Thursday, March 7, 2013

EU withdrawal is losing its appeal

I have been a Eurosceptic for decades so it might seem strange, with an in-out referendum promised and anti-EU sentiment at an all time high, I am cooling on the idea of a UK exit.

Don't get me wrong, I have not suddenly learned to love Brussels.

Just last week, the British government was overruled on bankers' bonuses.  Regardless of what you think about our friends in the City, the effects of this move will overwhelmingly be felt in Britain and yet we have no right to say no.

The Eurozone shambles has reduced pro-European voices to a whisper and not just in Britain.  Any notions of being better off "at the heart of Europe" are now widely derided as those who warned about the single currency are  completely vindicated (Euro doubters are being proved doubly right).

Consequently the Europhiles have adopted fear tactics.  Fear of lost trade, jobs and inward investment.  Fear of declining influence and isolation. Fear of retribution from Brussels, Berlin and Paris.

I would liken the situation now to a spousal abuse victim finally plucking up courage to leave her husband.

Britain has been marginalised, overruled and bullied by the EU for a long time but only now, when the resolve to do something about it has hardened, do the doubts creep in...

She thinks: "What will I do for money?", We think: "who will we trade with?"

She worries: "What if he comes after me?". We fear regulatory retaliation.

She worries:"What will our friends say?".  Will Obama still take the PM's calls?

The temptation is to dismiss the Europhile fear-mongering and marginalise the downside of leaving the EU.  That would be a mistake because some of the issues are genuine and could easily turn a referendum in favour of remaining in the EU.

It is obviously true that leaving the EU will have downsides. Yes we will lose a measure of influence in the world and particularly in trade negotiations.  Of course our spurned partners (especially France) may try and put the knife in and, for example, stack the regulatory cards against the City of London.  Multinationals will certainly be worried about the security of access to the giant, albeit, shrinking market across the Channel.

None of this means that the UK should just lump it in the EU, like the victim who keeps giving their abuser another chance.  And that old reform-it-from-within line is starting to sound pretty lame.  The Eurozone countries have their own existential struggle going on and are not going to listen  to Britain however polite and obedient we are.

Besides some of the fears can be dealt with by securing guarantees in exit negotiations which could take years and in which we hold some cards, a big trade deficit prime among them.

However to make a case for withdrawal, EU opponents must do more than try and talk away the negatives. They must present a positive case for being a free and independent country once again.  How would we use that room for manoeuvre?

Theoretically the UK could reap massive economic and social advantage from being fully sovereign again: a more rational immigration policy, a massive reduction in red tape and converting saved budget contributions into tax cuts aimed at growth.

But there is a big difference between being offered an opportunity and taking it.  Given that the two main British parties are both firmly wedded to the high spending, high taxing, bank bashing, welfarist, interventionist consensus that currently prevails, EU withdrawal would be unlikely to usher in a new era of economic liberal radicalism.

And without hope of turning into the Hong Kong of Europe, why take the risk of leaving?

The best quote I ever read about withdrawal was from a Europhile who said "Britain has a competitiveness problem not a Europe problem".   Germany out-exports us handily under exactly the same regime of EU regulation.

Much as you might loathe the EU, without serious commitment to reform Britain is in deep trouble whether it leaves or not.


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