Richard North, 02/06/2016  

The "leave" campaign must choose, writes Ambrose Evans-Pritchard. It cannot safeguard access to the EU single market and offer a plausible arrangement for the British economy, unless it capitulates on the free movement of EU citizens.

One or other must give. If Brexiteers wish to win over the cautious middle of British politics, they must make a better case that our trade is safe. This means accepting the Norwegian option of the European Economic Area (EEA) - a "soft exit" - as a half-way house until the new order is established.

It means accepting the four freedoms of goods, services, capital, and labour that go with the EU single market. It means swallowing EU rules, and much of the EU Acquis, and it means paying into the EU budget.

Leavers know that if they gave in to these terms, they would drive away all those other voters who want to slam the door on immigration. So the campaign has been evasive, hoping to muddle through until 23 June with the broadest possible church.

Some Brexiteers have tried to square the circle with blue sky romanticism on trade, or sweeping talk of a "Hong Kong" model, or by suggesting we fall back to the default settings of the World Trade Organisation.

The Treasury claimed that a "vote to leave would cause an immediate and profound economic shock". The hit to GDP ranges from 3.6 to 6 percent, with a loss of 800,000 jobs in a "severe" scenario, comparable in scale to the collapse of Western banking system in 2008.

What is striking about this ghoulish document is that it did not model the Norwegian-EEA outcome, even though this "off-the-shelf" option is the most likely counter-factual. The reason is obvious. Had the Treasury done so it could not have come up with such alarming figures.

However, says AEP, there have been two excellent reports on the EEA option, one by the Adam Smith Institute and another entitled Flexcit by Richard North from the EU Referendum blog. Used as an interim option, "the economic risks of leaving would thus be neutralised – it would be solely a disengagement from political integration. All the business scare stories about being cut off from the single market would fade away".

The elegance of the EEA option is that Britain would retain access to the EU customs union while being able to forge free trade deals with any other country over time. There would be no need for a desperate rush to both reach a modus Vivendi with the EU and to renew all the EU's 80 bilateral deals with other countries and regional blocs before the two-year guillotine fell under Article 50, the EU secession clause.

Sadly though, just at a crucial moment, Vote Leave has turned away from freedom of movement, to adopt the wholly inappropriate Australian points system as its proposal for an immigration policy.

However, while this system cannot in any way guarantee a reduction in immigration, the EEA option has within the agreement the facility for a unilateral "emergency brake" which allows Efta states to stop immigration from EU Member States.

The option that Vote Leave is rejecting is the very thing that could afford us relief, while keeping us in the Single Market – potentially a game changer that could win us the referendum. But the right choice can still be made. Vote Leave is not the campaign, and does not represent us all.

And if the choice is between winning the referendum while keeping freedom of movement, and losing it because we argue for curtailing freedom of movement, it is pretty clear what that choice must be.

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