Economic Outer Space? Poppycock

“There may be valid arguments against Brexit, but the leap-in-the-dark claim by Cameron & Co is not one of them”

Marketplace
Geoffrey Howe: Believed keeping the pound was to plough "a lonely furrow" (Albert Sidney CC BY-SA 3.0)

In his speech to the House of Commons on February 22 David Cameron described Brexit as “a leap in the dark”. The same sort of phrase has long been a commonplace of pro-European Union rhetoric. Only a few weeks earlier the Financial Times’s chief economic commentator, Martin Wolf, said that leaving the EU would be “a leap into the abyss”. Back in a December 1991 House of Commons debate, Geoffrey Howe, a former Foreign Secretary, had been more imaginative in his choice of words. He asserted that, if Britain did not participate in the European single currency project, “it would be locked on a conveyor belt, not to federalism, but to economic outer space”. Keeping the pound was, in his view, to plough “a lonely furrow”.

If the British people vote to quit the EU in the referendum on June 23, would we be right in thinking — along with past and present prime ministers and foreign secretaries — that our country would have jumped over the precipice, be plunging into an abyss and on a journey towards “economic outer space”? Would we be “locked” into a future of obscurity, remoteness, isolation and even solitude?

Certain obvious facts about contemporary international relations have to be stated. The modern world consists of two kinds of nation, those that belong to the EU and those that do not. At the latest count the United Nations has 192 members, split between 28 that are in the EU and 164 that are “outside”. The notion of being “outside” the EU is surprisingly complex. Of the 164 non-EU members of the UN no fewer than 19 could be deemed European and some of these are “inside” the EU’s borders, as these are usually understood. Andorra, Monaco and San Marino are the awkward squad, as they are semi-incorporated in EU states, but are not strictly speaking EU members. The Channel Islands and the Isle of Man are in neither the UN nor the EU, but are more substantial than Lichtenstein. Lichtenstein belongs to the UN but not to the EU, and is not semi-incorporated in any EU member.

Evidently, Europe is a mosaic of contingent entities that have arisen from the cock-ups and conspiracies of history. No doubt Andorra and Monaco, and Norway and Switzerland, have their problems and moments of tension with their EU neighbours. But life goes on, and to say that they are in a dark abyss or economic outer space is poppycock. Actually, incomes per head are higher in these small states than in the larger neighbours that are full EU members.

More fundamentally, 145 nations are outside the European continent altogether. These nations have a combined population almost nine times that of Europe and 14 times that of the EU. It is true that on average they are poorer than Europe, which reduces their economic importance. However, the output of the non-European continents is more than 80 per cent of the world total. Further, this figure has risen sharply in the last 30 years and is certain to increase for many decades to come.

The 145 nations include the US, China and Japan, and Canada and Australia. Is the US in geopolitical outer darkness? Are China and Japan struggling to escape from a tenebrous abyss? Have Canada and Australia been hurled into “economic outer space”? All Brexit advocates are proposing is that the UK ceases to be a member of the EU and takes a position among the nations of the world similar to that of the 164 present non-EU states. That is all. Indeed, in many respects the UK might be like a larger version of Australia or Canada. It could have — and in practice almost definitely would have — much the same political and legal institutions, and the same ability to defend its interests in international forums, that these English-speaking nations have. The Cameron & Co rhetoric of loneliness and detachment, and of descent into gloom, is ludicrous.

Canada has set Britain an example. When the UK joined the then Common Market in 1973, widespread popular support was based on economics, that the UK would enjoy free trade in industrial products with its neighbours. Canada and the EU have now signed a free-trade agreement that does not envisage Canada, at any stage, being forced to participate in the EU’s “ever-closer” political union. If Canada can do that, so can Britain. No doubt Cameron & Co will warn that, by leaving the EU, Britain runs the risk of a long period of uncertainty while its new status is being defined. As it happens, the negotiations over the EU-Canada trade agreement lasted eight years, but people continued to go to work, goods and services kept on being produced, exports and imports passed through ports, and day-to-day economic reality was undisturbed. No impact from extra uncertainty can be identified in the macroeconomic data. There may be valid arguments against Brexit, but the leap-in-the-dark claim is not one of them.