January 11, 2017

Drawbacks to single market membership

Drawbacks to single market membership

John Redwood sets out the shortcomings to Britain’s continued membership of the single market.

I have long argued that we are unlikely to trade less with the EU after we have left than we do today, whether we have a special deal or not. Clearly the rest of the EU will want to keep on selling their goods to us, so they will not be able to impose big barriers on trade. Nor can they under WTO rules. Both the rest of the EU and the UK will remain under WTO rules on our departure.

The good news about offering the rest of the EU the choice between confirming current tariff free arrangements and registering it as a Free Trade Agreement at the WTO, or accepting most favoured nation status with low average WTO tariffs is that either outcome will be fine from the UK point of view.

This obvious common sense does not prevent some “experts” claiming we might lose trade and therefore they think lose some output. Indeed, one or two extreme Remain enthusiasts have suggested all trade with the continent will cease if we leave without an agreement, an absurd proposition. Trade will continue. Germany will not stop selling us cars nor France her dairy products.

It is interesting, however, to ask what happened to the UK economy when the extreme outcome did occur. In 1939-40 when war broke out with Germany, Germany soon took over much of the continent by conquest. It was also in alliance with the Axis powers, which included Italy, Hungary and Romania. The Axis countries and the conquered lands did not trade with the UK, so for a period there was no trade between the UK and most of the continent.

What happened to the UK economy? It leapt ahead, growing by 32% in real output and income between 1939 and the peak in 1943. Much of the growth in output was of course production of military transport and weapons. By 1943 the UK was producing a staggering 26,000 planes a year from widely dispersed component and assembly factories around the country. By the end of the war the UK had also developed the first jet engine fighter, and had produced 250 Gloster Meteors. Output of military vehicles, ammunition, military clothing and much else was massively increased.

The UK was also turning out large quantities of commercial shipping. There were strong advances in coal and steel output to fuel and supply the industrial activity. Much of this was paid for by public spending and public borrowing. It would have been equally possible to expand civilian production with private sector spending and lending if there had been no military imperative.

What 1939-45 demonstrated was the potential in the UK to have a much larger energy and industrial sector if the demand was available and if imports from the continent were closed off. The country also converted much more land to agriculture to produce much more of its own food.

Fortunately, we will not be revisiting those extreme times. We can, however, learn from them that the UK is very adaptable, and could also adapt in more benign conditions where it would be good if we produced more of what we want and import less from the rest of the EU. I doubt they will want to impose tariffs on their exports to us to encourage us to produce more of our own goods and farm products.

4.37 avg. rating (87% score) - 19 votes
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John Redwood MP
John Redwood is the Member of Parliament for Wokingham in Berkshire. He was formerly Secretary of State for Wales in Prime Minister John Major's Cabinet. He is currently Co-Chairman of the Conservative Party's Policy Review Group on Economic Competitiveness.
  • Shadow Warrior

    Hammond is continuity Brown. He is a hand-wringing lefty looking for clever wheezes to raise more tax in ways that people don’t immediately notice.

  • captainslugwash

    I predict the Budget will attempt to show the Left how caring the Tories are, and it will be funded by screwing over the working man.
    If Corp Tax comes down, I bet Divi tax will be going up.
    I would love to be wrong.

  • skynine

    We really need to look at tax credits, in particular in work tax credits that encourage people to work part time to preserve the benefits. 45% of women work part time and I would hazard a guess that tax credits are the main cause. This leads to low pay, low skill work in supermarkets and the retail sector including coffee shops. The government needs to get back to the employer paying people to do a job for economic reasons rather than to get onto the tax credit ladder. Like all government benefits it distorts the market and diverts government expenditure into non productive areas.
    The refrain that the government has cut expenditure is not true, it increases every year as more and more goes into welfare.

  • MrVeryAngry

    fat chance

  • MrSauce

    So, when wouldn’t we want a ‘budget for growth’?

  • Rob

    I note that the UK Government has just slapped on a 25% tax charge for anyone moving abroad and wishing to move out their private pension from the UK.

  • SonofBoudica

    The Remoaners will do their utmost to sabotage the Government’s negotiating position. They do not want a successful outcome; they want a failure. They want to be able to scream “Told you so!” from the rooftops.

  • EnglandLaments

    Thank goodness for Andrew Neil, the one media hack who scares the pants off the established politicians. He was spot on with Heidi Allen!

  • joshuafalken

    I had a very long, hard, studied and considered look at the hope, care and aspirations of all Europeans, before I voted to get the UK out of the toxic grasp of Brussels.

    The European Union and it’s charge of “ever closer union” has borrowed and spent its way to oblivion, whilst enslaving the working and middle classes in debt.

    The central control mantra of the unaccountable Brussels ruling elite, delivered through a mixture of socialism, globalism and corporatism is entirely responsible for the populist revolt by the millions of “Just About Managings” across Europe.

    We must remember the ultimate goal of socialists, globalists and corporatists is control, not prosperity. see https://mises.org/blog/goal-socialists-socialism-—-not-prosperity.

    Social equality and economic growth always fail under central control and fighting against the Brussels doctrine on behalf of all Europeans is why I voted for Brexit.

    Britain has a long history of helping Europeans depose tyrants and Brussels is just the latest incarnation.

    Britain is the most racially advanced and accepting society on the planet. We welcome those in need and those that can help us with open arms and a smile; that will not change.

    We are also one of the most innovative, talented and open societies in the world, which why everyone wants to live here. However, we cannot fit everyone in, so we have to have clear, balanced and fair immigration policy which is where the arguments start between the monetarists and humanists will never be reconciled.

    I thought long and hard before coming to the conclusion that leaving the EU was in the best interest of all Europeans, as Brussels is toxic and cannot be reformed from within.

    Also, I find it insulting that people who voted Remain have insufficient faith in British ingenuity, compassion and skill to get a good deal for us and see the Europe that we love get a better deal from Brussels and the reform that European people deserve. https://mishtalk.com/2017/03/29/bad-brexit-deal-better-than-no-deal-mathematical-idiocy-odds-of-no-deal/ and https://www.worldheadlines.info/2017/03/after-brexit-9-reasons-to-be-bullish-on-great-britain/

    The politics of left verses right are dead because neither have delivered the promised economic growth and social mobility for anyone, but themselves. The populists are not selfish per-se, they just want to take back control of their own destiny that left/right politicians have freely given away and/or exploited for their own ends. In my constituency, the local residents group are taking over the councils as politicians ignore voters, so Westminster should beware of the well-organised, local resident independents at the next election. This is a peoples revolution which should be shouted from the rooftops, but liberals remained deafened by the socialist, globalist and corporatist “vested interests” that have spectacularly failed us and are obediently crying foul and fake.

    There will be an initial unpalatable inflationary cost to fighting globalism and rolling back central control that few appear to have factored in, but dismantling failed left/right vested interests should eventually free libertarian socially-conservative capitalism from the shackles of TBTF corporatism to feed economic growth and social mobility.

  • agdpa

    The EU usually makes the wrong decision – on immigration, on freedom of movement, on the euro, on the Ukraine, etc. etc. Little hope it will get Brexit right.

  • brownowl

    Eh? Reference please!

  • Neil2

    Sod caring. Screw the spongers and breeders. Kill HS2. Stop all “green” subsidies. Slash “foreign aid” and walk away from the EUSSR with immediate effect.

  • Rob
  • John C

    What a confused article. It conflates surveillance by the security services with poor defences against fraud.

  • John C

    Err, it’s the UK that’s leaving the EU, not vice versa.

  • John C

    Me, now. ‘Growth’ is a manic obsession.

  • La Face Nord

    Mr Redwood – are you aware of the Biased BBC website? It’s been exposing their agenda for a long time, but I imagine you’ve been well aware of the BBC’s agenda for quite some time…

  • Contact Rvtech

    The post is great

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