How the UK economy’s key sectors link into the EU’s single market

A report with this title was released last week by the Centre for Economics and Business Research for Open Britain.

This report was somewhat shyly presented by cautious Remainers as a case against sectoral EU-negotiations. More importantly, however, it makes a compelling case for continued full membership in the European single market.

It should be mandatory reading for everyone who still believes that:

  • UK exports to the EU are meaningless and shrinking.
    Truth: GBP 187 billion, 3.25 million jobs, 10.3% of GDP
  • Many sectors are unaffected by EU-trade.
    Truth: supply-chain integration is pervasive across almost all business sectors.
  • Just a few industries need special EU-access deals.
    Truth: sectors are interlinked and many indirect EU-links exist.
  • Barrier-free trade can be replicated via free trade deals.
    Truth: full and ongoing compliance with all EU-regulations mandatory.
  • Britain can trade more cheaply outside the customs union.
    Truth: such components or products cannot be sold tariff-and barrier-free in the EU.
  • Services will be unaffected by Brexit, because they are not part of the single market.
    Truth: the ongoing completion of the single market will exclude non-compliant service providers.
  • Excessive EU immigration can be replaced by local talent.
    Truth: many sectors can only succeed if European creative talent flows freely.
  • Regulatory equivalence can substitute passporting for financial services.
    Truth: equivalence is debatable and not dynamically robust.
  • Reducing housing demand is good.
    Truth: an FDI-downturn would negatively impact the entire UK economy.
  • Big parts of the economy could be freed from onerous EU-regulation.
    Truth: no sector is truly EU-export-free; multiple product lines because of regulatory divergence are costly.
  • After Brexit, the UK will be its own sovereign rule maker.
    Truth: the UK will become an EU rule-taker.

The full report is here.

 

* Arnold Kiel is a self-employed Management Consultant, father of two sons in British education, and very concerned about their future in this Europe

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15 Comments

  • Nom de Plume 5th Dec '16 - 7:44pm

    I agree with this argument. It does not help. Of the people I know who voted for Brexit, mainly traditional working class and some elderly, the main reason for voting for Brexit was a sense of insecurity or fear. Fear for their jobs and futures of their children; a threat to their cultural identity. Also a tabloid press effect. It is all very well if you are rich enough or educated enough to see at least some of the changes as opportunities, but not if you perceive it as a threat; if the conversation is more likely to be about football than the finer points of economics or international politics. It is another way of looking at the immigration and sovereignity issue. A suitable answer for such people is yet to be found. Meanwhile Brexit and populism awaits. It is all quite dangerous. I live in a Remain area as well.

  • I disagree with the last point that after Brexit, the UK would not recover sovereignty but instead would become a “rule-taker”. The whole point of Brexit is to retrieve some parliamentary sovereignty given up on entry to the EEC in 1972. I was only 6 at the time of the relevant debate but would refer all Lib Dems to the moving speech of Sir Derek Walker Smith on 15 February 1972, in which he stated “that entry to the Community involves as an inescapable condition substantial and irrevocable sacrifice of the sovereignty of Parliament…” . He goes on to outline in grave detail what that means in terms of our Parliament being powerless to stop or even debate or amend laws coming into force from Brussels.

    It is certainly true that all countries are rule-takers on the international plane – no country is an island, even the UK. We all abide by international trade agreements, conventions etc, so to that extent our national sovereignty, and that of other countries, is always compromised. But I think you are confusing national sovereignty with parliamentary sovereignty. This is what we Leavers care about – the sovereignty of our Parliament, that we hold dear, to make all our own domestic laws ourselves.

    I have been a consistent Lib Dem voter all these years and I can live with the fact that despite a majority Leave vote in the country, the majority of LDs voted Remain. But what I cannot accept is the LD attitude to sovereignty and democracy. We Leavers knew perfectly what we were voting for, and it was that sovereignty issue. All the way from that debate in 1972 to today. You read the whole debate and you’ll see. I’m ashamed of the Lib Dems – you are the party that should treasure sovereignty the most, with your commitment to grassroots democracy – have a look at your own Lib Dem founding principles. And you are the party that should be most accepting of the vote, for the same reason, instead of fighting it. And you are the party that should be taking the Brexit ball from the Conservatives and running with it, to create an open, tolerant, Europe-friendly UK outside the EU, with full parliamentary sovereignty. Only then will Leavers vote for you again.

  • Arnold Kiel 6th Dec '16 - 7:32am

    Dear Annabel,

    I have just extracted the key messages from an independent (non LibDem) report.

    Today, the UK is a sovereign and weighty participant in the formulation of EU rules. Of course, the UK outside the EU would be “sovereign” to disregard the rules of the EU single market (which will then be formulated entirely without UK input) if it chose not to do business wth the EU. It would just be a sovereign economic suicide.

  • @Annabel
    I respect your views but could you flesh it out a bit by informing us of which EU laws you object to. Then I can explain to the 3 million unemployed the benefits of their sacrifice.

  • Dear Arnold
    I entirely accept that we currently have a seat at the pooled sovereignty table and that we will lose that by leaving the EU. I even accept that, on balance, it was probably worth ceding some internal parliamentary sovereignty in 1972 for that seat. But the position now is different. The EU is and always was poorly constituted and has inappropriate political aims from the UK’s standpoint but we have been able to draw a veil over all that for the last 43 years, and make the most of the economic and other cultural benefits. But now the poor EU has reached a stage where it is becoming dysfunctional, unwieldy and at times harmful to its own member states. Our seat at that table is worth a lot less in such circumstances, unfortunately.

    Of course we will continue doing business in Europe. It may be that some of it is under more adverse conditions than today, which I regret. Maybe if Major or Blair had seen fit to actually ask the British public in 1992 or 2004 whether they wanted what the EU has become, we wouldn’t be in this current mess – either we would have voted in for better for worse, or we would have got out before getting so deeply entangled. But they never asked us.
    PJ- the point is not what individual EU Regulations we object to – it’s the fact that they weren’t debated, scrutinised and made in our Houses of Parliament that Leavers object to. There is also the fact that French, German, Italian and EU law are based on a wholly different philosophical system from our own. e.g. The 1993 Commercial Agents’ Regs contain some non-derogation clauses which don’t make total sense to the British legal brain. We have coped manfully with that over the years but need to start making all our own laws again.

  • Daniel Walker 6th Dec '16 - 2:15pm

    @Annabel “PJ- the point is not what individual EU Regulations we object to – it’s the fact that they weren’t debated, scrutinised and made in our Houses of Parliament that Leavers object to. There is also the fact that French, German, Italian and EU law are based on a wholly different philosophical system from our own.

    But they were debated and scrutinised in our European Parliament, weren’t they?

    Of course, how you regard that sentence may have strong correlation with your opinion of the EU.

    Regarding the Civil Law vs. Common Law argument you make, it is, in fact, a valid one, but those problems are demonstrably not insurmountable (it’s worth noting that the Scottish legal system has many Civil Law-style aspects and so we are used to dealing with the crossover)

  • Dear Daniel
    I don’t disagree that we have of course had MEPs at the EP, debating and scrutinising, it’s not as if the EU is wholly undemocratic. (There are several criticisms one could make about the EP system but there’s no need to go into those, as one could equally spend days doing the same about our FPTP system here.) And I agree that the chalk-and-cheese basis of EU laws has been managed ok-ish to date….my point is that, in weighing these things in the balance, to decide if we should stay or leave, parliamentary sovereignty (and therefore self-determination and therefore freedom) is insufficiently prized by the LDs. If the EU had better aims on integration and better systems, and were servants to its populations rather than acting as a supranational power, then would be worth sacrificing a bit of sovereignty for the sake of co-operation, as we have done to date. But the LDs are selling sovereignty too cheaply, in my view.
    It is all a question of judgment of course, there is no right answer.
    Thank you.

  • Arnold Kiel 7th Dec '16 - 8:31am

    Dear Annabel,

    apparently, you are a lawyer. That is good for you, because after Brexit you will be able to indulge in British legal philosophy for decades, and your government seems happy to plunge even deeper into deficit to fund this exercise in sovereignty.

    As a lawyer you should know that creating robust contractual ties between 28 sovereign countries cannot be anything but “dysfunctional and unwieldy”; what did you expect? What do you want: no contract and total autonomy or full integration?

    Please excuse my bluntness, but I am losing my patience with this romantic, frivolous and unsubstantiated sovereignty-nonsense when your country loses its ability control poverty, house its people, educate them properly, and give them medical care. The UK cannot even keep its lights on without French project-management and Chinese capital.

  • Dear Arnold
    I would have agreed with you until Maastricht, or Lisbon at the latest. But not since the EU went off track.

    I have tried to engage in reasonable discussion, to try to narrow the gulf in understanding, along the lines suggested by Ruth Davidson. We Leavers are not all Tories, you know. I think there is scope for a sensible enlightened Brexit with the Lib Dems at the forefront of it. I like the idea of close co-operation between European nations and so do most Leavers I know. Our ideas are not that far from your own. Like I said, there is no right answer here.
    I wish the Lib Dems well. I am now one of the politically homeless, like the third of Libs who voted Leave.

  • Arnold
    I wonder if I may ask you a quick question here?
    Depending on how you answer it, I’m going to attempt to try to give you (as nicely as possible) a top line psychology lesson on what is motivating millions of British people particularly North of the M25 at present.
    The question is this – what is your motivation here? (truthfully)

  • Jenny Barnes 8th Dec '16 - 5:02pm

    arnold Kiel “The UK cannot even keep its lights on without French project-management and Chinese capital.”

    And usually 1 – 2 GW from the french interconnector. Even though several of the french fleet of nukes are off line suffering from poor quality steel problems. This winter we seem to be running perilously close to max. on all our power stations.

  • Arnold Kiel 8th Dec '16 - 10:31pm

    Dear Mike,

    thank you for asking. I am trying to remind your politicians (and the LibDems are kindly providing an open and tolerant platform) of their responsibility to house, feed, heat, educate and protect UK citizens, esp. the ones north of the M25. Protecting them from their own misguided psychological motivation is sometimes also part of the job.
    Deceiving them into a silly referendum vote, and then blindly following suit will produce the opposite, and I don’t want that.

    I am looking forward to your psychology lesson, admittedly an area where I can learn.

    Dear Annabel,

    please stay with the LibDems. I am not their spokesperson, just enjoying the freedom of expression provided by libdemvoice (which I greatly appreciate).

  • Dear Arnold
    I have to say, I feel some of empathy for you here. Much of what you say, I agree with.
    The issue I think is that the British Psyche is very different from the European one.
    I did have an attempt at trying to explain my thoughts around this, over on the ‘Brexit and the denial of democracy’ thread earlier today.
    Ah, Ok just noticed, you’ve responded to some of us there, so you’ve obviously read my ‘Britain’s are from Mars, Europeans are from Venus piece – so absolutely no point in repeating it again here.
    I’m not sure what to say, if I’m honest, since you appear to be simply repeating the same arguments again, basically that we are all doomed if we don’t stay in the EU.
    The problem with this as far as I can judge, is that everyone knows what your views are from your first article. Many agree, some don’t and very many North of the M25 definitely don’t.
    So, what next, what is the next step here?
    You say you’re trying to remind politicians of their responsibility to the UK citizens, but on the evidence of last nights vote, the vast majority either don’t agree with your assessment, aren’t listening or both.
    Even half of the most Pro EU party in England apparently don’t think this is black & white.
    So, I’m not really sure what your next move is.
    I wish you luck Arnold, I really do – have a good evening.

  • Denis Loretto 9th Dec '16 - 2:02am

    Those who argue that “nations” (often the product of previous conflict with borders that have little real logic to commend them) should operate as completely separate entities have to be left in their glorious isolation and the likely wars that history tells us will be their lot from time to time. However those like Annabel here who recognise the need for international co-operation are different. She likes “the idea of close co-operation between European nations” and so, she says, do most Leavers she knows.
    As far as I can see the Annabels of this world –

    (a) believe in British exceptionalism – narrowed by Flanders and Swann to English exceptionalism as in “The English, the English, the English are best, I wouldn’t give tuppence for all of the rest.”
    (b) would accept continental co-operation only of a nature and degree that they have invented, ignoring the co-operative system that has been mutually developed over many years by (up to now) 28 countries and which is subject to further development and hopefully improvement over many further years.

    That way lies the glorious isolation that Annabel says she eschews.

  • Katharine Pindar 11th Dec '16 - 1:05am

    Hello, friends, I have been having terrible trouble with access to the site just lately, which accounts for this late comment. Arnold, thank you for your kind comment on the other thread, and I must say I entirely agree with you on this: the economic facts you bring are very helpful, and I do actually share your impatience, above! By all means keep on with your persistence in showing us with good arguments what a disaster Brexit would be. I think Denis Loretto’s reasoned comment is a good conclusion.
    PS, Mike (hi if you are still checking this thread!) I always admire your questioning spirit, but I think you are on very dubious grounds talking about a ‘European psyche’ – what, Hungarians, Spanish, French, Polish, Romanians and Germans all sharing the same ‘psyche’? Surely not.

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