Asked about Lord Lawson’s argument in The Times today that Britain should leave the EU, Vince Cable, the Business Secretary replied that Lawson was “a terribly clever guy but he’s often wrong on the big issues, like climate change, and this”.
That’s well put. I admire Lord Lawson’s huge memoirs on his time as Chancellor (it’s an outstanding book on applied economics). I’ve debated with him on Europe. He is an intellectually formidable proponent of arguments that are often an unreliable guide to policy.
The best point Lawson makes against EU membership is that the costs of exit are less now than the costs of remaining outside the EEC were 40 years ago. The reason is that international tariff barriers are lower, owing to a general and extremely welcome liberalisation of global trade. But that doesn’t get the argument far.
There would be some immediate financial gains from leaving the EU of about £8 billion, if we no longer made a budgetary contribution. But note that Norway, whom UKIP cite as a possible model, does contribute to the EU budget and accepts almost all EU regulations. It does so because it wants access to the Single Market. And being outside the EU, it has no say in forming its regulations. The nations within the European Free Trade Association (EFTA) have to negotiate their own bilateral trade arrangements rather than be represented by the EU. And they have suffered countervailing duties on important exports (Norwegian salmon, Swiss cheese).
If Britain left the EU, it would moreover suffer a loss of business investment. This would be true even in financial services. The City is highly unlikely to retain its importance as a global financial centre without being part of the EU’s Single Market rules and when sterling is not a reserve currency. Its international competitiveness would also be damaged by the removal of the right of entry to the UK for skilled young workers in finance and IT.
But the main damage to British interests from leaving the EU would be a long-run decline in diplomatic importance. The most important bilateral component of the transatlantic alliance for much of the postwar era has been between the US and Germany, not the US and Britain. Britain outside the EU would be of far less significance in Western foreign policy. We’d be a medium-sized power with a narrower, less liberal ethos. No, thanks.
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