With inflation soaring and the cost of living crisis biting, the Chancellor’s recent £15bn intervention was welcome – but more radical thinking is required if we are to energise our economy through these stormy waters and earn another five years of Conservative government.
Given the gargantuan economic challenges ahead, we must dare to assess how Brexit, the biggest geo-political decision in a generation, is faring. So loaded is the B word, many may prefer to steer clear of the subject. But this would be a dereliction of duty.
If an army general, mid-battle, is mature enough to finesse his strategy to secure mission success, then government should do the same. Let’s have the courage to dare to make operational amendments as we seek to leverage greater success.
Let’s not forget, both Winston Churchill and Margaret Thatcher endorsed this model
Here’s my attempt of how we might adjust the tiller to better maximise our Brexit fortunes.
Political distance from Brussels has been achieved. This is not up for question. However, economically speaking, there is vast room for improvement. The OBR calculates, in its current form, that Brexit is reducing our GDP by four per cent. This compares to around 1.5 per cent caused by Covid.
Put another way: our exports to Europe have shrunk by £20bn. From the fishers who can no longer sell their Scottish salmon, to the farmers undercut by unchecked imports, to Cheshire cheesemakers running into £180 health certificates, even to the City which can no longer sell financial services to Europe, sector after sector is being strangled by the red tape we were supposed to escape from.
Total business investment across the entire United Kingdom economy stalled after 2016 and is 10 per cent down on 2019. European Union workers are turning their backs on the UK, leaving vital gaps in our workforce. Low investment means lower growth. No wonder the IMF forecasts growth for 2023 as half the advanced economy average.
And then there’s the unresolved issue of the Irish border. Current plans to bin the Northern Ireland Protocol could trigger a trade war with the EU (causing further economic harm) and is alienating the United States, our closest security ally.
As a recent YouGov poll indicates, this is not the Brexit most people imagined, with the majority believing Brexit has gone badly. There is appetite to make improvements – not U-turns but course corrections.
In a nutshell, all these challenges would disappear if we dare to advance our Brexit model by re-joining the EU single market (the Norway model). Leaving this aspect of the EU was not on the ballot paper, nor called for by either the Prime Minister or Nigel Farage during the 2016 referendum. There was, however, much discussion about returning to a “common market,” which is exactly what I propose.
Any model will have benefits and drawbacks. The single market means the free movement of goods, services, capital and people. It would see £7bn of paperwork and checks go, and boost our economy by restoring free trade to sectors demanding change.
It would require acceptance of some EU regulations. However, UK industry, from food to pharmaceuticals, chemicals to motor manufacturing, says they would be better off working with one common standard rather than having to follow two: both a UK regulatory system and the EU one for most exports.
There remain understandable reservations about the free movement of people in relation to benefit claims which would need addressing, but this is not insurmountable. Let’s not forget, both Winston Churchill and Margaret Thatcher endorsed this model, with the view that the potential economic benefits outweigh the drawbacks.
If joining the single market (with conditions) results in strengthening our economy, easing the cost of living crisis, settling the Irish problem at a stroke and promoting our European credentials as we take an ever greater lead in Ukraine, would it not be churlish to not face this reality?
Tobias Ellwood is the Conservative MP for Bournemouth East.
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