by Stephen Tall on April 11, 2014
Winner of the IEA’s Brexit Prize 2014 (and Director of Trade and Investment at the UK’s embassy in the Philippines)
Reason: for a serious analysis of how Britain can remain an outward, open, ambitious, entrepreneurial, democratic, trading nation state even if we leave the EU
I approached Iain Mansfield’s essay outlining a blueprint for ‘Britain after the EU’ with some trepidation. I half-expected a Ukip-style turn-the-clocks-back digression into right-wing isolationism. I was wrong.
Iain’s 20,000-word essay, A Blueprint for Britain: Openness not Isolation, sticks to the brief set by the Institute of Economic Affairs: to outline, in the event of a the British people voting to leave the European Union, the measures the Government of the day would need “to take in the following two years, domestically (within the UK), vis-a-vis the remaining EU and internationally, in order to promote a free and prosperous economy”.
Those last seven words are the key. Because what Iain’s essay focuses on is how Britain would continue to promote a free and prosperous economy from outside the EU. That, he makes clear, depends on securing free trade agreements between Britain and its European neighbours (probably through joining the European Free Trade Area, like Switzerland) and with as many other trading partners as possible.
I’ve tended to be suspicious of the Swiss option – all the benefits of the EU’s negotiating power and of free trade within the EU, few of the disbenefits – but Iain is more optimistic:
… the advantages of being unconstrained by the concerns of more protectionist EU Member States and of a streamlined negotiating process should more than outweigh the disadvantages of reduced bargaining power. The UK could therefore enjoy a more favourable position than it enjoys within the EU, which to date has FTAs with not one of the BRIC countries.
But that doesn’t mean there are no risks, not least in assuming that our European neighbours will happily agree the same terms we already enjoy:
… whilst it is in no-one’s rational economic interests to erect trade barriers, the EU could afford a trade war far better than the UK could. Some EU nations would see leaving as a betrayal of the European project and may wish to ensure that a sufficient example is made of the UK to deter others; others will not want to ‘reward’ leaving. … Throughout the negotiations it must be remembered that the UK is in the weaker position: in the case of no agreement, the UK would face the full trade barriers that any external nation does.
The only way that will be achieved is through an extensive commitment of time and energy: of British officials, but also of Government ministers and the Prime Minister. In effect, they would be able to do little else for the two years of re-negotiation. And they will need to make concessions along the way, such as tapering off budget contributions to the EU rather than immediately ending them, retaining some EU regulations to ensure continuing access to markets.
Iain Mansfield’s essay sets out three scenarios – best, most likely, and worst – for a British exit from the EU. Here’s the middle option:
Domestically, one would expect to see a nation of less and simpler regulation and a lower budget deficit, but that remained a beacon for foreign investment, albeit with rather more investors from North America and Asia and rather less from Western Europe. Its character, that of a global nation open to the world, would be unchanged. Overall, the UK would probably be neither significantly richer nor poorer: there is no recorded correlation between EU membership and GDP growth. The fundamental assets of the country, its population, global connections, infrastructure and knowledge base mean that the long-term growth, balance of trade and economic outlook should remain strong.
It all sounds like an awful lot of effort to achieve very little: “the UK would probably be neither significantly richer nor poorer”. This has been challenged by John McDermott in the Financial Times:
I am not a trade economist but I worry that by comparing an abstract future with a concrete present, Mansfield underestimates the strength of the ties between the EU and the UK – and therefore he underestimates the costs of exit. There is no magic number for the economic benefits to the EU but repeated studies show that the single market has brought net gains to the UK – and further service liberalisation within the EU could bring much more.
And indeed Iain Mansfield himself notes that economics are only one part of the decision-making process: “Ultimately, whether or not the UK exits from the EU is a political, not an economic decision.”
In that spirit, it’s worth noting that Lib Dem MP Jeremy Browne has also written about Britain’s membership of the EU in his book, Race Plan, published this week. The strongest chapter in it focuses on international relations, in which he vigorously defends the Government’s decision in 2004 to allow people from the new EU states in eastern Europe, including Poland, to work in Britain:
Britain held the line against the Soviet Union in the Cold War because we believed all people should benefit from liberal freedoms and be spared from communist oppression. That we were able to achieve that objective and share our success with people in countries like Poland is a genuine historical achievement. We did not tear down the Berlin Wall only to erect a new barrier between the people of Western and Eastern Europe.
Why do I think Iain Mansfield deserves to be a Liberal Hero this week? Three reasons:
1) Too many of those who are anti-EU fail to acknowledge the complexity of a Brexit. It is not simply a case that Britain can simultaneously leave the EU but demand to retain all the things we like and discard all the things we don’t. That’s not a serious proposition. For a grounded, realistic assessment of the benefits and costs of exiting the EU Iain Mansfield deserves recognition.
2) The debate has become charged and polarised. This isn’t surprising. When you have Ukip pushing the isolationist anti-EU agenda, it’s small wonder that internationalist pro-Europeans like Nick Clegg take umbrage. But this leaves those of us who recognise there are both positives and negatives that come with EU membership with no natural home. Iain Mansfield’s rigorous analysis might just create space for a more nuanced debate.
3) Too many liberals seem to see Britain’s membership of the EU as an end in itself. It is not. It’s a means to an end: that Britain should be an outward, open, ambitious, entrepreneurial, democratic, trading nation state that can lead internationally by domestic example. Iain Mansfield’s contribution to the debate brings us back to the core principles of those outcomes.
* The ‘Liberal Heroes of the Week’ (and occasional ‘Liberal Villains’) series showcases those who promote any of the four liberal tenets identified in The Orange Book — economic, personal, political and social liberalism — regardless of party affiliation and from beyond Westminster. If they stick up for liberalism in some way then they’re in contention. If they confound liberalism they may be named Villains. You can view our complete list of heroes and villains here. Nominations are welcome via email or Twitter.