Richard North, 09/06/2014  

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On offer from the Financial Times today is a preview of an as-yet unpublished report from the Centre for European Reform (CER), to be launched on Wednesday. The report is by their grandiose "Commission" set up last year to explore the implications of Britain's exit from the European Union.

We have already had a foretaste of its work with a report on the effect of Brexit on the City of London, on which basis, we can expect the same wearily predictable Europhile drone. The problem is that the CER exudes "prestige". Furthermore, the professional presentation of its work offers a stark contrast to the laughably amateurish style of the IEA "Brexit prize" finalists, and the thrashing of lightweight dilettantes such as Hannan, each pushing their pet nostrums without any concessions to reality.

According to the FT, the CER is going to tell us is that EU membership has been a "boon" for the UK economy, lifting its goods trade with other members by 55 percent, generating increased inward investment and boosting the City of London. Then, entirely predictably, it finds that many of the purported benefits of leaving are "illusory".

We are to be led to believe that, "even within the rule-bound EU", Britain has managed to preserve the second most lightly regulated product market in the developed world, as well as levels of employment protection that are only marginally more restrictive than in the US or Canada – and well below those in France or Spain.

The CER will also tell us that some of the most controversial EU rules – such as the working time directive – have had only a "marginal" effect on the labour market. In other areas, notably financial regulation, it will say, Britain has voluntarily gone further than EU minimum standards.

Thus, it will maintain, "A bonfire of European rules would not transform Britain's economic prospects". According to its report, "The idea that the UK would be freer outside the EU is based on a series of misconceptions".

The trouble with this is that, when I have seen the full 92-page report, in all probability I will be agreeing with the premise. As I have already set out in my own draft report, in the short- to medium-term, the idea that there are significant regulatory savings to be made is "illusory". Most of the schemes which offer such savings, "seem to be based on wishful thinking rather than rooted in reality", I note.

By offering unrealistic nostrums, though, we are allowing the Europhiles to make the running. The CER report makes great play of what it calls an "invidious choice" facing the negotiators of any split with Europe.

If Britain seeks to benefit from the single market from outside the EU, it says, it will have to play by many of the rules it is seeking to escape – while having less influence over them. The flipside would be freedom from those rules, with loss of access to the single market.

Once again, we get the same tired old mantras, but the very same that are on offer from the "eurosceptic" community - both are offering the same ideas. These options, says the CER, include a Swiss-style deal based on bilateral agreements with the EU; a customs union of the kind Turkey has with the EU; or, like Norway, membership of the EEA.

From there, the drone develops: "the UK would still have to comply with the club's rule book without having power to influence it". And, as the lies continues, we are told that the UK "could find itself continuing to pay into the EU budget; a Norwegian-style deal would lower net contributions by only nine percent, while a Swiss arrangement would cut contributions by 55 percent".

Thus, the paper concludes that "the only option" that would make sense would be for Britain to go for as deep a free-trade agreement as possible with the EU, and sign as many bilateral trade agreements with non-EU partners as can be secured.

Even then, says the CER, "an FTA would still not leave Britain with complete regulatory freedom". The EU would "make demands on labour market rules, health and safety and competition policy, as well as product standards. Including Britain's services sector in any FTA would be difficult, given the UK's large trade surplus in services with the rest of the EU".

Needless to say, none of the points made are entirely valid, but there is just suffiicient truth in them to make them plausible. But not only is the FTA "option" politically unrealistic, we would be unwise to allow the Europhiles to set the terms on what our leaving options should be.

Again, though, the problem is that, in principle, I would agree with many of the points made by the CER – as far as they go. None of the available options, including the "Norway option" are viable in the long term. None of them provide the complete solution for Britain in a post-exit environment.

This was something I was at pains to stress in our Harrogate meeting last week. There is far too much emphasis on the initial options – including the "Swiss option" and the "Norway option". We need to extend our imagination to settling what can only be an interim solution. The real plan is to buy time for the longer-term solutions (in the plural). These are the essence of any successful exit plan.

By allowing the Europhiles to set the agenda, and by refusing to devote energy to developing our own realistic exit plans, we risk conceding the game before it has even started.

We can see very clearly the CER strategy, and it's a good one. They take "our" plans and rubbish them – which is easy to do, and then set up a "straw man" option which, in the fullness of time, will be just as easy to demolish. If we allow this, at the critical moment in any referendum campaign, we will be left with no viable alternatives to EU membership, and will have voters flocking to the safety of the status quo.

The real alternative, the idea of a two-tier structure, involving a short-term interim solution, buying time for longer term solutions, is of course one that the Europhiles dare not and will not raise. Because that is the strategy that has a chance of working, they will never discuss it, and will try to ignore anyone who does.

In the absence of publicity on the workable alternative, on Wednesday, we will see the CER making the running. There will be no great drama – no front-page headlines. But, unless we start getting our act together and push for a credible alternative, this Europhile propaganda initiative will be another substantial nail in the coffin. It could be one that ensures we lose any "in-out" referendum.


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