The inconsistencies and risk inherent in Vote Leave’s economic arguments must be exposed.

Yesterday we had a brief glimpse into a post Brexit future as sterling fell sharply on polls putting Leave ahead. Any shock to an economic system will hit growth and investment at least in the short term, as has been grudgingly conceded by Leavers. Voters must confront the reality that in a Brexit scenario swathes of the population may have to change their jobs, whether they like it or not, and face a period of unemployment whilst the economy is reconfigured.

Vote Leave discretely and disingenuously propose two mutually exclusive models for the nation post-Brexit, one outside the Single Market, one in. Acting like snake oil salesmen they offer a generally risk-averse British electorate (with much to lose) the possibility of having its cake and eating it, at the same time cynically denying the fact that is increasingly clear; Brexit is a gamble with uncertain odds.

Bandying about the discredited £350m weekly ‘cost’ of EU membership, Michael Gove has suggested that Britain outside the Single Market would be free to spend his mythical saving on our own priorities (his is not the politics that favours increased public spending – do not be fooled). This £350m is not only fictional in its calculation but, as the IFS has confirmed, very likely to be more than offset by lower growth and its depressing effect on tax receipts.

Withdrawal from the Single Market is the scenario most likely to damage the economy in the short term, with multinational manufacturers and financial organisations domiciled in the UK for EU access relocating to the continent, and UK exporters faced with new tariffs and trade barriers.

Others in the Leave camp seem to favour continued Single Market membership, and sketch out a utopian future where the UK continues to have access to the market like Norway and Switzerland: countries that contributes to the EU budget, accept unlimited EU migration and have no direct influence on EU decision making.

They must be clear, our options are:
a. Taking the plunge, withdrawing from the EU and Single Market, crossing our fingers and hoping for the best.
b. Exiting the Union but attempting to remain in the Single Market (with contributions to the EU budget and freedom of movement, but no say in the rules).
c. Continuing with the present unique arrangement (that will be enhanced with a Remain vote).

Gove, and others, have argued that there is another option, that our clout would allow us to dictate better terms than Norway and Switzerland, that we could gain access to the Market without any of the ‘nasties’. This is pure speculation. No country has left the EU, and given the significant electorates in other European countries also keen to exit the EU do we really think that European leaders will gift the UK exit terms that give succour to their own political adversaries? Irrespective of how many tonnes of cheese, litres of Olive Oil or BMWs they sell us (I’m sure I’m not alone in being tired of these clichés) this is simply not realpolitik.

* Pete Shallcross is a party member and a Business Analyst from Cardiff

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27 Comments

  • Eddie Sammon 7th Jun '16 - 2:25pm

    I find leaving quite frightening. I’d probably be alright, but will the vulnerable? Also, how could we then speak out against undemocratic regimes such as China? We’d be more dependent on them for trade.

    We’d have to let the free-trade ultras run the country and human rights and security would suffer around the world.

  • There’s a lot of worrying fantasy thinking in the Leave campaign’s free market rhetoric and little bit of over egging the economic Armageddon pudding in Remain. The problem I have is that it sometimes feels like an argument between to camps that believe that only argument is trade and that everything else is secondary to the market.

  • The whole “free trade” thing is far more complicated than it sounds. For instance, the EU applies tariffs to certain imports from China, usually because state-owned companies are dumping goods on the world market at below cost which threatens to put European competitors out of business. This means that some European companies pay more for their materials than they otherwise would – the application of tariffs to Chinese imports also allows European competitors to sell at a higher price (and not go bust).

    So if the UK leaves the EU and negotiates a “free trade” deal with China, will it abolish those import tariffs? In doing so it would accept some harm to some UK companies, but also allow others to benefit from lower material costs.

    However, if you want to have a free trade agreement with the EU at the same time, will the EU allow UK manufacturers to benefit from those lower material costs and so have a competitive advantage against EU manufacturers? I doubt it – they will either insist that the UK applies tariffs to Chinese materials, or apply their own tariffs to UK goods being imported into the EU.

    Either way, you don’t end up with “free trade”.

  • But people i know who are voting Leave are not doing so on economic grounds, some even accept we will be worse off if we leave, they are voting for emotional, national, kick the Johhny Foreigner, immigration, do not like Cameron and Osborne, making our own laws, chance to get rid of the Rories, you name it you get it, but it is not on economic grounds.

  • Bill le Breton 7th Jun '16 - 5:14pm

    Peter Shellcross, may I congratulate you – you are the first person here in an OP to indicate that there is an option where the UK can leave the EU yet remain part of the single market. Unfortunately your link is to the FT and behind a paywall for most readers.

    Leaving and thus continuing as part of the EEA of course means that all four freedoms on the single market remain. Not many people know that.

    Why are ‘leavers’ not open about this? Well, because they would lose those supporters who want to leave in order to stop uncontrolable immigration from the EU. I don’t think you can blame them when the Remain camp is not willing to admit that by being part of the EEA post a leave vote, there is no evidence that there would be a recession – a key claim in their fear campaign. I am sure you are aware that the second review by the Treasury deliberately left out the analysis of the EEA option because it could not then claim a recession would follow. Sneaky.

    So, regardless of the machinations of the leave and the remain camps, how should Liberals fight a Liberal campaign based on information, support for free markets (the single market is not free, though it is a customs union) and the greatest extent of subsidiarity in future decision taking ie in ‘who decides’?

    Clearly the EEA option wins hands down – it retains all the advantages of the free market, but gives the UK sovereignty over deciding at which level decisions should be made. Some the UK Parliament will agree should be with partners in the EEA and the EU, some by the Westminster Parliament, some by the Scottish and Northern Ireland Parliaments, the Welsh Assembly or the Grand Committee, others by local authorities and some by parish and town councils – full subsidiarity.The Liberal Vision.

    So how do we achieve this? Not by voting remain as little or no reform will come from that and the drive for ever greater union will continue (weakening subsidiarity yet further).

    The question is, if the country votes leave, will Cameron, Osborne, Gove and Johnson then reveal the EEA option? I think they will – if only to keep the Tory party united – as outters like Bill Cash and Davis would support this.

    What we should not do is blindly vote ‘in’ because we think the outters are not telling the whole story – no one is until June 24th – sadly that includes the British Liberal Party, which should know better and be providing the country with the facts.

  • Bill le Breton 7th Jun '16 - 5:28pm

    Peter your next important question is ‘do we really think that European leaders will gift the UK exit terms that give succour to their own political adversaries? ‘

    They can’t do otherwise. First the UK will file at the United Nations under the “presumption of continuity” and trade just as happened at the break up of Yugoslavia and the division of Czechoslovakia. So all existing trade relationships continue and cannot be violated without sanction. They would have to violate international law. And of course alienate themselves from G7 and G20 which is urging everyone against any form of protectionism.

    Second the EU’s own article 3 of the Lisbon Treaty says the union will uphold “free and fair trade” with the rest of the world, and this too has legal force.

    Of course you can’t expect the EU Commission and others to admit this, because as you say other countries will be queuing up to follow the UK in this route.

    But you should expect a British Liberal Party to be explaining this loudly and clearly and disassociating itself from an in-campaign which is using this and other scare claims to badger the public, instead of proving proper information with which people can make free decisions.

    If people want to go the EEA route they can – some disruption but not huge + huge gains to the Liberty of the British people and to the Liberty of huge swathes of people in the EU who are suffering an almost permanent depression in their economies thanks to the management of the EZ by the ECB, which is also holding back non Euro members of the EU – A situation that is giving succour to the hard right and to Putin.

  • Bill le Breton 7th Jun '16 - 5:50pm

    sorry to come in again, but just seen from Twitter that scores of MPs are now using the arguments I have been using. How we could leave the EU, exploit our membership of the EEA, maintain the access by right to the single market.

    http://www.bbc.com/news/uk-politics-eu-referendum-36457120

    Why oh why are we leaving this very Liberal solution to the likes of Stephen Kinnock when it should have been our obvious stance from Day1?

    It leaves a way open to vote Leave and have the Liberal solution. The BBC think this will come about because the Parliamentary majority for staying in the single market – but I have always thought that this option will be announced by Cameron (and others) on Friday 24th if vote leave win.

    We can reform the way all of Europe interrelates and trades – releasing the potential of all the countries of Europe including those benighted by inappropriate membership of the Euro – ie the southern economies.

    Looks like we missed our chance to ‘lead’ and will just follow along like irrelevances.

  • If the present outflow of capital continues at an increasing and alarming pace with the need for heavy rate rises in an attempt to stop the process, could we see the referendum being called off

  • Bill Le Breton’
    I think you might be right about what will be tried. However, if the vote is heavily reliant on an anti-immigration contingent such a move will be seen as mendacious and will not hold. Part of the problem with the perception of politics at the moment is the feeling that rather too many politicians seem to believe that the electorate are an inconvenient obstacle to be negotiated.

  • “Vote Leave discretely and disingenuously propose two mutually exclusive models for the nation post-Brexit, one outside the Single Market, one in.”

    To be fair, Vote Leave are not putting themselves up for office (June 23rd is not general election day) so it’s actually perfectly proper for them to be describing two mutually exclusive alternatives; they won’t get the choice of which one to put in to practise. It would be nice if Remain would follow their lead and offer us some kind of vision of how our relationship with the EU might be modified in the event of an In vote, because it’s quite likely that the referendum will be close enough to keep this a burning issue for years to come.

    Fascinating to read Bill’s proposals for a liberal non-EU future. I’m baffled by the (almost) unanimous nature of Lib Dem support for Remain. How does this fit with the Lib Dems’ fondness for decentralisation?

  • David Allen 7th Jun '16 - 7:48pm

    What is critical about the EEA (Norway) option is how it is presented to the voters.

    If the voters think it is just a trick to be played by Remain, a ruse to defeat a Brexit vote by sabotage, a “clever” way of nominally leaving and in reality staying – Then the voters will vote a Brexit landslide, and demand a “real” Brexit.

    If the voters can instead be convinced of the truth – that Vote Leave have shamefully ducked a choice they would need to make, and are offering us all a pig in a poke – Then they will turn against Vote Leave.

    Vote Leave say that we should “Take Back Control” of our borders. Very well then. They are demanding, aren’t they, that to do that, we must ditch the Single Market (Shallcross’s Option A), accept tariffs and barriers to trade with the EU, and live with the worst-case economic consequences. We need to challenge them, ad nauseam, to come clean on this.

    It’s a fair challenge. They are the big twisters in this game. Remain’s hyperbole doesn’t begin to match Leave’s deviousness when it comes to misleading the voters. But will people see it that way? Boris, with his grinning-clownish-toff act, beats Cameron on pseudo-likeability.

    This game will be won by whichever set of politicians is least despised by the voters. We need to show that it is Vote Leave whose campaign is despicable.

  • Lorenzo Cherin 7th Jun '16 - 8:35pm

    Stuart

    I agree, but there is a strong liberal leave campaign , Anne Cremin was very popular on here with a very good piece , she and especially Paul Keetch and their su[porters need to get on with more articles and make more impact.

    Saying that , I am a cautious remain voter , just !

  • Conor McGovern 7th Jun '16 - 8:40pm

    Bill, I agree on voting to leave and the possibility of being an EEA member. I’ll be voting to leave. I still think it would be sensible to control our own immigration law so we can manage infrastructure accordingly, but I think the EEA would be easier to reform (or even one day leave, if it proves unsatisfactory) than the EU is.

  • Conor McGovern 7th Jun '16 - 8:49pm

    I think most people know our long-term economic future won’t be affected much, one way or another, once the negotiations are done. What’s been sidelined is the political nature of the EU – it’s a political organisation. Where are Tim Farron and co. on the lack of democracy in the EU – we’re democrats, right? What about the drive for austerity in Greece and Spain – we’re radicals? And the tariff walls of Fortress Europe, stamping down on trade from the poorer parts of the world – we’re liberals? We believe in free and fair trade? I think we can more of the democracy we deserve, and be more radical, more liberal as a country if we leave the EU. The liberal case to leave in my view.

  • nvelope2003 7th Jun '16 - 9:41pm

    The problem for the Liberal Democrats, Labour, the Greens etc is that Remain represents the Establishment and many of the voters are sick of that. Labour are very wisely keeping a low profile on this after the almighty slap they got for lining up with the Conservatives in the Scottish Independence Referendum. We should not have got involved with this at all. No lessons have been learned from the Party Of In fiasco in the 2014 European Elections which reduced our representation to one even with a proportional election system. I do not think anyone in the Liberal Democrats has a clue what ordinary voters think. It is all very noble having high ideals but if you cannot take the voters along with you then you will remain in the wilderness. There is no hope for a party content to sit at 6/7% in the polls. Sorry.

  • nvelope2003 its probably why i’ll be leaving the party. Farron is slowly turning the Lib Dems into a liberal left middle class elitist party. He has no imagination and is really like a younger version of Corbyn.

  • Conor McGovern 7th Jun '16 - 11:36pm

    We need some guts as a party.

  • Still can’t figure how self-proclaimed ‘liberals’ could think we should live under the EU.

  • Lorenzo Cherin 8th Jun '16 - 12:17am

    Jane
    Very tantalising and demoralising , your comments. I have been and shall be , a critic of Corbyn, and yet cannot see our leader as like him at all, other than obvious agreement amongst progressives on certain policy ideas.

    The way it is put in your statement saddens me.Our party needs all comers , who are in the mainstream of Liberal and Democratic thought. What you should do is explain and see what we , any member, thinks of your view , as constructive critics we have all , each a part to play .

    I voted for Norman Lamb as I felt it would give us a number of years of him then Tim.I have been very pleased with the partys choice , and believe him a fine man and a real leader.I disagree with him on certain issues and tendencies , such as inability to develop a broader view on immigration, the doctors strike and wherever else nuance is called for. But that is as disagreeing amongst true friends or family.

    Share your views !

  • Yellow Submarine 8th Jun '16 - 6:06am

    Bill almost puts his finger on it. Leave are manufacturing consent for Brexit on the basis of Immigration. But controlling immigration is incompatible with EEA membership which is not only the most obvious compromise for the UK but what I suspect what most in Leave want. If Brexit voters are betrayed in this way UKIP will surge.

  • Yellow Submarine 8th Jun '16 - 6:09am

    Not that I buy Bill’s support for the EEA on liberal grounds by the way. EEA membership is EU membership with the democratic input. Why any liberal would want to be bound by the Acquis but end all input into shaping it is beyond me.

  • Pete Shallcross 8th Jun '16 - 8:55am

    @Bill, fear not, I’ve resurfaced! – You are a very eloquent advocate of the EEA option, that I agree would probably be a much happier solution for swathes of the Remain and Leave camp alike.

    Unfortunately for you, and for other proponents of a post-Brexit EEA future this is not an option on the ballot paper, and as Yellow Submarine highlights, if Leave prevail it would be inconceivable that anybody could construe this as a quasi-acceptance of an arrangement that continues payment into a Brussels budget and freedom of movement, given the conduct and content of Leave’s campaign. Any moves to remain in the Single Market, seemingly orchestrated by an elite of politicians, against the public’s will would surely produce a huge swing to UKIP and further against mainstream politics.

    The broader point I tried to make in my piece is that this is fundamentally about risk, and whether or not people are prepared to pay the price for a future that either doesn’t seem much changed (EEA), or is very different and even more uncertain, with their jobs and standard of living. This secondary debate would only commence in the event of a Leave vote on June 23rd and would in likelihood be conducted in front of a backdrop of plummeting Sterling, probable recession and businesses relocating to the continent, whilst UKIP soar in the polls.

    My pro-remain views go much wider than the economy, but I am aware that I am probably in a minority on this – maybe I will share on this site in the future.

  • Bill le Breton 8th Jun '16 - 9:31am

    Pete relieved you have not been captured by the enemy.

    As with devo-max and the Scottish referendum, it is a shame that EEA is not on the ballot paper, but because our leaders wanted to grandstand on the dream of the EU, we never really looked at a practical and positive option to achieve reform.

    I have always thought that the EU and the concept of ever closer union was doomed. It will either collapse in a few years time as the right take hold in countries which must now it seems include France. Better by far to give it the shock it needs now, in time to make the necessary changes to release the economies from the depressive actions of the ECB.

    Just as with the Scottish question, what was on offer moved very quickly in the last week, with vows and pledges. It may yet be the case that people like Stephen Kinnock start to explain the benefits of the EEA option.

    In theory, this Parliament lasts until 2020. That would be three and a half years for the European majority in the Commons to effect an orderly move into a free trade and pro subsidiarity solution.

    Anyway, I believe that the Lib Dems would have raised their profile more significantly had we campaigned for this vision.

    Best wishes.

  • David Allen 8th Jun '16 - 10:16am

    Once upon a time we held a different referendum. The question was not “Shall we leave the First–Past-The-Post voting system and Try Something Else Instead?” No, the advocates of change accepted the need to offer a specific reform proposal to be adopted or rejected.

    Vote Leave have evaded that necessary step. They want to kid the public that they can have their cake (immigration limits, outside the EEA) and eat it (nil trade barriers, inside the EEA). They know perfectly well that they are offering a pig in a poke.

    And no, it wasn’t for Cameron to tell them that “Leave the EU” was an unacceptably vague option to place upon the ballot paper. He would have been pilloried for “gerrymandering” had he said that. It was Leave’s own responsibility to propose a specific “change you can believe in” (to coin a phrase!). They ducked it, preferring deceit through vagueness.

    Voters now know most of the arguments. The one point they mostly haven’t grasped, simply because it’s a bit technical, is just how deceitful Leave have been. “Leave” could mean two different things, one of which does nothing about immigration, while the other one wrecks our economy. If we can get that point across, we can change minds, and win.

  • Tsar Nicholas 8th Jun '16 - 10:44am

    This has been a really interesting discussion, much more so than the official campaigns.

    I am particularly grateful for Bill le Breton’s insights, but also others such as Yellow Submarine – and Pete.

  • `Voters now know most of the arguments. The one point they mostly haven’t grasped, simply because it’s a bit technical, is just how deceitful Leave have been. “Leave” could mean two different things, one of which does nothing about immigration, while the other one wrecks our economy. If we can get that point across, we can change minds, and win.`

    Actually you can have both – they call it Liberal Canada. You simply negotiate a British deal that allows compromise on immigration and the single market. Since when has this country, and our party, been so lily-livered in playing to our strengths.

    Since when has it been the voice of the Spanish villa owner, the voice of the trendy middle class above the ordinary worker? Remain or Leave after the 23rd politics will profoundly change and the Lib Dems will be `at the back of the queue`.

  • Lorenzo Cherin 8th Jun '16 - 8:31pm

    jane

    Did you see my post above re your comments?

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