Richard North, 07/08/2014  

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Gerard Lyons is chief economic advisor to the GLA and Alexander Johnson (aka Boris), and also an Open Europe board member. And this is the man who has just issued a "win-win" report on London's relationships with the EU, upon which Mr Johnson based his speech yesterday.

The report is 108 pages (linked to unlocked version), with appendices running to 130 pages, which can be accessed from the GLA website.

London taxpayers have funded this production, and they should demand their money back. It is a disgustingly superficial piece of work, technically illiterate, flying in the face of treaty provisions, written under the hand of a man who is as ignorant of the EU as his master.

It should not be the case that we should have to waste time dealing with this sort of rubbish. Amongst his many other failings, the man so completely misunderstands Article 50 that he suggests that, if it comes to leaving the EU, we should negotiate an exit without it. In an argument worthy of the UKIP kamikaze tendency, he suggests we keep it in "reserve", as a threat, or some such.

You really would have thought that if the GLA was going to produce such a work, it would have at least run it past a competent international lawyer, one who could have told these facile children something of the basics of treaty law, and in particular the meaning of lex specialis.

It is at this most basic, fundamental level that the report fails, an arrogant, time-wasting production where its authors assume they are in any way qualified to write of things about which they so obviously know nothing.

Lyons may be an adequate economic forecaster – his stock in trade. About that, I neither know nor care. But he is outside his sphere of competence when he pronounces on leaving the EU. He has nothing useful to say. His report is valueless.

Irritatingly, these people have blocked the copy and paste facility on the .pdf version of the report – despite lifting short extracts for review purposes being perfectly legal. This necessitates laboriously typing out excerpts, another example of the time-wasting arrogance of these people who cannot even assist a necessary review process.

Nevertheless, of the section where Lyons discusses the exit options for the UK, I have typed out sections on the "future relationship between Britain and the EU" (p.103 et seq), and append below sections of the text:
Comparisons are often made with the trade deals that Switzerland, Norway or Iceland have and the pros and cons of each. This is relevant as a benchmark for the UK, but the reality is that we are far bigger and more important economy than each of these countries, and so it is feasible the UK could negotiate a more suitable deal for both the UK and EU. The latter is particularly so given that the UK is such an important trading pater (sic) for them. This is not something the UK would have viewed positively in the past, but in the event of an exit it might work in the UK's favour, as a trade deal that penalised the UK would likely hit EU exporters to the UK, too. The UK trade deficit with the EU was £65 billion in 2013 and perhaps as many as four million jobs on the Continent may be dependent upon both British trade and investment.

The Norwegian option

This is not an option for the UK. The Norway Option is widely seen in the UK as not being a suitable future option for the UK, and rightly so. When this option is often discussed in the UK it is often overlooked that the terms of the Norwegian Option were negotiated in anticipation of joining in the EU, but its people subsequently decided not to join. Norway is not a member of the EU, but is a member of the European Economic Area. The one benefit is that Norway is not part of the common agricultural policy, but in most other respects this option would not be appropriate for the UK. As an EEA member Norway has access to the Single Market (which the UK would want) but it is subject to a rules of origin constraint to limit goods from the rest of the world accessing the EU via Norway and avoiding any necessary customs duties (that would not be appropriate for an open economy like the EU). Norway has to abide by EU rules, without getting to vote on them. Some call it diplomacy by fax.

The Swiss option:

The fact that Switzerland is neither a member of the EU or of the EEA and yet was able to negotiate a bilateral trade should suggest that the UK would be able to agree a far better deal if it chose. The Swiss Option is not suitable for the UK as it does not have full access to the services component of the Single Market. Switzerland earlier this year rejected the free movement of people element of the four freedoms and there has since been a focus on whether the Swiss deal will be negotiated.
Unlike the ex cathedra assertions made here, the contrary case is argued in full in my Flexcit report, in far more detail than Lyons could ever manage. I'm not going to take you all through it again. It's there for anyone to read, if they are so inclined.

If Lyons ever read it, he would doubtless disagree with it – in the unlikely event that he managed to understand it. But these people don't read anything outside their own bubble. They isolate themselves in their squalid little bunkers, feeding off their own collective ignorance, bolstering their confidence and authority by rigorously excluding anything which might challenge them. They don't engage in debate – they simply ignore anything they don't want to hear and assert that theirs is the only truth.

Lyons thus goes on to build his facile, stupid little document with the offering of a "UK Option", in which he tells us:
There is no reason why the UK needs to be constrained by the deals other countries have with the EU. As the sixth biggest economy in the world, a country with whom the EU will wish to trade, and also as an economy that has the potential to the biggest in Western Europe, even larger than Germany within a generation, the UK should have the ability to forge a favourable deal. As President Barroso acknowledged in April 2014, the UK is different. Some provision for either full service sector access or with limited barriers is critical.

The UK negotiation should be framed with one possible intention being little EU influence in the realm of anything other than specific goods and services regulation to allow exports into the EU market. As far as possible, the conduct of the British government, people or business should be removed from EU control or influence. Otherwise the benefits of leaving are undermined over time and it would be a case of short term gain dragged back over time by a regulatory heavy model.

Single Market membership via the EEA means that many negative aspects of European membership remain. This means the relationship with the Single Market needs to be reframed in a bespoke negotiation.

Thus the most likely UK option has to be a comprehensive free trade agreement, with its negotiation improved by the threat of Article 50 – clearly the UK would push for full market access. It is unlikely that this will be granted. Whilst it is not optimal to lose full services market access, the UK competitive advantage in services means that Europe may impose some barriers to market entry.

On the flip side, a bespoke negating (sic) relationship will give the UK the broadest possible operating environment from which to pursue its post exit future. UK business would decide to mirror EU regulations on products and services to allow ease of selling into the market – but these would be business decisions, not something imposed by a centralised bureaucracy. Existing social and employment legislation would need to evolve to suit the UK's domestic needs.
Thus, this man would have us going to Brussels, outwith Article 50, "negating" (sic) a bespoke agreement, without even attempting to suggest a timetable. He does not explore the political environment in which an agreement must be forged, and he obviously has no idea what might be achievable. There is not the slightest recognition that these will be difficult negotiations, in which the other parties will have their own expectations.

On the basis of a superficial, almost trivial appraisal of the state of the art, however, he concludes:
In conclusion, this section looked at the consequences of a UK exit from the EU. Leaving the EU would lead to considerable near-term uncertainty, but as we have outlined here for the UK economy to be successful it would also lead to the need for a clear framework of policy planning, in order to both create a future enabling environment for business and a clear strategic vision for the economy. As our earlier economic scenarios demonstrated, the future performance of the UK economy will not be determined solely by whether it is in the EU, or outside. If the UK were to leave the EU, our economic scenarios suggest that the path ahead would differ considerably if the UK adopted the inward looking path in contrast to the far more desirable, outward looking scenario that we have called One Regime, Two Systems. Outside the EU, the UK can no longer look to blame Brussels and Europe for any economic problems. The UK would need to realize its potential standing on its own two feet and seeking to position itself well in a growing global economy. London, as an open, dynamic capital city, would have much to gain in this scenario. Overall, if the UK can take a lead role in reforming the EU, or if it pursues an open and business friendly approach outside the EU, then it can succeed. It is a win-win situation.
What screams out from the likes of Lyons, therefore, is the arrogance. He with Mr Johnson, his master, is intellectually idle. They are complacent, in that they expect their substandard work to be accepted without demurral, but above all they are arrogant. They believe they can set the terms of the debate without even taking the trouble to learn the subject, not in the least attempting to show respect to their audiences by arguing their cases honestly and thoroughly. We deserve better than the low grade rubbish they are offering, but they feel it is quite good enough for the lowly plebs - criticism from whom they will ignore.

The believe that, despite their shallow, narrow perspective and their ignorance of the wider debate, they have the god-given right to decide our futures. Implicitly, they expect us to trust them to handle our most vital affairs, without them even taking the trouble to offer credible explanations of the options open to us .

In time, through diligent, patient work, we will show these people to be the charlatans that they are – and reciprocate the contempt they show us, in giving us shoddy, poorly researched and valueless arguments. But at least the likes of Lyons have done us one small service. They have shown us with absolute clarity that the establishment is not the place to look for a workable EU exit plan.

But then, I suspect, we knew that already.

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