The government says we need to re set our EU relationship. This is code for rejoining by stealth. They will agree to progressively adopt more EU laws and taxes, sector by sector, until we are more fully back under EU control. The idea is to start with food where UK exports are small and where the EU is keen to dominate our market, keeping out non EU cheaper food through regulations and tariffs. The government is scrambling to avoid the imposition of regulations which would inhibit or ban the great work in the UK on genetic modification of crops to deal with pests and low rainfall.
The UK has established higher levels of animal welfare in farm trade, banning the export of live animals and establishing better standards for animal husbandry. These too could be at risk with a poor Re set.
The Re set will require agreement on a Youth mobility scheme. This is an EU attempt to reintroduce much of the freedom of movement of people that applies to EU member states. The problem for the UK is it is likely to be one sided. There are many more under 30s on the continent than in the UK. There is a bigger proportion wanting to come to the UK to take advantage of our high standards of university education and jobs available, and wanting to improve their English. There is a smaller percentage of UK young people with enough foreign language skill to go to a continental university or get a foreign job.
As the UK struggles with its own young people problem with far too many out of work and not studying, the last thing our jobs market needs is more young people seeking work. Our universities are apprehensive that the student deal may entail including a big discount on the fees European students in the Uk currently pay as the EU presses to get the much more favourable UK home student terms. How will they make up the lost income?
The UK has already sold out on the EU Erasmus student scheme, agreeing in principle to pay a ridiculously expensive £800 m a year to a fund which will help a lot more EU than UK students. It means ending the successful and cheaper Turing scheme which only pays out to UK students and allows them to go to universities all round the world, not just in the EU like Erasmus. UK students are keener to go to high quality universities in the USA and other English speaking centres.
As the UK is brought into more EU laws and regulations under the Re Set proposals the UK will have to pay an administrative charge to cover EU costs, whilst also incurring its own substantial costs on government and business from the laws themselves. Worse still the EU is threatening to insist on a solidarity charge where UK taxpayers have to contribute to public spending in the lower income member states! The costs of Re Set will be billions a year. The UK government has no extra money spare, so which taxes will it put up to pay these extra and needless EU bills?
The UK government sacrificed a large quantity of our fish stocks to EU fishing licences for 12 years, giving away around £6bn of value just to get into talks. It showed the EU that if it just hangs tough the UK wilk give plenty more away. The UK never negotiates as the customer, yet with such a large balance of trade deficit with the EU we are more customer than exporter. Why don’t we demand payments for access to our lucrative market? Why don’t we set standards for the conduct of this trade? Why don’t we show that our lower tariffs and fewer rules delivers better results? That after all is what the Draghi Report is telling the EU from one of its own most famous insiders.
Worse comes in the energy sector. The EU wants the UK to join its carbon tax and emissions trading scheme, which entails even higher costs than our own domestic version. The last thing we need is dearer energy to close down more of our factories. The EU is successfully making the UK dependent on importing energy from the continent as net zero policies close down the older fossil fuel stations that always gave the UK electricity independence. The coming carbon border tax will be another rise in the costs of industry’s imports of raw materials and other supplies, adding to the lack of competitiveness.
Mr Burnham’s idea that maybe we should go back into the EU is completely absurd. Why would the EU allow it when the main opposition parties would be opposed and threatening to pull out as soon as they won an election? The EU would be bound to say no more rebate on contributions, greatly hiking the cost of membership compared to last time. They would want us inside their Euro scheme preparing to abolish the pound. They see us as Treasure island, weak enough to pay them large sums and with sufficient borrowing power and taxing power to be able to afford a larger contribution. They should realise this time the UK has overspent and over borrowed despite saving billions from ending its expensive membership. It is doubtful the UK does now have the borrowing and taxing capacity to add large EU bills and debts to its big collection of home grown ones.
Any attempt to take us back in would need a new referendum. Polling shows people feel let down by the lack of progress after Brexit, but are still strongly against surrendering powers back to Brussels. It didn’t work last time. Since then the EU has become an even slower growth area slipping further and further behind US economic and digital success.
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