EU Referendum


Brexit: choose your fantasies


30/05/2018




The pharmaceutical giant, GlaxoSmithKline (GSK), has announced it is reviewing its operations at its Barnard Castle site in County Durham. The local newspaper reports that up to 200 jobs are at risk.

The news has come as a surprise as, only last July, GSK announced it was investing £39 million into the site to expand the production of drugs to treat HIV and asthma. And, although no reason has been given for the sudden turnaround, Brexit is a front-runner in the speculation stakes.

This is by no means the first time that job losses (actual or potential) have been associated with Brexit but, if we get the "no deal" Brexit which some seem to want, there will be a torrent of news of this nature, with unemployment leaping by hundreds of thousands.

In fact, if the Treasury forecast of an eight percent loss in GDP from a "no deal" Brexit is anywhere near correct, the relationship between GDP and employment suggests that job losses might top a million. But, assuming a chaotic fall-out, total losses could run into many millions out of the 32 million workforce.

Some experts already argue that Brexit is already an economic disaster, with the economy having failed to bounce back after the "beast from the east". But if the pundits can't offer certainty either way, it is also true to say that, given the political uncertainty, no one can predict a happy outcome from the path we are currently pursuing.

It ill-behoves the likes of well-padded commenters such as Daniel Hannan with his fanciful nostrums about trade liberalisation, but if there is one thing the Brexit referendum has done is open the floodgates to any number of snake-oil salesmen peddling their favoured remedies.

Of the many things I'm sick of hearing about are the perpetual wibbling about how the city states of Hong Kong and Singapore offer an example for us all, free-trade nirvanas which, if followed, will lead us to an eternal economic paradise.

It was good to see Hannan taken down in his own comments, with just one commenter making a more than adequate case against this illusion. Hong Kong and Singapore, he observes, are not viable economic development models. Hong Kong is a unique historical anomaly; it's not an independent nation, its eminent position is the result of Chinese State containment of a colonial power.

Singapore is an authoritarian single party state, in effect, that exercises hundred percent state ownership of land and eighty percent of property. Both Hong Kong and Singapore are served by armies of immigrant labour.

That last observation alone should give cause for warning as the studies have been done which show that there is a darker side to the Singapore "economic miracle", with the bulk of the population paying a price that none of us here would be prepared to pay.

However, it is also the case that Singapore has a higher per capita number of billionaires than any other country in the world. To be mega-rich in that land is an exquisite experience denied to the vast bulk of the people living there, suffering a population density of well over 7,000 per square kilometre.

It is always instructive, therefore, to have the well-heeled defining for us certain economic models, the consequences of which their wealth enables them to avoid.

As we ourselves have observed before, though, people such as Hannan are entirely immune to criticisms. Mostly, they insulate themselves from them so that they scarcely realise they exist – like the poverty that their policies would create. That allows them to trot out the same old nostrums, again and again, without having to change their messages.

That said, in the space of six years, Hannan's views seem to have undergone quite a radical transformation. In September 2012, he was stressing to his readers that "no one – no one – is suggesting that Britain should disengage from European trade". He went on to tell us that "withdrawal from the EU does not imply withdrawal from the European market". Indeed, he said, "under Article 50 of the Lisbon treaty, the EU is obligated to negotiate a commercial accord with any state that leaves".

Six years later, in the new version of the Hannan reality, he would have us merely "aim to have as deep and comprehensive a trade deal with the EU as possible". But, he says, if we can't get one, "we can secure most of the benefits simply by continuing to accept EU exports without restriction".

That's fine and dandy, and what we would almost certainly have to do – just to keep the population fed - notwithstanding that we would have to apply the same terms to the rest of the world in order to stay WTO compliant.

It is quite staggering, however, how casually Hannan writes off EU exports, valued at £276 billion in 2017 – representing a 14 percent hit to the GDP if we lost the lot of it – plus the additional losses arising from the massive disruption to our economy.

Unfortunately, Hannan is not alone with his fantasies. Another one who has created his own form of reality is my former friend and colleague, Owen Paterson, who is now dismissing the Irish Border question as "a hugely exaggerated non-problem". The border, he says. is not a tax control point, adding: "Nothing happens at the border itself, everything happens at the point of shipment and the point of landing".

You have to give Paterson one thing. In a remarkably few, deft sentences, he has totally demolished the entire concept of the single market which the EU holds so dear. The essence of that is an area of free circulation of goods, protected by an external border to which entry is prohibited to goods from third countries except under the most rigorous of conditions – including extensive border controls.

In a few words, therefore, Paterson has abolished the whole gamut of EU controls and would have us ship goods freely across the border, a freedom afforded to no other third country on earth, and a concession which the EU will apparently grant us simply because we want it this way and can't bear to accept the consequences of our leaving the EU.

It does not matter to the likes of Paterson that the EU has consistently rejected his "non-solution" to what it considers is a very real problem. The fantasy world of the former Northern Ireland secretary must prevail. The Irish border it is a non-problem, purely because he stands up in front of a most audience and says so.

Creating personal fantasy worlds, however, does not seem confined merely to the rabid end of the Brexiteer spectrum. The Guardian, this time with the help of its friends in the Local Government Association. is quite capable of creating its own.

Raising the alarm on food safety when we leave, it says that regular alerts are sent by the EU for things such as pesticides residue, mercury, salmonella and E coli "in order to avoid a repeat of controversies such as the horsemeat scandal".

The point is fair enough in general, as we do rely on RASFF - Food and Feed Safety Alerts from the EU. But to suggest that this system would prevent another horsemeat scandal - when it was failures in the EU food safety regulatory system which allowed the first episode – is something of a stretch.

It is also the case that we need food safety data from a much wider area than just the EU (or EEA) and it would be much more preferable to have the World Health Organisation (WHO) coordinating intelligence – something we could promote once we have left the EU.

Rejecting that reality, the Guardian has its own. Brexit, therefore, does not look as if it is going to open us up to the real world. Merely, it provides the opportunity for the opposing sides to chose their own disparate fantasies, to which the public are invited to subscribe.

Meanwhile, of course, the clock ticks away the time to 29 March.