UK Economics

The five economic freedoms that Britain can win by leaving the EU


Graeme Leach

Graeme Leach is chief executive and chief economist of Macronomics, a macroecono [..] Show more

EU regulation applies to the whole economy even though only around one tenth of UK GDP is actually attributable to the EU (Source: Getty)

This November marks the 75th anniversary of the publication of the Beveridge Report, or more precisely, Beveridge’s report on Social Insurance and Allied Services.

Beveridge set out his five “social” freedoms from squalor, ignorance, want, idleness, and disease.

Today, 75 years on we need to set out five “economic” freedoms from the EU.

Read more10 reasons the UK should not fear a ‘no deal’ Brexit outcome

Beveridge talked about freedom from these five “giant evils”, and while such language is inappropriate and wrong with regard to any description of our relationship with the EU, the economic freedoms are still giant.

The five economic freedoms provided by Brexit are: freedom from the EU protectionist fortress, freedom from EU budget payments, freedom from uncontrolled EU migration, freedom from EU product market regulation, and freedom from EU labour market regulation.

These are giants walking our land, but they walk unseen. If asked about the EU, focus groups show people associate the bloc with free trade, not protectionism. They have little or no idea that they live within a protectionist fortress with tall and thick walls to the outside world.

The best example of this is in the reaction to the fall in sterling post-Brexit.

People associate Brexit with higher prices (from higher import costs). They do not realise that being outside the Common External Tariff will lower prices if we pursue genuinely free trade. The weekly shop at the supermarket will become a whole lot cheaper. Forget “that’s Asdaprice” – remember “that’s Brexit price”.

The cost of EU budget payments has been analysed to death. The £350m per week figure is a step too far, but the amount is around half that, and possibly more depending on how you judge the effectiveness of funds returned to the UK by the EU. If you’re sceptical as to their benefit, then the weekly total ratchets up towards £250m, because of the opportunity cost.

Freedom from uncontrolled migration is not nationalist or isolationist. Rather, it is the opportunity to implement an open, outward, global policy, which allows in those from across the world who can make an economic contribution.

Controlled migration also means that, when there are global tragedies, we can open our arms to help. It’s much more difficult politically to have open arms if you already have open borders.

EU regulation applies to the whole economy even though only around one tenth of UK GDP is actually attributable to the EU.

Brexit provides the opportunity to take down the regulatory state. Not to abandon workers’ rights or lower safety standards in goods, but instead to undertake a regulatory reset, identifying a common sense approach.

Politicians have talked of a bonfire of controls, but over recent decades all they’ve delivered has been a small spark, which was quickly snuffed out. Brexit offers an opportunity to explode a thermonuclear device underneath the regulatory state.

Over the past 75 years we have made great strides in overcoming squalor, ignorance, want, idleness, and disease. They’re still there though, and the best way of continuing to overcome them is to generate the economic wealth which is central to their solution.

This is why the five economic freedoms from the EU are so important – 75 years from now, the UK economy has the potential to be a lot bigger than if we’d stayed in the EU.

It’s by no means a guarantee – we have to make the right economic policy decisions ourselves. Corbynomics would be a an economic disaster, and the last thing we need is a soft Brexit and Venezuelan economic policies.

But it’s an opportunity we simply wouldn’t have if we stayed in the EU, and we have a duty and a responsibility to make the most of it.

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