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The EU Referendum 

A blog by John Forbes

It is now less than a month until the EU referendum. Those of you who follow me on Twitter or have spotted occasional comments in our newsletter will know already that I am strongly in favour of voting to Remain.  I thought, however, that I should set out my position more comprehensively.

 

The campaigns on both sides of the argument have been uninspiring and the television coverage has been long on interviews with people complaining that nobody is providing the facts. This is fundamentally the source of the problem. Predicting the future is difficult even if we remain members and nobody really knows what will happen in the event of an exit.  At extreme ends of the spectrum of analysis, here is a detailed economic forecast by PwC and here is something that appeared on twitter this week.

 

 

Although slightly tongue in cheek, the tweet sums up the challenge very well. The pro-Brexit campaign has entirely failed to come up with any clear idea of what a post exit UK would seek to achieve.  The only comprehensive pro-Brexit economic analysis that I have seen assumes that the UK would be economically competitive because we could abandon EU employment protection legislation, gender diversity rules and climate change commitments. This does not sound like progress. The pro-Brexit campaign is now concentrating on immigration as an issue. Aside from the fact that this ignores that we are reliant on immigration and that it brings significant economic benefits, this presumably means that we have ruled out the Switzerland and Norway model for our post-Brexit relationship with the EU. Both Switzerland and Norway are, for all practical purposes, part of the EU free movement of labour rules and have more immigrants entering from the EU than the UK does. A trade deal replicating theirs would require acceptance of EU free movement of labour. Assuming that it would be unacceptable in the event of a Brexit vote based on immigration being the key issue to backtrack on that particular aspect, then our trade agreement with the EU, if we get one at all, will be pretty close to the World Trade Organisation (WTO) Most Favoured Nation basis. It is important to note that this, and recent EU Free Trade Agreements, cover goods but not services. The UK is a major exporter of services to the EU, so this is an important point. Defautling to a WTO model will therefore be worse for us exporting to the EU than it is for the EU exporting to us. Negotiating a favourable trade agreement with the EU will be a challenge. Negotiating trade agreements with all the other countries where we currently rely on their trade agreements with the EU will be a herculean task. The UK has not had to negotiate a trade agreement since we joined the EU in 1973. In a delicious, ironic twist, we will need hire some bureaucrats from the EU if we want anyone with relevant experience to undertake the task.

 

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