Professor Steve Peers

The pro-Brexit group “Change Britain” recently released a statement claiming significant financial benefits for the UK following a “hard Brexit,” where the UK leaves both the EU’s single market and customs union. This claim was widely circulated in the media despite being fundamentally flawed.

While the report attempts to offer a thorough analysis, it highlights the poor quality of the overall Brexit debate. The report’s claim of a £24 billion benefit originates from three key areas: ending contributions to the EU budget, potential savings from reduced regulation, and the anticipated benefits of new trade agreements. However, a closer look reveals significant issues with each of these points.

EU budget contributions

The report acknowledges that the UK’s actual savings from leaving the EU budget would be between £10-14 billion, a figure significantly lower than the £19 billion initially claimed during the Brexit campaign. This admission indirectly confirms that the previous figures used to support Brexit were misleading. The UK’s budget rebate is never directly sent to the EU, and the UK government has complete control over its use. This initial inaccuracy casts doubt on the report’s credibility from the outset.

Cutting back ‘red tape’

The report proposes potential savings of several billion pounds by eliminating certain EU laws, encompassing areas like environmental protection, animal welfare, data security, and consumer rights. However, these estimates are misleading for several reasons. Firstly, they conflate public finances with business expenses, which is economically flawed. Secondly, they disregard the non-economic value of these regulations, such as the public’s preference for cleaner air, data privacy, and ethical animal treatment, which have indirect economic implications.

Additionally, the report ignores the fact that some EU laws, like data protection, are crucial for accessing the EU market. Removing these laws could negatively impact UK businesses. Finally, savings for businesses, such as reduced air passenger compensation, might not benefit the overall economy, as they could lead to a decrease in consumer spending.

Future trade deals

The report assumes the UK can negotiate more favorable trade agreements independently, leading to increased exports. However, this assumption is based on flawed methodology, using the EU’s trade data and applying a fixed percentage to the UK. Trade dynamics are far more complex, and this simplistic approach is inaccurate.

The report cites trade deals with countries like South Korea as potential wins, even though such agreements already exist within the EU framework. It also fails to account for the potential increase in imports from these countries, which would offset any export gains.

Negotiating and implementing trade agreements is a complex process, and the report overlooks the potential difficulties and delays the UK might face. Moreover, the report fails to address the potential economic downsides of leaving the single market, such as the predicted 4% GDP reduction, which further undermines its credibility.

Costs of leaving

The report is noticeably silent on the potential costs associated with leaving the single market and customs union. For instance, it does not account for the expenses related to hiring additional customs officers or border control staff. In the report’s overly optimistic outlook, these practical considerations seem to disappear.

Conclusion

The “Change Britain” report, with its flawed analysis and disregard for crucial economic factors, reveals the worrying lack of depth in the post-referendum Brexit discussion. The report’s lack of serious engagement with opposing viewpoints and reliance on misleading figures highlight a concerning trend in the debate.

A recent exchange where a prominent Leave campaigner, Michael Gove, refused to engage in a substantive discussion about the report’s flaws further illustrates this problem. This avoidance of rigorous debate and reliance on blind faith rather than evidence-based arguments is a disservice to the gravity of the Brexit issue.

Six months after the referendum, the UK deserves a more nuanced and honest conversation about Brexit’s implications. This report, unfortunately, falls short of that standard.

Barnard & Peers: chapter 27

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