Monday 21 March will go down as a seminal moment in the campaign for the UK to leave the European Union. It was the day the CBI conceded defeat in the economic argument.
From this point forward, following the publication of a study it commissioned from PwC, the business group will have to explain why economic growth will be higher in the long term if we leave the EU. It’s an admission that higher costs through taxes and regulatory compliance make us less competitive than we should be.
PwC offered two alternative scenarios compared to remaining in the EU: the first with a free trade agreement between the UK and the EU, and the second with World Trade Organisation rules governing our trade. Under both these scenarios, UK growth was projected to be higher after 2020 than if Britain remained in the EU. The area of dispute is what would happen between now and 2020, with PwC arguing that there would be pain.
But this is unnecessarily pessimistic. Leaving the EU requires that we follow Article 50 of the Lisbon Treaty, meaning we would continue to have full access to the Single Market in the two years stipulated for negotiating our disentanglement. We already have all the necessary regulations so should not expect trade to be disrupted.
We also need to remember that, following Brexit, the UK saves £12bn net per annum in EU membership fees and can tailor regulation to meet its needs. This would be a spur to significant growth. Open Europe has calculated that the most wasteful 100 EU regulations cost over £33bn each year and there are thousands of others on top of that. These could be greatly reduced or simplified, helping small businesses, job creation and the consumer.
Separate studies by academics such as professors Patrick Minford and Tim Congdon, as well as a UK Treasury cost-benefit analysis commissioned by Gordon Brown, have all shown the EU is a drag on UK economic growth in a range from 4 to 12 per cent.
Add to this the admission by chairman of the remain side, Lord Rose, that wages would rise once outside the EU and we see the economic case for staying in is collapsing.
People have every right to be concerned about their jobs and future prospects, but the reason Project Fear is not working is because the scaremongers got it wrong before. It was the CBI, the big corporates and the establishment politicians that told us we could not survive if we did not join the euro.
Now, with cheerful repetition, every week international bodies are declaring that they’re putting their faith in the UK. Last week we had the cosmetics company Avon announcing that, after 130 years, it would be moving its HQ from New York to Britain rather than Paris, while at the weekend Boeing broke the news that its European HQ would be in the UK not Germany.
We also had the Norwegian Sovereign Wealth Fund say it would be investing at least as much in the UK following Brexit, while some 70 per cent of chief financial officers surveyed world-wide said they believed Brexit would make no difference to their business plans.
We even find that the Pentagon is to locate its new European Intelligence Centre in Northamptonshire rather than the Azores, belying the nonsense that our security will be at risk if we leave the EU.
The scare stories about doing business, international investment, access to markets, recruitment of talent and security are all being shown by real decision-makers to be based on false assumptions. The CBI knows this and from now on will be in retreat.