4 minute read
With inflation soaring and the cost of living in crisis, the Chancellor’s recent £15billion intervention was welcome – but more radical thinking is needed if we are to boost our economy through these waters. turbulent times and win another five years of Conservative government.
Given the gargantuan economic challenges ahead, we must dare to assess how Brexit is faring, the biggest geopolitical decision in a generation. The B-word is so loaded that many may prefer to avoid the topic. But that would be a dereliction of duty.
If an army general, in the midst of a battle, is mature enough to refine his strategy to ensure mission success, then the government should do the same. Let us have the courage to dare to make operational changes as we seek to leverage greater success.
Let’s not forget that Winston Churchill and Margaret Thatcher endorsed this model
Here is my attempt at how we might adjust the bar to better maximize our Brexit-related fortunes.
The political distance with Brussels has been reached. This is not to be questioned. However, from an economic point of view, there is a lot of room for improvement. The OBR calculates, in its current form, that Brexit reduces our GDP by 4%. This compares to around 1.5% caused by Covid.
In other words: our exports to Europe have decreased by 20 billion pounds. From fishermen who can no longer sell their Scottish salmon, to farmers plagued by unchecked imports, to cheesemakers in Cheshire who face £180 health certificates, even to the city who can no longer sell financial services to the Europe, sector after sector is strangled by the bureaucracy from which we were supposed to escape.
Total business investment across the UK economy has stagnated after 2016 and is down 10% from 2019. EU workers are turning their backs on the UK, leaving vital gaps in our workforce. Low investment means lower growth. No wonder the IMF predicts growth for 2023 equal to half the average for advanced economies.
And then there is the unresolved question of the Irish border. Current plans to scrap the Northern Ireland Protocol could spark a trade war with the EU (causing further economic damage) and alienate the United States, our closest security ally.
As a recent YouGov poll indicates, this is not the Brexit most people imagined, with the majority believing that Brexit went badly. There is a desire to make improvements – not U-turns but course corrections.
In a nutshell, all these challenges would disappear if we dared to advance our Brexit model by joining the EU single market (the Norwegian model). Leaving this aspect of the EU was not on the ballot, nor demanded by the Prime Minister or Nigel Farage in the 2016 referendum. and that’s exactly what I’m suggesting.
Any model will have advantages and disadvantages. The single market means the free movement of goods, services, capital and people. It would wipe out £7billion worth of paperwork and checks, and boost our economy by restoring free trade to sectors requiring change.
This would require the acceptance of certain EU regulations. However, UK industry, from food to pharmaceuticals, chemicals to engine manufacturing, says it would be better to work with one common standard than to have to follow two: both a UK regulatory system and that of the EU for most exports.
There are still understandable reservations about the free movement of people with regard to benefit claims that would have to be met, but these are not insurmountable. Let’s not forget that Winston Churchill and Margaret Thatcher endorsed this model, believing that the potential economic advantages outweighed the disadvantages.
If joining the single market (subject to conditions) has the effect of strengthening our economy, alleviating the cost of living crisis, solving the Irish problem at once and promoting our European credentials as we take more and more ahead in Ukraine, wouldn’t it be rude not to face this reality?
Tobias Ellwood is the Conservative MP for Bournemouth East.
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