Sir Desmond Swayne TD MP

Sir Desmond Swayne TD MP

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The Economic Question

06/06/2016 By Desmond Swayne

 

At public meeting in Fordingbridge last week a constituent asked me why the Vote Leave campaign had conceded the economic argument on the question of leaving the EU. I assured him that we most certainly had not. To get that impression I suspect he had just allowed himself to be overwhelmed by the vociferous chorus of academic economists, corporate bureaucrats, and politicians all warning of penury if we leave the EU.

It is difficult to stand up to this rather than accept the herd instinct and just follow along. It takes courage – or complete innocence – to point out that the Emperor is wearing no clothes. It is reassuring however, to recall that it was the very same people who warned of the desperate consequences we would face if we did not adopt the euro currency. They could not have been more wrong then, and they were wrong too when they said that we would face disaster if we left the exchange rate mechanism. They have form. They have made a habit of being wrong, and they are wrong now.

I believe that we will prosper outside the EU (the Prime Minister, not so long ago, said that we could thrive) but I don’t want to over sell the prospectus. Whether we are inside, or outside the EU, the single most important determinant of whether we prosper, is our ability to produce goods and services that other people are willing to buy at competitive prices. If we can do this we will be okay, economically at least, irrespective of whether we are in or out of the EU.

The reason I believe that we will be better off out than in, is because our ability to trade those competitive goods and services will be greater. Most of our trade has always been outside the EU but it is disadvantaged by the EU rules which encourage trade within the EU and make it more difficult to trade outside, by building a barrier around the EU in the form of a common external tariff.  Britain’s particular strength has always been in the export of services but within the EU, despite years of trying, we still do not have a single market in services. When the EU negotiates trade deals with other countries, trade in services is not its priority, in fact a third of its agreements exclude them.

As a general rule I am sceptical of the value of trade agreements. You don’t need a trade agreement to trade. We trade successfully with China, the USA and India and we don’t have trade agreements with any of them. Undoubtedly however, some agreements can give added advantages. The problem is that the EU is so monumentally bad at making them. Canada has been knocking at the door trying to make one for 7 years. India tried for so long, and eventually gave up. We would have much greater flexibility to negotiate on our own account and to our particular national interest if we set ourselves free to do so. As for the claim that, were we to leave, existing trade deals negotiated by the EU, would then exclude us, this is just nonsense and contrary to international law.

There really is no economic advantage to be had by staying in the EU. You can measure that fact by the £68 Billion trade deficit we had with the EU last year, and every year.

Filed Under: DS Blog

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