EU Referendum


Brexit: Johnson does fantasy politics again


03/08/2014



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I can scarce bring myself to review the latest effluvia in the Sunday Times. It includes a reference in a front page story to a report by one of Boris Johnson's minions, which concludes that "quitting the EU would be much better for Britain than remaining in on the current terms".

This, in the pathetic hyperbole which the media insist on using, is "seen as a throwing down of the gauntlet" to David Cameron, and represents an attempt to carve out a unique position for the Mayor of London on the European Union, prior to his return to Westminster – and his leadership bid when Cameron fails to form a government.

It seems though that Johnson wants to be different from Mr Cameron, but not too different. He is still peddling the reform meme, but adds that the UK should "not be frightened" of quitting the EU if the negotiations fail, this being a ploy to encourage the "colleagues" to play ball, on the basis that they will be more willing to deal if we threaten to leave.

In this, Johnson, apparently, is relying on a report by his chief economic adviser, Gerard Lyons, who in turns is relying on modelled by the independent economics consultancy Volterra. As yet unpublished, it will tell us that if eight key reforms are attained, then the UK will be better off.

This is expressed in employment terms, with the status quo would yielding just 200,000 jobs, a reformed EU could generating one million new jobs in London over the next two decades, while leaving the EU and maintaining an outward looking approach to trade with the rest of the world would create 900,000 jobs. By contrast, a fourth scenario - leaving and retreating into isolation - would cost 1.2 million jobs [in London] over 20 years.

Lyons is a former chief economist with both Swiss Bank and Standard Chartered and has thereby concluded that "the best scenario for Britain is to be in a reformed European Union".

But one can tell that this is not serious politics when he says that a "very, very close second" would be for the UK to leave the EU and strike a new deal along the lines of those enjoyed by countries like Norway and Switzerland. "Britain", he says, "is in a much stronger position” than those countries to strike a new deal on advantageous terms outside the EU".

Discounting the obvious catch – that there cannot be any meaningful negotiation, no matter how much we threaten and bluster – the obvious problem here is that the deals enjoyed by Norway and Switzerland are mutually antithetical. Furthermore, neither are particularly advantageous to the UK, and neither would probably offer any longer-term economic advantage.

More specifically, in terms of negotiating more "advantageous terms", Lyons clearly has not addressed the realities of the Article 50 scenario, in which time pressures and other constraints would drastically limit our options.

Furthermore, the economic modelling on which Lyons relies probably has about as much validity as the climate models on which the warmists rely, and without taking into account a realistic exit scenario, makes this yet another exercise in fantasy politics – in which Mr Johnson excels, and the mind-numbingly shallow media so loves.

The most important mistake Lyons makes, though – as do so many – is to focus the exit terms in relation to the immediate deal negotiated with the EU. What almost everybody fails to do is understand that the benefits of leaving the EU do not come not with the exit deal.

What we are looking at here is not only the unravelling of forty years of political and economic integration – which is going to take time – but also the suppression of UK national interests and the support of a "European" world view.

Where Britain will score will be in the ability to engage afresh in the global community, and in gaining the chance to reshape the moribund global trading settlement – already suffering a fresh blow from the Indian veto of the latest WTO deal – freed from the dead hand of EU protectionism.

The point here is that the eventual outcome is almost impossible to predict, as are the economic benefits. But then, when Britain sought to join the EEC in the '60s, no official attempt was made to quantify the economic benefits. There were too many imponderables.

Learning from this, we need to be concentrating far more on the post-exit scenario, the one which will develop in the decades after leaving the EU. We need to spend proportionately less time on the immediate exit agreement, which is just the mechanism for securing our departure.

This distinction separates the amateurs and the fantasists from the professionals, and there aren't many of the latter about. And nor is gritty realism attractive to a media which is more interested in entertainment than it is real analysis. Thus, we are going to have to suffer the triviality of the pundits, while the real work goes on apace, unregarded.

Our very great danger is that, when it comes to a referendum campaign – if it comes to that – the shallow nostrums will get the exposure, leaving the Europhiles to sweep the board with their predictions of doom. And, one suspects, Mr Johnson will be right there, muddying the waters.

We need a counterweight, someone who knows how to do serious politics.

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