New Perspectives

In Economics and Finance

Brexit: the ‘Leavers’ Referendum Claims and the Aftermath

During the EU referendum, the ‘Leavers’ campaigned on three main issues. The first two, espoused by Boris Johnson, Michael Gove and Andrea Leadsom, were that Brexit would enable us to ‘regain our sovereignty’ and that it would save us the money we contribute to the EU general budget, which we would then invest in the NHS. And the third, mainly championed by UKIP, was that Brexit would give us ‘our borders back’, thus control over the number of immigrants coming from the EU.

The three issues were based on misconceptions and utter lies. The misconceptions included that the EU undermines UK sovereignty because the UK has no control over EU law. But EU law, although initiated by the EU Commission, is enacted jointly, through the ‘ordinary legislative procedure’, by the Council of the European Union and the European Parliament (EP). The Council comprises the relevant ministers from each member nation and the EP consists of persons directly elected by the EU citizens. Thus the UK is fully involved in the making of EU law; there is no Brussels ‘diktat’.

Another misconception was that remaining in the EU would inevitably make us a ‘State’ of an imminent ‘United States of Europe’. Yet the UK has been granted an opt-out from the ‘ever closer union of the peoples of Europe’, has an opt-out from the euro, is not a party to the Schengen free cross-border arrangement, has been allowed to deny EU immigrants the right to claim benefits before working in the UK for four years, has a veto on taxation and on enlargement, and so on and so forth.

The lies included the size of the UK contribution to the EU general budget. The £350 million a week decorating Boris’s bus included the British rebate, which never goes to Brussels to be reimbursed to the UK, and excluded EU expenditure in the UK. Both the independent Office of National Statistics and the respected Institute of Fiscal Studies confirmed during the campaign that allowing for these two factors our contribution was £136 million per week, i.e. 38.9% of the mentioned figure (the chart provides a very clear picture of the annual sums involved). This is a price well worth paying for the benefits we get from the ‘Single Market’; it is a club subscription!

The campaigners for the control of EU immigrants completely dismissed the fact that non-EU immigrants were in excess of those from the EU and, more importantly, that the majority of EU immigrants come to the UK to work, especially in fields where UK talent is lacking or that the local population shuns, and that respected academic studies had shown that they contribute more to UK taxation than they claim in benefits.

There is no need to dwell on these issues here since they are fully explained in my book The European Union Illuminated: its Nature, Importance and Future. What is vital for Brexit is the type of deal that the UK would be able to negotiate with the EU, a subject on which the Leavers were almost completely silent during the referendum.

Some have since suggested that the UK can negotiate membership of the European Economic Area (EEA), comprising the European Free Trade Area (EFTA, of Iceland, Norway, Liechtenstein) and the EU, which they claim would entail no contributions to the EU budget, consultations on regulations, no CAP obligations, etc. Apart from the fact that the EFTA members do have to make contributions, have to accept the Single Market’s ‘four freedoms’ (for movement of goods, services, capital and, pertinently, people) and have no real say on EU law, this completely ignores the rationale for the creation of the EEA. It is designed to facilitate an easy accession process to the EU for those countries deemed to be on the doorstep to joining. Why on earth would the EU extend this semi-privileged treatment to a ‘quitter’, especially when the 27 other EU member nations are determined that Brexit should not set an example to others to prevent the demise of the EU itself? The Leavers do not seem to understand that for the rest of Europe, the EU is a matter of life and death, not a ‘supermarket’.

The Leavers have also asked: why do we need to be part of the EU in order to trade with its members when we do so with China, India and the USA without belonging to a ‘club’ with any of them? But this reveals complete ignorance of the Single Market: it enables us to trade ‘freely’ inside the biggest (in terms of GDP and over 500 million people combined; see the table for a comparison) and most advanced bloc in the world, and to which we send almost half of our exports.

Trading with China, India and the USA will never be free unless we are able to negotiate special agreements with them (form clubs!) and, individually, they do not absorb much of our exports.

I do not need to go through all the other possible outcomes of the Brexit arrangement between the UK and the rest of the EU because it should be obvious that any one of them would fall short of the status quo: nothing better than the Single Market and all the above-mentioned opt outs enshrined in the EU treaties. As to negotiating better deals with the rest of the world, it is unimaginable that the UK can do better than the EU combined: there is clout to the EU. Moreover, any agreement with the EU will have to be approved by Parliament, the majority of whose members are against Brexit, so they will either force the government to go for a general election or to conduct another EU referendum. In either case, the outcome is most likely to be the retaining of the status quo. Especially so since the country at large will by then have seen through the lies and misconceptions of the Leavers and the areas that voted overwhelmingly to leave will have realised that their economic misfortunes are not due to our EU membership but to the UK’s own policies. 

Ali M. El-Agraa is the author of The European Union Illuminated.

NB: All opinions expressed here are the author’s own and do not represent the views of Palgrave Macmillan.

The European Union Illuminated