If we were to believe the so-called voice of business, the world would be flat and the UK about to fall off the edge on Brexit day. The recent manifestation of “Project Fear” mark III , clearly a blatant attempt to frustrate and stop Brexit by organisations and businesses which have openly declared their opposition to it, is a shocking, anti-democratic intervention in the body politic.
Some simple facts should be noted when weighing the narrow self-interest on which these interventions are based.
Only 8% of UK businesses export to the EU. These exports represent just 13% of the economy. In fact 17% of the economy is related to exports to the rest of the world and 70% is domestic. Even a so-called ‘hard’ Brexit – which is actually global trade on World Trade Organisation (WTO) terms – would have only a marginal (if any) impact on exports to the EU, while it would considerably boost the 87% of the economy not related to the EU.
As sterling is at a more competitive rate than it was on referendum day, the impact of any tariffs applied to British goods going to the EU has already been more than eliminated. Non-tariff barriers will be minimal given the WTO export systems – only 2% of goods are checked at borders worldwide and the majority of imports into the EU come from countries which are not EU members and do not have any trade arrangement with the EU.
Economists for Free Trade (EFT) calculate that a WTO global trade Brexit will boost the economy by around 7% of GDP, increasing our growth rate by a third every year for fifteen years.
All of this is dependent on “actual” Brexit. That is taking control of our money (including trade), our laws (including jurisdiction) and our borders (including immigration). Anything less is not Brexit and this was made clear during the referendum campaign, although of course some people were not listening.
So why are the organisations and businesses concerned voicing opposition?
Corporations do not like change. Change costs them money but, more importantly, upsets the cosy system they have stitched up for themselves. In particular, multi-nationals which have no allegiance to any peoples see it as a down side. They like to segment markets, produce cheaply and sell expensively. They like regulation as they can handle it and it creates barriers to the entry of competition. They hate creative disruption as this enables challengers to emerge. Their primary concern is executive bonuses and shareholder return (perversely, in that order). They tend towards monopolistic behaviour and the maximisation of margins. They do not like competition and welcome the anti-competitive, protectionism of the EU Customs Union, surrounded by a wall of tariffs and standards paid for by the consumers of the EU.
The organisations who represent them are even worse, as they also receive EU funding (paid for by British tax payers). Let us look at them. The greatest enemy of Brexit, the CBI, which has been consistently wrong about most economic and political issues in the last seventy years, is determined to destroy Brexit.
When repeatedly asked at a House of Commons Committee how many full members the CBI has, the head of the organisation, Caroline Fairbairn, refused to answer. I know because I was there giving evidence, me being the only pro-enterprise, free trader present (the other two compatriots were the CBI and the TUC). The reason she refused to answer is that the CBI has around 2,500 full members, not the 190,000 they claim. These policy-making, policy committee-dominating members are large multi-nationals, often foreign-owned. The CBI is a well-funded “think tank” of officials, rather like the pro-Remain civil service, dominated by multi-nationals with narrow vested interests and part-funded by the EU.
The second most prominent business group, the British Chambers of Commerce (BCC) consists of local Chambers which are themselves made up of secretariats and local business members. They have around 60,000 members. Some of the Chambers are dominated by foreign multi-nationals eg Airbus, Nissan etc and some receive EU funding. Many have public sector members and they receive local and national government funding. They also profit substantially from export documentation.
Nevertheless, they do carry out surveys of their business members. At the beginning of the referendum campaign, such a survey showed a majority in favour of Remaining in the EU, but with over 40% wanting to Leave. Amongst those surveyed, there was a disproportionately high number of exporters, especially to the EU. In the weeks running up to the referendum, a stratified sample survey was undertaken. It found that the majority in favour of Remain existed only amongst businesses that exported only to the EU. Amongst businesses that exported outside the EU or which operated only in the domestic market, there was a majority in favour of Leaving. In the wider business community, those two groups represent 87% of the UK economy. The survey has never been repeated – perhaps an inconvenient truth?
To read John Longworth’s piece for BrexitCentral in full, click here.