Come off it, Jeremy!


Not Jeremy Corbyn, of course.  In this case it’s Jeremy Warner, economic correspondent of the Daily Telegraph.

Now I have a huge respect for Jeremy Warner, because generally speaking he makes a great deal of sense, and I’ve learned a lot by reading his columns.  So I was particularly surprised and disappointed when he came up with a piece in the Sunday Telegraph of Sept 6th which could have come straight out of the “Yes to Europe” playbook.  Under the headline “Outers wrestle with economic case for Brexit” he agrees that there are powerful reasons to leave the EU, in terms of borders, laws, foreign relations – but goes on to add that “the economic case is much harder to make”.

The following paragraph particularly stuck in my throat:

“Neither (the case based on regulation or on budget contributions) is compelling, since part of the price of staying in the Single Market is certain to be that Britain continues to comply with these regulations, only with no say in them, and to contribute to the EU budget.  Alternatively, Britain could leave the Single Market, but that truly would be a leap in the dark.”

 Let’s leave aside, for the moment, the fact that we have precious little say in making regulations at the moment.  Tory MEP Kay Swinburne claims to have achieved wonders in modifying financial legislation for the City of London, but I have served on a number of parliamentary committees over 16 years, and my experience is that we rarely if ever make a substantial difference, and the British government rarely if ever succeeds in stopping legislation which it regards as damaging.

But Jeremy, why this obsession with the Single Market?  The Single Market is just an old-fashioned, protectionist Customs Union (on the 19th Century Bismarckian zollverein model), overlaid by massive and damaging regulation.  I wish that Jeremy would read William Dartmouth’s excellent book “Out of the EU into the World”, which sets out the case for leaving.

One stunning point that too few people understand is that the three largest sources of imports into the EU are China, America and Russia.  By definition, none of these countries is a member of the EU, and none currently has any preferential trade deal with the EU.  Are they obliged to follow EU regulations, or to subscribe to the Single Market to be allowed access?   Of course not. The idea that being outside the Single Market would cost exports or jobs is simply absurd.

At the same time, the EU already has, or is negotiating, free trade deals (FTAs) with dozens of countries around the world.  These countries do not have to obey EU rules (apart obviously from conforming to EU product specs on products exported to the EU), nor do they pay for the privilege of exporting to the EU.  And the second point that too few people realise (although surely Jeremy does) is that the UK (when we leave) will be the EU’s largest customer in the world, in both gross and net terms.  Bigger than the USA, or anyone else.  How on earth could the EU not have a free trade deal with the UK?  (Although even if we had no trade deal at all, the total duties payable on British imports to Europe at current levels would be only a fraction of our EU budget contributions).

Jeremy, where do you get the bizarre idea that we’d have to make contributions to the EU in order to trade with them?  We buy much more from them than they buy from us.  If they think they can charge us (say) €10 billion a year for access to their market, then we could charge them €15 billion a year for access to ours.  It makes no sense at all.  Jeremy, we have a substantial deficit on automotive trade with the continent.  Do you really think that those smart guys in Munich are going to accept the loss of their BMW exports to the UK?  And the same applies to other auto makers, and other industries.  This proposition that “We’d have to obey the regulations and pay for market access” is a read-across from Norway.  But the UK is not Norway.  The read-across makes no sense at all.  Do America, and China, and Russia, obey EU regulations and pay for market access?  They do not.

After Brexit, our trade with the EU will continue, but we shall be much better placed to make our own deals with fast-growing countries, in the Commonwealth and outside it.  How is it that little Switzerland, and even tiny Iceland, have free trade deals with China – and we don’t?  The Yes camp will argue that without the EU, we couldn’t get an FTA with the USA – we’d be too small, they say.  So please explain why the USA has a number of bilateral FTAs, all of which are with economies smaller than the UK?  If we hadn’t been in the EU, I believe we’d have a trade deal with the USA, on our terms not Brussels’ terms, decades ago.  They will argue that we are in a stronger position to negotiate trade deals as part of a large European bloc.  But in fact the reverse is true.  Before EU trade negotiators can even sit down at the table, they have already had to trade off Britain’s interests and priorities against those of twenty-seven other member-states.  Our vital interests can be lost in the horse-trading

Brexit is fundamentally about freedom.   Freedom from a mountain of stultifying regulation and bureaucracy.  Freedom from the regulatory and other costs of membership, widely estimated at around 10% of GDP.  Freedom to develop our own trade deals with the fast-growing areas of the world.  Freedom from the EU’s perverse and damaging energy policies.  Freedom to manage and profit from our fisheries..

Far from wrestling with the economic case, the fact is that economic and trade opportunities are the strongest arguments from Brexit.  We need to free our industries and free our trade from the EU’s straitjacket.  Bring it on.  The trade argument is a winner for the Out campaign.

I invited Jeremy Warner to respond to my blog post, and I am most grateful to him for doing so (though I don’t necessarily agree!):

“Thanks for asking me to reply to your blog, which makes some excellent points. However, I remain to be convinced. It admittedly seems to me quite unlikely that Brexit would be an economic disaster for Britain, though it may have very serious long term consequences for the City, at present the de factor financial centre for the whole of Europe. It is unlikely this position could be maintained in the event of Britain leaving the UK.

Never the less, for the rest of the economy, the effects may be quite marginal. Much depends on the terms of the divorce. As you say, Germany and the rest of Europe have a powerful vested interest in it being relatively amicable.

However, nor do I see much if any economic upside in leaving. The reason Britain’s trade performance with countries outside the EU is poor is not because the EU prevents us having free trade arrangements with them, but because we don’t produce the stuff they want to buy. Germany manages to trade very successfully with the outside world – much more successfully than us with many Commonwealth countries, as it happens – so it is hard to argue that the EU is in this regard an impediment to our trade with others. The fault lies more with the structure of the UK economy than the EU.

Most modern trade theory has at its heart the idea of “gravity”, or that countries are more likely to trade the closer they are to one another and the more similar they are economically. Admittedly, this may not have been the case when European countries still had empires, but times have changed; under developed nations in far away places can no longer be relied upon to take the mother ship’s goods and services simply because of old historical ties.

In any case, it is a matter of fact that trade is at its most intense within sovereign nations, where common laws, language and proximity support interaction. The idea of Europe’s “internal market” is to recreate this level of intensity at an international level. Unfortunately, cross border economic integration inevitably requires some ceding of national sovereignty. The UK Treasury estimates that the single market has boosted trade between EU member states by 38pc of GDP, though its impact on Britain is estimated to be a much smaller 7pc. None the less, this is a significant gain which would be jeopardised by Brexit.

As for the stultifying regulation, quite a lot of it seems to be home grown. In financial services for instance, the EU had nothing to do with ring fencing, which may yet cause HSBC to re-domicile, or the ridiculous senior managers’ regime, which makes executives down to quite junior levels legally responsible for mishaps even when they have no knowledge of the mischief. Growth in regulation is a modern day disease, which is prevalent almost everywhere. If it didn’t come from Europe, much of it would come from Westminster.

If there is no good economic case for wanting to leave, there may be other reasons for wanting to stay, even if Europe’s disastrous mishandling of the Eurozone crisis would test the loyalties of even the EU’s most fervent supporters, and I am certainly not one of them. My chief reasons for believing it makes sense to stay are in any case not economic, but  geo-political. The euro, which requires members to further integrate if it is to survive, already renders our position in Europe one of semi-detachment. Eventually, the eurozone will become the EU, which automatically means a separate relationship with the UK. Cameron is therefore right to try and negotiate one. What is more, Europe is in the midst of a very serious economic and political crisis. A Brexit would further destabilise things with unpredictable consequences for everyone, and to boot would almost certainly lead to the breakup of the United Kingdom, with Scotland voting for divorce from Westminster as a means of staying in the EU. These are not trivial matters. Leaving the EU may work out fine, but if we are to exit, let’s do it with our eyes open. There are considerable risks involved, while beyond regaining control of our borders, the benefits are far from obvious.”

Jeremy Warner.


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28 Responses to Come off it, Jeremy!

  1. ian wragg says:

    I have stopped reading the Telegraph because it has got increasingly left wing. I read the article by warner and came to a similar conclusion as you. i also read Ambrose Pritchard swooning over carbon capture and storage which in any large scale is pie in the sky. Any paper that gives a platform to Mary Riddle and Geoffrey Lean is not worth purchasing.
    As anyone told him there is more to life than the economic case” especially when it relies on massive immkigration to give the impression of growth.

    • Jeremy Warner says:

      Dear oh dear. My piece was about the economic case, plus some stuff about the geo-political risks of leaving. It is very much not in Britain’s economic interests to destabilise Europe, and I’m worried that this is what Brexit will do. As I say, there may be other reasons for wanting to leave – such as getting our country back – but I wasn’t addressing those. If you really think the Telegraph is left wing, then you’ve obviously gone mad or don’t read it properly. As on all newspapers, there are columnists who represent alternative views. If everyone said the same thing, it would make for a very boring read.

  2. Ex-expat Colin says:

    I’ve stopped the D. Telegraph about 6 months back and just skim it online. Reset their cookie after 20 views and start again, so no need to subscribe.The Obits are often good though.

    Russia and that lot – BRICS:

    As the upstairs Russians say…just talk/negotiate, no threat needed. And as Trump says there isn’t anybody available in the US to do effective talk etc. The West really!

  3. Ian Terry says:

    I long for the day when all these reporters actually get their arse into gear and start applying simple logic as a process to be used in their articles.

    The first starter for 10 is: Where we are and where we want to be or where we are and where we could be?

    It is not rocket science it has a name Force Field Analysis and a lot of these journalist could do well to practice it.

  4. lasancmt says:

    “Do America, and China, and Russia, obey EU regulations and pay for market access?”
    Yes they do Roger, trust me.

    You are not really telling me China can sell kiddie’s toys in Europe coated in lead paint, do you? Or the US can sell cars here without safety belts or catalysts, do you? Or Russia oil that has more sulfur than carbon?

    “They do not. “must be your most blatant anti EU propganda fib to date?

    • Ex-expat Colin says:

      So if any of us respond, you’ll come up with this (from your blog):

      “Your points about homogenisation and diversity are just too batty to deserve a reply. I will archive them under xenophobia and general dementia”.

      Because we are kippers?

    • Hugh Davis says:

      Unlike the UK, Russia, China and the US do not have to comply with the EU regulations on the 95% of their products that are not exported to the EU!

      • lasancmt says:

        and do you seriously think that the 95% products destined solely for the UK market do not need regulation? In other words if a UK SME makes kiddie toys solely for the UK market they can cover them in toxic lead paint, have little parts that easily break off and make babies choke? …. I guess that’s a ‘no!’ then?

        so also the 95% need regulating. Now look at the balance of competence review from your own government and their habit of ‘goldplating’ everything that coms out of the EU and blaming it on Bwussels. I guess you are starting to see that that was a rather silly comment?

        Let’s go back to one of the core reasons why the EU Common Market was created in the first place. After WWII the United Stated of America clearly emerged as the dominant industrial power and economic world trade power house. Economists studying the success of US companies growing so quickly from mom & pop stores into multimillion dollar corporations, noted that in the USA business start-ups immediately had access to a huge single market. Having a common currency, the absence of state borders and tariffs and a common language helped them grow rapidly. Having achieved economies of scale in their formidable domestic market, US companies then naturally became internationally competitive on price and productivity, even when faced with competition of often lower wage economies.

        While the language barrier will of course remain an issue in the EU, by creating a common Euro currency and a single common EU regulatory trade frame work for goods and services, the EU has copied the success factors that made the US the No. 1 global economy.And you can bet your sweet bottom dollar after #brexit Britain will keep complying to those rules, just no longer have a say in drawing them up. I can see those Whitehall mandarins rubbing their hands and its not over a bonfire of EU regulations.

        More ..

    • Jane Davies says:

      But those regulations would exist even if the UK was never a member of the EU. Could you see the UK letting in lead loaded cheap toys for British children to be poisoned by?

    • Roger Helmer says:

      You’re making the commonest error in the debate, Lasancmt. Of course if you want to export any product to another country, you must meet local regulations and specifications of that country (and also the consumer expectations in that country). If we in Britain want to export tractors to India, or fridges to the USA, we must conform to Indian tractor rules and American rules for fridges. That is simply a commonplace of international trade (in which I was engaged for several decades). It is quite different from being obliged to conform to another country’s employment regulations, environmental regulations, accounting rules and so on. I don’t know whether you’re making a genuine error out of ignorance, or whether you’re simply trying to muddy the water, but I think you owe me an apology for the word “fib”, please.

      • lasancmt says:

        I am not apologising for the use of the word fib, because what you are spreading is propaganda lies. You are suggesting Britain will save money, when you darned well know as others have pointed out that a lot of these EU regulations are “home grown” and gold plated by Whithehall if anything UU companies know that by manufacturing products to EU standards they are acceptable in the biggest and richest consumer market in the world right on the UK’s doorstep. Even further flung countries to poor to do their own testing will accept EU accredetation so UK businessess will continue to comply with EU rules after #brexit because in the main they are sensible rules and following them makes good business sense and for no other reason.

  5. DICK R says:

    There is some truth in the position Warner takes ,the political argument for getting out has been won thanks to the threat of even more enforced mass immigration , but what I find frustrating in any discussion concerning the EU is the mistaken belief that somehow the economic roof will fall in if we do.
    Until we can convince voters that this is not the case those who would wish to keep us trapped inside this corrupt stinking marxist dictatorship will always have the upper hand.

  6. Brin Jenkins says:

    With a Press following thew Guidelines of The National Union of Journalists is there any wonder why we are deliberately misled? Unless you are a Union Member you don’t work.

  7. Brin Jenkins says:

    Hungary’s Viktor Orban is worth googling, Breitbart News- has a good article ignored by the press in general

  8. John Poynton says:

    The Single Market is the core problem. It is a thoroughly bad idea because it introduces instability into both the labour and capital markets. It is like removing the bulkheads from an ocean-going oil tanker – as soon as the first wave comes along all the oil slops down one end and the tanker upends and sinks.
    Most economists I am sure would agree that stability is a precondition for steady growth. It is surely no coincidence that we have had constant decline over the past ten years or so.

    • lasancmt says:

      What decline? 0.4% growth is still growth and 0.4% of a 18 trillion dollar EU economy is a lot of money, a lot more then say 8% growth in some far flung commonwealth country. The problem with kippers is that they belive idiots like Dan Hannan who thinks that somehow with the BRIC countries growing at the rate they do the EU and the USA can somehow still hang on to theur 25% of global GDP each. The simple mathematical truth is that all the worlds countries GDP percentages will allways add to the same 100% total. But every percentage that China India Brazil gains we in the west loose. Hanna loves to call that ‘decline’ but I look at it as simple math. As long as there is growth in absolute terms in the EU we are not in decline. People who say that have a decline in mental powers of arithmatic?

      • John Poynton says:

        If you look at the graph for average real standards of living in the UK, setting an index at 100 in the year 2000, you will find the highest point at 105.7 came in 2004, and had declined to 83.4 by 2012. Some of this is due to the banking crisis of course, but the interesting point is that the peak is in 2004, not 2007. The effect is even clearer if you allow for a continuation of 1% productivity growth per annum as was enjoyed up until 2004. Most of this decline is almost certainly due to immigration.
        If that seems counter-intuitive, given that most immigrants do indeed work hard and pay their taxes, remember that they are also consumers, just like the rest of us. They consume as much as they produce. Only the higher-rate taxpayers will be putting in more than they take out. But on top of that they are using land and other inelastic infrastructure and public services so that there are less to go round on average. That I suspect is the principle cause of the decline which the figures show.

      • lasancmt says:

        “Most of this decline is almost certainly due to immigration.” John Poynton says in true kipper style. He shares absolutely no proof of this but this is what his gut kipper instinct tells him. You got to blame someone and blaming immigrants is easy, they are fair game after all.

        Only higher rate tax payers put in more into the system than they take out John says, ignoring the fact that we all pay 20% VAT on our shopping to fund state coffers? Yes John, that includes low paid immigrants shopping at Aldi or Llidl. Most of us at the botom of the ladder pay more in indirect taxes than direct taxes, a fact John simply chooses to overlook.

        Also NI contributions to pay for things like NHS and OAP will be taken out of immigrant wages, just like the rest of us. They are capped for High earners at around 35K as far as I remember, so they pay the same, not more.

        The most commonly used indicator of how wel we are all doing together as a nation is GDP growth, but of course that indicator does not suit John’s kipper agenda so he swiftly moves on to his under belly feelings of xenophobia. Shame on you John!

      • John Poynton says:

        I am well aware that people pay more indirect taxes at the bottom end of the scale. The Taxpayers Alliance produced a very good research document on it just recently. What that has got to do with my figures showing we are ON AVERAGE worse off per capita is nothing at all. Do try to stick to the point.
        Your emotional reaction shows that you know perfectly well you have completely lost this argument. No GDP is NOT the most commonly used indicator of how well we are doing together. GDP is a nominal figure which includes both inflation and population growth. Obviously it will go up if population goes up. That proves nothing. I would have thought even a moron like you could have worked that out!

      • lasancmt says:

        your figures showing we are worse of? You have provided no link and on the ONS web site all they say is that we are 101% better off since 1975. Before calling people morons let’s have some links with figures showing you haven’t sucked them out of your thumb?

      • John Poynton says:

        Fair enough – yes, I will shortly on my own blog. So far I have downloaded the figures for GDP, inflation and population levels onto a spreadsheet in order to create the index I refer to. I want to do a bit more research next on personal borrowing levels to try and isolate the effect of the banking crisis so as to demonstrate how much of the decline can be attributed to immigration. Watch this space!

  9. Hugh Davis says:

    “In any case, it is a matter of fact that trade is at its most intense within sovereign nations, where common laws, language and proximity support interaction”.

    Exactly Jeremy, which is why it make more sense for the UK to concentrate on trading with the Anglosphere – ie Canada, the USA, Australia, New Zealand, South Africa – all of whom adhere to British customs and values embodied in Magna Carta, The Bill of Rights, Common Law etc – as to some (if a lesser) extent do India, Hong Kong, Singapore and many other beneficiaries of former British rule. See Daniel Hannan’s masterly “HOW WE INVENTED FREEDOM AND WHY IT MATTERS” .

    • lasancmt says:

      The EU per capita GDP is $35,000 instead of the Commonwealth’s $3,500. And that $3,500 average becomes a lot lower if we take the two richest Commonwealth nations Canada and Australia away from this figure. Go figure where the biggest market is for Jaguars, Bentleys, Rolls Royce? But also for more down to earth UK Nissans, Tiptree Marmalade, Cadbury chocolate bars, McVitie’s Hobnobs. Not in some village in rural Africa! Not in the tribe lands of Pakistan. The truth is trade with the Commonwealth was in long term decline long before Britain decided to join the Common Market. There is no marked dip in the graph around UK’s join date in 1973, just a continuation of a decline that set in shortly after WWII as the graph clearly shows in the following article:

      The next thing your typical ukip brexit activist like Hugh likes to tweet on and on about is how well the old British Commonwealth is doing, and how we should have never abandoned them in favour of the EU Common Market. This is another favorite Hannan propaganda line they fell for:

      “Far-flung Commonwealth nations would make a far more natural trade bloc than the EU. It never made much sense to abandon a diverse market, which comprised agricultural, industrial and service economies, in favour of a union of similar Western European states.”

      Unfortunately that is absolute Hannan bollocks . That line may have made sense for the British Empire, when you could send in the gun boats and enforce such a colonial trade policy. Didn’t Hannan study modern history in Oxford? Must have forgotten the image of Gandhi spinning his own yarn as a peaceful protest against UK manufactured goods? Hannan’s and your idea of trade is not how modern nations operate today. Jerimy in the main body of this article sas exactly the same. He and I have been taught in economics that nearby nations of a similar wealth and stage of economic development benefit most from trade. Not trade that exploits their natural resources and dumps unwanted manufactured goods on ex-colonies. We are talking about a ‘mutual beneficial trade’ with the EU, because the consumers in EU countries like the additional choice that such trade offers. An example of consumer choice is a Frenchman ‘sick’ of all the Renaults, Citroens and Peugeots in his street and instead would like to make a statement driving a sporty UK Nissan, a cool Mini or even a ‘posh’ Range Rover. This is a win-win two way kind of trade, not the pillaging of the colonies you Hannan seem to be lusting after. But I am sure that kind of neo-colonial ‘Britannia rules the waves again’ talk goes down a lot better with Roger Helmer’s ukip followers.

  10. Brin Jenkins says:

    John I like the analogy of the bulkheads or baffles. Ro Ro ferries have a similar problem if they take on only a few inches of water to the car deck it capsizes the ship in a few minutes. Brilliant!

    Small is beautiful.

    • lasancmt says:

      Small minded is beautiful, esspecially if you are two kippers reinforcing each others’ beliefs in a closed ideology echo chamber.

      However talking about those RoRo ferries: Kippers see a foto of the biggest Chinese container ship ever loaded in Felixstowe and they pat each other on the back, thinking they are all full of British exports goods headed for China. In fact most of them are empty returns, which is what you would expect of you are running a trade deficit with most of the rest of the world.

      Now the roro ferries in Calais and Harwich is a different matter. They are mainly full, because we have now such integrated supply lines in Europe that when French dockers strike in Calais, three days later the production lines at Toyota in Swindon have to stop for lack of parts.

      Kippers think it would be a good idea to block up the channel tunnel and ban roro ferries. Go figure!

      • Brin Jenkins says:

        Why are you even interested enough to comment on the UK when you have chosen to not be one of us? Just interested. I don’t understand why you need to resort to insults on here however?

        For your sole education I am not a member of UKIP, I am a patriot who loves my country and hate these confounded internationalists who all seem to know what we must to do!

        Off is the second word, now please choose a first one to suite your interfering self and may The Lord help the Country inflicted by yourself.

  11. Mr Helmer,
    You know as well as I do that AM (Associate membership) is what Mr Cameron will be campaigning for in 2017 when the Bertelsmann/Spinelli Fundamental Law is unveiled by the Commission.
    Does “Brexit” embrace AM or does it involve complete severance?

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