Of course there will be transitional problems if the UK decides to leave the EU, but we need to look to the longer term, argues John Mills.

In the event of Brexit, where will the balance lie?

We will no longer be paying the EU £11bn a year net of all rebates. We will regain much better control of our borders. We will not be tied so closely to a part of the world which is manifestly growing much more slowly than the world average. We will have much more control over our future. We won’t become part of a continent-wide federation which almost no-one in the UK wants. These are the upsides, but what of the downsides to Brexit?

Many of the arguments about the advantages and disadvantages of our EU membership are disputed and hard to call. Would we be safer in or out of the EU? Better at negotiating trade treaties? More secure militarily? More prosperous? It is hard to tell. It depends on the assumptions you make. If they are pessimistic, so are the outcomes, and vice versa.

On safety, we might lose a little co-operation from our continental neighbours, although surely it would not be in anyone’s interest for this to happen. But by controlling our own borders, we should be able to increase our capacity for keeping out the wrong people. On trade deals, obviously 28 countries have more clout taken together than only one – even though we are the fifth largest economy in the world – but getting 28 countries all to agree to sign up to the same deal has proven extremely difficult. This is why the EU currently has no trade deal with China, Japan, India, Australia or the USA.

On military co-operation, the UK has long taken the view that NATO is a much more secure foundation on which to base co-operation than on a separate EU defence force, not least because EU military spending is so low and divorcing EU military activity from NATO is likely to send out the wrong messages to those who might threaten us. On prosperity in or out of the EU, we have heard some hair-raising projections from the Treasury and others, while more sober voices have suggested that Brexit itself would probably make little difference in the short term but should improve our prospects in the longer term, provided that the policies we pursue are sensible. Who is likely to be right on this crucial score? What seems – at least to me – to be the most probable outcome?

Clearly there would be a period of uncertainty and arguably this might cause a temporary dip in GDP, although it is not really clear why this should happen. If the economy does turn down over the next few months, moreover, Brexit is likely to have been a minor influence compared to other factors such as world-adverse economic trends and huge imbalances in the UK economy, not least our burgeoning trade deficit. How well we do after Brexit – if this is the referendum outcome – is therefore much more likely to depend, in anything but the short term, on policies the UK pursues on maintaining open borders for trade and on monetary, fiscal and exchange rate policies to help get the economy rebalanced. What happens with the UK’s ongoing relations with the EU is therefore likely to be something of a side-show. We will almost certainly finish up with a free trade deal, because this is in everyone’s interest, but even if we don’t, industrial tariffs are now so low – and services are tariff-free even if there are non-trade barriers – that relying on the World Trade Organisation tariff regime will leave us in a perfectly viable position.

Once the initial transitional period is over, therefore, there is no reason to believe that we should not be able to do at least as well, if not better economically, than if we remain in the EU. It is extremely unlikely that there will not be a deal done which maintains industrial free trade between the UK and the rest of Europe, maintaining the conditions which apply now to countries across the whole continent, whether they are in the EU or not. The situation on services – already more restrictive than on goods as a result of non-tariff barriers – may be more tricky, but the City thrived after we did not join the euro in the early 2000s, despite what nearly all the Establishment said at the time would happen. The City has huge comparative advantages compared to other financial centres in Europe and no doubt it will adapt and prosper as it always has done.

It is easy to talk down the economic resilience and resourcefulness of the UK and this is clearly what is happening by those on the Remain side as the referendum draws close. People everywhere, including the UK, however, respond to incentives and, provided we get them right, there is no reason to believe that we cannot thrive outside the EU. There are about 160 countries in the world outside the EU and 28 who are inside. Many of those outside are doing much better than the EU average. There is no reason, if we join them, why we cannot do so too.

This article first appeared on LinkedIn and can be viewed here

0.00 avg. rating (0% score) - 0 votes