The next section of the UK government’s EU referendum leaflet addresses economic concerns related to EU exit. But before I come onto the points that are raised, I have to preface this by saying that Britain’s EU membership is first and foremost a political decision. It is an almost unbearable distraction for those of us who observe and comment on matters EU with any degree of earnestness for the debate about ‘Who governs Britain’ to be consistently deferred as as to discuss economics or immigration or any other (at best) secondary issue.
Having said all of that, EU membership does have an economic dimension because it is through Britain’s EU membership that people and businesses access the Single Market. The Single Market, however, is not only comprised of EU Member States; there are three EFTA (European Free Trade Association) members too. Those are Norway, Iceland and Lichtenstein. Reading only the UK government’s EU referendum booklet would leave one with the impression that access to and even participation in the Single Market is synonymous with EU membership. It is not.
So, what of the other assertions made? “The EU is by far the UK’s biggest trading partner. EU countries buy 44% of everything we sell abroad, from cars to insurance”, notes the leaflet. Some Leave campaigners will dispute these figures and argue that intra-EU trade is declining as a percentage of Britain’s current “exports”. I will not.
The percentage—whatever the actual figure—is significant enough that it cannot and should not be ignored. As much as I look forward to the idea of Britain engaging globally without the encumbrance of a trade policy decided by the compromise position of the EU28, the fact of the matter is several of the world’s most important developed economies are EU Member States, and Britain will want to continue friendly trade and co-operation with those partners post Brexit. Working to develop better trading relations with emerging economies in Asia, Africa and Latin America will take time, so it is important to safeguard the economic benefits of the Single Market even as we decouple from the supranational political structures of the EU.
To that end, it always rankles to see Britain’s trade with the rest of the EU described as “exports”. The word “exports” implies a degree of separation that is not present. Britain and the other 27 EU Member States are part of a common regulatory zone that is “protected” from third-country imports by a common external tariff. Outside of the EU though, Britain can rid itself of the common external tariff, increase its trading agility, and have more say over Single Market rules than any EU Member State by rejoining EFTA, thereby allowing access to the EEA agreement (the Single Market agreement) from the other side of the table.
Indeed, the UK government booklet’s emphasis on the Single Market provides a strong indication as to the most likely post-exit trading scenario—continuity market membership as part of EFTA. That means no immediate change to freedom of movement or business regulation, but, as a corollary to that, very little risk of economic instability or job losses.
In other words, contrary to the tenor of the UK government booklet, Britain can leave the EU safely and securely in a series of measured steps, taking proper account of all the concerns that Remain campaigners seek to amplify and exaggerate.