After the United Kingdom left the exchange range mechanism in 1992 it experienced the longest period of economic growth in its history. This did not happen by chance but because a failed economic policy was dropped and a better one put in its place.
Monetary policy was loosened but the fiscal side was kept in check, at least until Labour started spending around 2000.
Norman Lamont, as the Chancellor of the Exchequer when we left the ERM, made business taxation more favourable for investment.
The same approach could be taken now as we leave the European Union preferably with a Canada style free trade deal or without any withdrawal agreement.
Economists for Free Trade (EFT) have produced their Brexit budget report which outlines how this could be done and sets out some of the opportunities.
It has been helped by the fact that the dire warnings about what would happen purely on a vote to leave have not been borne out by events and this week’s figures show falling unemployment, rising real wages and a decling deficit.
The economic consensus did not forecast this strong outcome nor did it predict the benefits of leaving the ERM.
Patrick Minford on the other hand has been right on both occasions so although he still does not represent the main stream view he deserves to be listened to because of his remarkable track record.
His forecasts are predicated on the basic view that free markets work and free trade enriches both sides.
Why should this be?
Free Trade puts consumers at the centre of economic activity.
It lowers the cost of imports which gives people the opportunity to buy more with the same amount of money, domestic producers have to compete with the lowest global costs or invest in new business.
This ensures that capital is efficiently allocated to the opportunities that will provide the best returns which ought to lead to new goods or old ones being more competitively produced and thereby either increasing consumer choice or lowering prices.
Both measures improve people’s standard of living.
In simple terms the less money spent on essentials the more there is for luxury or saving and further investment.
Obstacles to trade put up the cost both to consumers and businesses.
A pound of beef costs more in the United Kingdom than in the United States, a sirloin steak is twice the price in London than it is in New York but farmers also have to pay more for their chemicals and other inputs because of costly EU non-tariff barriers designed to keep out competition.
In this way everyone loses, consumers have less money but farmers cease to be globally competitive so lose export opportunities.
Leaving the EU allows the removal of restrictions, some of which will need to be phased, that would make both producers and consumers better off.
Tax payers would also benefit.
It is in all our interests that the government, when buying goods or services, pays the lowest price.
Subsidising inefficient businesses does not encourage them to become more competitive and means that extra money has to be taken from tax payers for the same result.
Inevitably this reduces the total size of the economy and lowers living standards.
The Economists for Free Trade have calculated that adopting free trade policies would reduce the cost of living by 8%.
This is tremendously important in a world where real wages have been fairly stagnant, especially for the least well off in society.
Even the latest figures only show a 0.6% improvement in real earnings.
In addition GDP could be expected to grow by 6%, 4% of this would come from trade and 2% from more intelligent regulation.
This is not a suggestion that we move to the Wild West but that rules applied in this country ought to be proportionate and have a clear purpose.
This level of GDP growth would inevitably help balance the budget as a larger economy would produce more revenue but there are two other benefits.
0.6% of GDP would be saved by not making payments to the EU and a further 0.2% could be kept if we were not funding benefits for unskilled EU migrants.
Both of these costs would continue under the Governments proposed extension of the transition.
Once these steps are taken then normal politics takes over but with a very different visage.
Instead of working out if it is an austerity budget with taxes rising and spending falling both could move in the other direction.
Taxes could be cut and public services funded in the way voters want.
The EFT forecasts that a £25billion Brexit dividend would be available from 2020 and a further £40billion from 2025.
This could be used to cut the standard rate of income tax and leave plenty of room to fund the NHS too.
The freedom to re-set our nation’s economic policy is one of the true excitements of Brexit.
Every country in the world that has embraced free trade has prospered.
What a pity the Treasury is so keen on whaling wailing and gnashing of teeth.
To read the piece in full, click here.