The Prime Minister is fighting for her deal. So she should. There is no majority in parliament for a hard Brexit. Nor is the EU likely to grant meaningful concessions at this stage apart from cosmetic tweaking, if that.
Labour’s position is to disregard the referendum result by staying in the single market and the customs union. This would mean the continuation of freedom of movement and prevent the UK from striking its own trade deals.
Fanciful talk of a “people’s vote” to resolve an impending parliamentary impasse is neither realistic nor desirable. Time to hold it is running out, it would crush faith in democracy, and potentially lead to civil unrest. The choice, therefore, is between the proposed deal and none at all. Those arguing for the second of these options – leaving with no deal and reverting to WTO rules – are increasingly vociferous.
This position, contrarian to the majority view that no deal would be a disaster, is now being advocated by a growing number of Brexiteers, including Professor Patrick Minford, chair of Economists for Free Trade. He estimates that leaving the EU would provide a £135bn boost to the economy or seven per cent of GDP, resulting from a reduction in the cost of imports from outside the EU following the removal of its protectionist tariff barriers, and the UK securing free trade agreements with other countries or unilaterally eliminating tariffs.
He predicts annual growth in a no-deal scenario of 0.5 per cent driven by an increase in trade with non-EU countries. This has been ridiculed by the majority of other economists, including a group at the LSE, who argue that unilateral removal of tariffs would be devastating for manufacturing jobs and that trade with the EU is much more important, due to proximity, than it is with countries further afield.
Ruth Lea, former Head of Policy at the IoD, has also concluded that no deal is preferable to remaining a de facto member of the EU during the transition period and adhering to its rules. It would also avoid the “horrendous” backstop which, if invoked, would leave the UK in a single customs territory with the EU from which it could not withdraw unilaterally.
Lord Trimble, former First Minister of Northern Ireland and a leading architect of the Good Friday agreement, has dismissed the economic benefits of remaining in the EU and does not believe that a hard border between Northern Ireland and the Republic of Ireland will lead to violence.
The predictions of the majority of expert opinion are often incorrect. This was the case with 364 economists who opposed the 1981 Thatcher budget which raised taxes to reduce public borrowing; those who advocated joining the ERM in 1990, which Britain crashed out of two years later; and those who predicted economic catastrophe the day after a vote to leave the EU, whereas we have seen continued growth and record employment.
So on Britain’s fortunes post-Brexit will the “no deal-ers” be vindicated or will the economic establishment be proved right? Time will tell.
- Professor Patrick Minford will be in conversation with Ali Miraj on 5 December at Cass Business School. Register to attend here.