Brexit will complete Thatcher revolution

Posted on September 2, 2016

Despite being bombarded with an unprincipled scare campaign about the alleged disastrous economic consequences of Brexit, the British people chose to vote decisively for the UK to leave the EU on political grounds. To put it simply, they chose to become a self-governing democracy.

This was perfectly logical, as the EU itself is a political and not an economic project. And the project is to create a full-blooded political union, a federal united states of Europe. There is nothing secret, or in any way disreputable, about this. But it is not what the British people want. And as Mervyn King, the former governor of the Bank of England, wrote recently
: “Why would you want to be a member of a tennis club if you do not play tennis and indeed actively dislike the game, simply in order to play a game of bridge once a month?”

    Happily, however, there are significant economic gains to be had from Brexit, too, provided we play our cards right.

    I was a member of the Thatcher government of the 1980s that transformed the British economy, an achievement acknowledged throughout the world at the time. It was done by a thoroughgoing programme of supply side reform, of which judicious deregulation was a critically important part.

    But it was only indigenous UK regulation that we could repeal or reform. And increasingly we are bound by a growing corpus of EU regulation which, so long as we remain in the bloc, we cannot touch. Brexit gives us the opportunity to address this; to make the UK the most dynamic and freest country in the whole of Europe: in a word, to finish the job that Margaret Thatcher started.

    This has clear implications for how the UK should set about implementing the Brexit decision. At the present time, all the signs are that we are going about it in precisely the wrong way. The focus seems to be all about negotiating some sort of trade deal with the EU, in which we have some kind of special relationship with the so-called single market. That is not negotiable. Nor is there any need for it. If you chart the course of the EU economy as a whole, both before and after the advent of the so-called single market, it is clear that it has brought no discernible benefit.

    Our starting point needs to be that we seek the best possible relationship with the peoples and governments of Europe, against whom we have no grievance and a multiplicity of mutual interests. So far as the single market is concerned, we must respect the EU doctrine that to remain a member in any shape or form we would have to accept the freedom of EU citizens, beyond those already here, to come and live and work in the UK. That is something the British people have, understandably, made clear is not on, so we must accept that we will be outside the so-called single market.

    That is scarcely a disaster. The rest of the world is outside the single market, and trades happily and profitably with the member nations of the EU. You do not need a trade agreement in order to trade. Unsurprisingly, even now, our trade with the rest of the world, with most of whom we have no trade agreement, is greater than, and growing faster than, our trade with the EU. We have always been, and remain, a full member of the World Trade Organisation in our own right.

    Brexit Briefing: The decisions May must take

    Theresa May holds a cabinet meeting at the Prime Minister's country retreat Chequers in Buckinghamshire to discuss department-by-department Brexit action plans, Britain August 31, 2016. REUTERS/Stefan Rousseau/Pool

    While PM grapples with the Europe question, many domestic policies appear to be stuck

    The banks may be concerned about exit from the single market, and there may indeed be some complications for them. But the position of London as one of the only two truly global financial centres in the world, and the only one in the European timezone, is unassailable. And they have far more to fear from being inside it, particularly from further European legislation on banking union and the financial transactions tax.

    A prolonged period of uncertainty can only be damaging to British business and the British economy. Following the early invocation of Article 50 of the Lisbon treaty, accompanied by repealing the 1972 European Communities Act, if necessary with a delayed commencement date to be determined by parliament in due course, we need to complete the Brexit process as soon as possible. By abandoning the chimera of trade negotiations, a speedy process becomes practicable.

    Instead of wasting time on a futile and wholly misguided attempt to secure a trade agreement with the EU, the government needs to focus on how we propose to conduct ourselves as a self-governing nation outside the bloc. A whole range of issues need to be addressed, from the precise nature of our immigration controls (which need to be a single system applying to Europeans and non-Europeans alike) to how we will support our farmers following our exit from the Common Agricultural Policy.

    There are also some issues that will involve bilateral agreements with individual European countries, such as over security co-operation and (with the Irish Republic) over our land border with the EU.

    Above all, on the economic front, a study needs to be undertaken of the vast corpus of EU regulation to which we are presently subject, to decide which we wish to retain, which to amend (and how), and which to scrap altogether.

    There are other economic gains to be secured from Brexit, from not having to pay our net annual subscription of some £10bn and rising to our newfound ability to strike trade deals with the faster-growing countries of the world. But it is the benefit of intelligent deregulation, something that cannot be captured in any theoretical economic model but which we demonstrated in the 1980s, that offers the prospect of the greatest economic gain. And this is entirely in our own hands, and not a matter of negotiations with others. That is what we need to be focused on now.

    The writer is a former chancellor of the exchequer

    You must be logged in to post a comment Login