The economic illiteracy and dangers of Brexit
Professor Guy Rowlands, University of St Andrews
I am one of the Historians for Britain but I cannot support Brexit. For all that I still believe that the UK is different from most of the rest of the EU, and the UK needs to push for major reform of the EU, it would be a real mistake for the UKto withdraw. After much reading of material from Vote Leave and its supporters, in the end the Brexit camp has notpersuaded me that the UK should embrace a future outside the EU.
Fundamentally, the Vote Leave case suffers from several massive flaws. First, it is dewy-eyed about too many aspects of the UK’s past;and it is naïve in its belief in a utopian future based upon global trade in which the rest of the EU and North America would (we are told) rapidly agree to the UK’s demands for a new trading framework. Speaking as a French historian, nothing I have seen about French governments indicates to me that they would help us to maintain the primacy of the City of London in Europe. Brexit would, on the contrary, give Paris a golden opportunity to regain Eurozone business from London. Even were the UK to accept a Norway-style arrangement within the EEA, we would lose control over EU financial markets and regulations, and would be forced to accept a relative downgrading of the City. This would be detrimental to the UK’s balance of payments and to inward investment from the rest of the world.
Second, Brexit is geopolitically dangerous.The EU technically might not have kept the peace in the past 60 years but it has done a great deal to foster amicable relations between erstwhile enemies based, not least, upon promoting interlocking economies and populations. Whatever tensions there may currently be between member states over frontiers, an EU framework encourages peaceful resolution of disputes. This is not only the case in eastern Europe and the Balkans; stability in Ireland is also secured through cross-border cooperation, commerce and population flows between Northern Ireland and the Republic, devoid of serious restrictions. Brexit would risk an outbreak of destabilising communal tensions, but Remaining would promote further Irish harmony.
Third, Brexit is economically illiterate. For decades the UK has produced too few goods as a proportion of GDP to be confident of success by going it alone, outside a major trading bloc, in a free-trading world. The most likely source of long-term growth is developing our export of services, where we can excel – but for success we need a large, open market in the shape of the EU. However, Brexit would not only lead to a curtailing of Britain’s service-export opportunities, which was conceded as early as February by David Davis MP, a leading Leave campaigner. Without the UK in the EU there would also be much less likelihood of greater liberalisation of cross-border trade in services like law, insurance, finance and other professional fields within the EU. At a stroke, British withdrawal from the EU would torpedo the UK’s best chance of achieving growth in jobs and greater prosperity. The long-term knock-on effects of stunted opportunities for our service industries, and the knock-on effects of the short-term shock following a vote for Leave, would depress government revenues and set back efforts to return the UK government to financial stability by many years. Budget deficits and ever-mounting debt increase, accompanied by tax rises or unprecedented degeneration of the public services, would be the pattern far into the future.
We should be fighting for democratisation and restoring power to national and regional European governments, and we should be embracing a degree of asymmetry in the EU. We should not be walking away from the EU when a more flexible, diverse Europe is already taking shape before our eyes, something the UK can promote and champion.This historian for Britainis therefore a historian for a better European Union. That is why I shall be out campaigning for Remain up here in Scotland in the final weeks before the referendum.