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Brexodus vs Brexit

The benefits of a “Brexodus” easily outweigh the risks of being forced to take whatever deal the EU chooses to force upon Britain

February 16

14:57
2018

London , United Kingdom of Great Britain & Northern Ireland - 16 Feb 2018 - Linda Kalasova

Openness is the propellant of great civilisations. Greece and Rome could only grow as they did upon the openness of seaborne trading opportunities and interchange of peoples, uniquely enabled by the Mediterranean. From the Middle Ages onwards, European vitality fed off the open exchange of technologies, goods and ideas flowing freely across contiguous borders.

The immigrant-unleashed dynamism of the United States is tribute to the same phenomenon. Similarly, open societies, economies and cultures – above all, those embedded in networks of growing trade and exchange – will best exploit the opportunities of the decades ahead.

This openness – to trade, immigrants, the flow of ideas, new technologies – is the essence of Britishness. Britain is formed from the inflow of many peoples and cultures – Roman, Danish, Norwegian, Norman, Celt, Huguenot and, more recently, Indian, Pakistani and Caribbean.

The Industrial Revolution was triggered in Britain first, explain today’s historians, because of its unique openness to the best of European ideas. Empire, driven by this melting pot people, was not just about the sometimes-cruel drive for booty and land: it was driven by the appetite for trade and then allowing conquered peoples to feed their culture into the constantly mutating notion of Britishness. Trade, migration and openness were – and are – a crucial part of this open alchemy.

The public call for Brexit was primarily driven by concerns over unfettered immigration; in particular, EU migrants; however, it is painfully clear that immigration was simply the scapegoat. The premise that EU migrants were crowding out native Britons out of the job market was built on false premises. The reality is that an increased number of migrants in the labour force can actually increase employment opportunities, which in turn leads to a greater demand for goods and services resulting in the creation of additional jobs.

It is part of the nature of scapegoating, as the late French theorist of mythology René Girard argued, that the target is not chosen because it is in any way responsible for society’s woes. If the target does happen to be at all responsible, that is an accident. The scapegoat is instead chosen because it is easy to victimise without fear of retaliation.

The name “scapegoat” comes from the Book of Leviticus. In the story it tells, all the sins of Israel are put on the head of a goat, which is then ritualistically driven out. Needless to say, the goat is not really guilty of the sins. It is ironic that the Jews of Europe were also singled out during World War II as scapegoats for the ills of the German economy.

The use of immigration in the Brexit debate was simply to polarise the community’s aggressive impulses which at that time were directed at the Bankers and politicians and redirect them toward victims that are always incapable of propagating further violence.

Yes it is true that the United Kingdom has lost its identity and is unrecognizable from the Britain of the 70s; yes it’s true that immigrants from former Eastern European countries as well as Italy, Greece and Spain have taken over local jobs; but the backlash against the EU, as well as the call for Brexit is not simply about immigration.

Brexit is about the loss of British identity; it is about EU corruption, unrelenting regulations that serve no purpose than profiting large mulkti-nationals. It is about the destruction of the British economy by bankers and hedge funds, who dramatically altered the high street, oversaw the closure of thousands of factories, drove prices of homes and utilities through the roof, and ripped off millions of Britons with lies, deceit and fraud. Where was the European Union when this was happening?

It is therefore no wonder that the UK has been accused of presiding over “a shambles” in the Brexit negotiations. It has been eighteen month since the referendum and it is clear that nothing has really been agreed. The latest response from Theresa May has been “We’re leaving the European Union, we’re leaving the single market and the customs union, but we will do what is right in the interests of the whole of the United Kingdom. And nothing is agreed until everything is agreed.”

This is why Calls are growing amongst those who called for the UK to exit the European Union to walk away from the deadlocked Brexit talks and prepare for the consequences of leaving Europe without a diplomatic agreement in place.

From grounded airlines to soaring unemployment and empty shops, the implications could be dramatic; however given how the negotiations are being undertaken, there is no doubt that the  benefits of a “Brexodus” easily outweigh the risks of being forced to take whatever deal the EU chooses to force upon Britain; and the figures re staggering.

Across the continent, pressure is mounting on the EU to sign a free-trade agreement with Britain after a report revealed that a “no deal” scenario could cost the bloc more than £500billion.

The shock figure emerged as Brussels looked set to cave in on a key demand to move a financial body out of the City of London and the head of Deutsche Bank was forced to admit a threatened “Brexodus” from the capital had been exaggerated.

The pro-Brexit Economists for Free Trade group forecast that Britain will gain £651billion from walking away from talks, leaving the EU with a £507billion bill.

Sir Patrick Minford, an economic adviser to the Treasury under Margaret Thatcher, used a classic trade model to predict that GDP will spike by nine per cent, amounting to a one-off gain of £180billion, if the UK leaves on March 29, 2019, without a deal.

He predicts that the UK would make an additional £433billion in tariffs imposed on EU producers if it operated under World Trade Organisation rules, because it imports more than it exports. That, plus the £38billion it would save by not paying for the two-year transition period, adds up to a total of £651billion.

The cost to the EU would be the loss of the £38billion “divorce” payment, plus £433billion in tariffs, plus its balance of trade surplus with the UK estimated to be worth around £36billion – a total of £507billion.

Professor Minford said: “It could not be more open and shut who least wants a breakdown of negotiations. “For the UK a breakdown would be a short-term nuisance but a substantial economic gain. For the EU it is both a short-term nuisance and a substantial economic loss.”

The scale of the challenge partially explains Treasury reticence to spend money preparing for this eventuality.

But Brexiters fears that unless Britain shows it is ready for a no-deal outcome, it will inevitably be forced to accept the worst deal instead. This might mean buying land near cross-channel ports that can be used to hold lorries awaiting customs clearance and investing in new IT solutions. But as sceptics have pointed out, even the most streamlined customs process is useless if it is met with indifference or even outright hostility from disgruntled trade partners on the other side of the border.

Unburdened by EU red tape, the UK can easily change its economic model by taking a more economically liberal, free market approach. The UK could slash taxes and introduce greater labour market flexibility. Britain could sign deep and comprehensive Free Trade Agreements with the United States, China, India, and other major economies. In short, far from heading for the cliff edge, Britain’s economy can thrive outside the EU.

The reality is that the supposed benefits of the Single Market are largely illusory. The growth of exports, of both goods and services, to the EU of numerous non-member countries over the 23 years of the Single Market has exceeded that of the UK, and argues that both the advantages of membership and the disadvantages of non-membership have been greatly exaggerated.

Agriculture

Can you remember the last time the minister for agriculture initiated a debate about agricultural policy in Britain? If so, you’re probably quite old, because since joining what was then the European Economic Community in 1973, a British debate on agriculture has been pointless. Agricultural policy has been not been made in Westminster, but in Brussels.

In fact, describing agricultural policy as ‘made’ in Brussels is misleading, because ever since the Common Agricultural Policy (CAP) was introduced by Brussels in 1962, agricultural policy has been broadly fixed. From time to time it has been revised, but the fundamentals have stayed the same. For over 50 years agricultural policy within the EEC/EU has been administered, rather than made. It has not been subjected to any meaningful political debate.

Under the EU, agriculture has become an issue for technocrats and lobbyists. Technocrats are people who think within a given framework, without challenging it. This includes economists who fine-tune a policy, lawyers who fit it into a legal framework and administrators who oversee it.

Lobbyists are the people who want to preserve a given framework while making it favourable to particular interests. With a policy such as the CAP, which is insulated from any meaningful oversight by ordinary people, technocrats and lobbyists can shape it without challenging it.

Forty-five years of agricultural policy, shaped by technocrats and lobbyists, has given Britain a subsidy system whereby the Newmarket farm of Khalid Abdullah al Saud, billionaire owner of the legendary horse Frankel, receives subsidies of £400,000 a year, and where Lord Iveagh, who lives on the 22,000-acre Elveden Estate in Suffolk, has received over £900,000 of public money. Each year, agriculture in Britain receives £3 billion of direct public subsidy and a generous indirect public subsidy in the form of exemptions on rates, ‘red diesel’ and inheritance tax.

But is this right? Is this money well spent? More generally, is agricultural land, which accounts for 69 per cent of Britain’s land area, used appropriately? Could the UK produce more of the food it eats (40 per cent is currently imported)? Could productivity be increased? Could more be exported to markets outside the EU?

In 2016 the value of imports was greater than the value of exports in each of the broad categories of food, feed and drink except ‘Beverages’ which had a trade surplus of £1.35bn, largely due to exports of Scotch Whisky

The total value of food and drink exports increased in 20166 to £20.1 billion, £0.9 billion more than the previous peak of £19.6 billion in 2011.

Fruit and vegetables had the greatest value increase at £1 billion (11%). Exports of dairy products and birds eggs increased by £530 million (24%) and exports of fish and fish preparations increased by £655 million (27%). Oilseeds, oils and fats had the greatest reduction in value at £194 million (12%).

The trade deficit in food, feed and drink increased in 2016 to £22.2 billion, up from £20.9 billion in 2015. It is equal to the previous largest deficit, in 2013, measured in 2016 prices.

Manufacturing

In the past 30 years, the UK's manufacturing sector has shrunk by two-thirds, the greatest de-industrialisation of any major nation. It was done in the name of economic modernisation – but what has replaced it?

Tony Blair was behind the argument for moving from industry to services with a huge emphasis on the now bankrupt and destructive banking sector, which crashed the British economy in 2008. The architects of New Labour were convinced that the future lay in what they called the "knowledge economy". Mandelson declared Silicon Valley his "inspiration"; Brown swore he would make Britain e-commerce capital of the world within three years.

Again, the theme was simple: most of what could be manufactured could be done so more cheaply elsewhere. The future lay in coming up with the ideas, the software, and most of all, the brands. Once the British had sold cars and ships to the rest of the world; now they could flog culture and tourism and Lara Croft.

Whilst it may not be fair to blame all this decline on membership of the EU, as there are other factors, it nonetheless shows categorically that joining the EU and helping create the so called single market has not helped us grow and has not saved many of our industries from decline.

The EU has prevented UK subsidy of industry under its state aids rules, but has often provided subsidised loans and grants to businesses to set up elsewhere in the EU. The UK has seen a spate of factory closures balanced by new and expanded facilities in poorer EU countries. The UK lost van production to Turkey, car capacity to Slovakia, chocolate to Poland, domestic appliances to the Netherlands and the Czech Republic and metal containers to Poland amongst others in recent years. In various cases there was an EU grant or loan involved in the new capacity.

There are also crucial issues to understand about how the asymmetric single market did damage to UK industry. When the UK joined the EEC, now the EU, in 1973, more barriers to trade had been pulled down in manufacturing than in services.

EU rules were often such that UK industry was badly damaged by the shock of joining and the continued shock of staying in as the rules increased and tightened.

When the UK joined the EU it had a 45 million tons a year steel industry. Today it is battling to save an 11 million tons industry. When the UK joined the EU it had a 400,000 tons a year aluminum industry. Today it have just 43,000 tons of capacity left. When the UK joined the EU it had 20 million tons of cement capacity. Today it has 12 million tons. Just before it joined the EEC in 1971 we had a 1 million tons a year fishing industry. Today it has 600,000 tons.

Coal & Steel - Both in terminal decline - a direct result of massive subsidies to companies in other EU states. Subsidies are illegal under EU law. Other countries ignore the law while the UK rigorously enforces it. Under Single Market rules subsidised EU coal & steel floods our markets causing widespread job losses. Now remaining British coal companies would gladly give their coal away for the £3.5 billion subsidy paid to German coal! Money from the EU was actually used for redundancy payments, paving the way for the destruction of jobs within these industries.

Textiles - To protect 5000 French jobs President Chirac pushed the EU to impose heavy import duties on unfinished imported cotton. Now UK and EU Textiles firms can't compete with finished cotton imports, threatening 2,500,000 jobs in the EU! Several UK factories have already closed. The tariff was removed because of the damage it was doing but France demanded its re-imposition. The EU refused - But Commission President Jacques Santer (a Frenchman - need it be said?) totally ignored the EU decision and re-imposed the tariff!!

Meat - New EU rules (viciously enforced by UK officials) forced half of all abattoirs to close. Large abattoirs were given EU grants in the 1980's but small abattoirs received no help to comply with the new laws. One in five abattoir owners now face prosecution for breaking one or more of thousands of new criminal offences.

Fishing - Mostly small businesses - now mostly on the dole! Facing massive fines for minor "criminal offences" under the EU Common Fisheries Policy; unable to pay for a vast array of new rules; helpless to prevent fish depletion (from what used to be UK waters) by other far less stringently policed EU fishing states. This UK Industry is at its last gasp.

Foreign Policy

It is hard to call to mind a major foreign policy matter on which the UK has had a decisive influence since joining the EU. Britain has historically been the strong and stable democracy in Europe on which others – both the Europeans and the US – could depend.

In the first world war, in the second, in the cold war and in building a liberal, free-trading and open Europe, the UK has played a central role. The UK took pride, as Douglas Hurd once put it, in punching above our weight. Now the UK has taken to punching each other in a polarised and uncertain country. Italy appears more politically stable, and France far more internationally relevant.

The reality is that no one care what Britain thinks, even in those parts of the world where it had a historical role. Since the Second World War, its foreign policy has been built on two pillars: Europe and the transatlantic relationship. Both are now broken, one self-inflicted and the other partly by circumstance. The UK is no longer able to build a coalition in Brussels behind its own foreign policy objectives.

Still, British diplomats are keenly aware that no coherent policy toward Russia is feasible without pan-European cooperation, and there is no British policy toward Belarus or the Western Balkans that does not accept the EU’s centrality.

Brexit is both a distraction from and a weakening of EU foreign policy. The UK had already half opted out of many key current issues, notably in connection with the refugee and migration challenges. But the political and diplomatic time that Brexit will consume—across a large range of issues—is going to be substantial.

It’s also in Britain’s interest to protect coordination among all European governments on the imposition and operation of sanctions regimes, if only because this bolsters London’s claim to remain Europe’s unchallenged financial center. Besides, Britain remains a key NATO actor, so it can hardly take its eye off European security issues.

The U.K. has an inventory of strategic tools few countries possess, including a globally mobile and experienced military force and nuclear power with second-strike deterrent.

As a cornerstone of NATO and the G7 and one of the five permanent seats on the U.N. Security Council, Britain has arguably exercised disproportionate influence on both shores of the Atlantic.

The objective elements of British power are unchanged. These include formal membership of international organisations such as the UN, the G7 and NATO, intelligence sharing arrangements (such as membership of the “five eyes” group), the Commonwealth and a broader network of strong alliances across the world. The UK has a world class diplomatic and security services that is truly global whose roots lie in the very foundations of the modern states.

Its special relationship with the Arab world has all but diminished since the UK joined the United States in the folly of invasions. The UK played a part in the destruction of two major Arab powers and has yet to make amends. The UK can use its post Brexit status to work alongside Arab nations including Iraq and Libya, helping them rebuild their country in exchange for oil security. The UK is awash with wasted talent in manufacturing, industry and construction, which can all be put to good use. By creating a fair and balanced economic relationship with these war-torn countries, the UK’s clout in the region will be restored and will far exceed trade with the continent.

The UK should aim to create a new post-Brexit ‘special relationship’ between the UK and the EU on foreign and security policy, allowing joint initiatives with the EU and action on issues of common concern. In order to help fill the gap in diplomatic representation resulting from Brexit, the UK will need to invest more in bilateral, and cross-Whitehall, diplomatic representation in other European capitals.

The temptation to use the UK’s ‘security surplus’ – its role as the leading West European military and intelligence power – as a bargaining chip should be resisted. The UK’s contributions to European security can, however, help to remind other EU states of the strong interests and values that they will continue to have in common.

The UK’s role as a valued global partner to the US is more likely to survive Brexit relatively unscathed than will its role as a diplomatic ‘bridge’ between the US and Europe. The prospect of diplomatic isolation in Europe could tempt the government to believe that it would have no alternative to standing ‘shoulder to shoulder’ with the US in a future military conflict.

However, Europe faces five major foreign policy challenges: an erratic U.S. President Donald Trump; an expansionist Russian President Vladimir Putin; a Western Balkans rejecting the settlement reached at the end of the Yugoslav Wars; a sultanesque Turkish President Recep Tayyip Erdoğan lashing out at Greece, the Netherlands, and Bulgaria; and three destroyed states in Iraq and Libya and a semidestroyed one in Syria, all exporting refugees (and a few jihadists) to destabilize fearful communities in Europe.

Conclusion

The United Kingdom should walk away from the European Union with a hard Brexit. It should honor outstanding commitments to projects that it agreed on but refuse to pay a divorce bill. It should have the courage to walk away from an institution that has sapped everything British about the United Kingdom and replaced it with a hybrid nation that lacks direction or identity.

The UK should refocus its economy away from the financial services sector, which has systematically destroyed everything productive in the United Kingdom. It should refocus its foreign policy to fixing the damage caused by its close alignment with the United States and place emphasis as the bridge between the rising Asian powers including Russia.

There is no doubt that the benefits of a “Brexodus” easily outweigh the risks of being forced to take whatever deal the EU chooses to force upon Britain; and the figures are staggering. It’s time for Britain to be Great again.