19 December 2017
Since the Prime Minister’s speech at Lancaster House in January, it has been Government policy to deliver Brexit by withdrawing the UK from both the Single Market and the Customs Union. Plainly, this was completely consistent with the referendum result and the Leave campaign which rested on taking back control of our money, laws and borders. Whilst we are members of the Single Market, we are bound by the free movement of people, so cannot control our borders and the Customs Union controls our international trade policy.
But leaving these two pillars of the EU is not simply a question of complying with the “logic” of the referendum. Rather, it is imperative if — as an independent, sovereign nation — we are to reap the benefits which that independence brings. Cardiff University economists predict that Brexit will lower consumer prices by around eight per cent — benefitting the poorest households most of all — and see an overall gain to GDP of seven per cent, or £135 billion each year. The reduction in food prices alone would represent a saving of £305 per household per annum.
The Government’s approach, as outlined at Lancaster House, was thus completely sensible. But we are now told that UK could maintain “full alignment” with the rules of the Single Market and the Customs Union once we leave. To its advocates, this suggestion will allow for continued easy trade with Europe, but they miss the point. Of course exporters to any market have to meet its standards, but Single Market membership requires us to apply all its regulations to the whole domestic economy, potentially damaging our future ability to trade around the world. At present, only around 12 per cent of GDP is a result of exports to the EU, yet the other 88 per cent must still obey all its rules. Coupled to this, any advantages that membership might have at present are set to diminish as the EU is comparatively outgrown by the rest of the world. In 1999, 61 per cent of our goods exports were to the EU, but by 2015, that figure was 47 per cent. By 2025, it has been estimated that it may have fallen to just 35 per cent. The European Commission itself admits that 90 per cent of global economic growth in the next ten to 15 years is expected to be generated outside Europe, a third of it in China alone.
We must be allowed – outside the Single Market and Customs Union – to seize these opportunities. Australia, Canada, Japan, New Zealand, South Korea, the United States and others will be watching the negotiations closely, knowing that they will only be able to do deals with an independent United Kingdom in full control of its own laws.
To read Owen Paterson’s piece for ConservativeHome in full, click here.