An extension of British membership of the European Union beyond the end of this year would be an act of madness that would cost the country up to £1 trillion and torpedo efforts to recover from the Covid-19 emergency, according to a major new report from a newly formed cross-party think-tank.
A combination of at least five massive actual or potential bills would fall on the UK taxpayer if ministers bow to growing “Delayer” pressure from resurgent Remainer forces:
- Continuing payment of the UK contribution of £11 billion a year net to the EU budget
- Likely loss of lucrative free trade agreements (FTAs) from beyond the confines of the 27-member EU bloc
- Loss of savings from better, UK-controlled business regulation
- Loss of savings from better control of unskilled migration
- Huge potential liabilities for bailing out a bankrupt Eurozone and likely extra cash demands from Brussels by becoming entrapped in the new EU budget cycle that begins on January 1 next year
The report, from the cross-party Centre for Brexit Policy (CBP), launched in March under the leadership of former Cabinet minister Owen Paterson and businessman and former MEP John Longworth, sets out a table (page 31 of report and see below) listing the huge extra bills faced by the UK if it falls into the Delayer trap. It calculates that the total cost would be £380 billion if Brexit were delayed by two years but then implemented in full. However, if delay led to the total loss of Brexit for ever, then the cost would rocket, reaching £4.6 trillion.
“Brexit delayed is Brexit denied,” the report declares, accusing Delayers of weaponising the pandemic. It warns that if the Government succumbs to Delayer claims that it is impossible to tackle the virus and complete Brexit at the same time, Brexit will be effectively dead in the water, four years after the country voted in a referendum to Leave.
Highlighting the dangers posed by extending the transition period and Britain’s continued effective membership of the EU, Mr Paterson warned:
“Britain is like a man standing by an unexploded bomb. The bomb is ticking, louder and louder. The prudent step is not to fiddle with the bomb. The prudent step is to retire to a safe distance.”
Mr Longworth added: “We just cannot afford to extend the transition period. It will cost us around £400 billion at least, quite likely much more. The combination of these eye-watering costs and continued subservience to EU rules would wreck any chance we have of restoring our fortunes as a nation as the pandemic subsides.”
The Government has repeatedly stated that it will not extend the transition period, intended to allow 11 months for securing a free trade deal with the EU, beyond the allotted time of the end of December.
But Delayers have launched a counter-offensive, claiming that public opinion is firmly in favour of Ministers putting Brexit on the back-burner, while they extricate the country from a virus-induced economic slump in which unemployment is set to run into many millions.
Anti-Brexit group Best for Britain has said it is not reasonable to think Ministers can strike a good deal for the UK by the end of the year. “The public would clearly support the Government requesting an extension so it can focus solely on fighting the virus and restoring our economy without the risk of a catastrophic no deal.”
But this claim is torpedoed by a new poll carried out for the CBP by Savanta-ComRes, which finds that by a margin of 44 per cent to 40 per cent the British public are opposed to an extension of the transition period. Among Conservative voters the margin is 2:1 – 61 per cent in favour of no delay or a quicker exit, compared with 29 per cent in favour of extension.
Matters come to a head next month (June) – the deadline for the two sides to decide whether to approve an extension of EU membership – for up to two years. During this time, Britain would be bound by EU laws and courts, obliged to pay its annual membership fee, unable to take back control of immigration, required to implement any new taxes and rules imposed by Brussels and would be unable to secure any new FTAs with, for example, the US, Japan or fast growing Asian countries. Crucially, during transition, the country is worse off than when it was an EU member because it no longer has any voice in decision-making.
The CBP report declares: “Much talk about an extension seems to assume that it is just about extending the time for carrying on negotiations with the EU. This is only one of many profound consequences of extending the transition period.
“This is a quite extraordinary arrangement unique in international law and practice since colonial days, in which the UK is subject to EU laws while having no vote or veto on them, and subject to foreign courts and foreign administrative and executive agencies such as the European Commission while having no representation of its citizens on them.
“Indeed, Art.7 of the WA specifically bans UK representatives from attending EU meetings, the only limited exception being when UK representatives can attend “by invitation only” for the purpose of being told what to do.
“This arrangement is exceptionally dangerous, putting the UK and its industries at risk of having new legislation, or changes of rules or interpretations, imposed with no remedy or recourse. The direct jurisdiction of the ECJ would continue throughout the extended transition period, together with its powers of enforcement including the power to impose fines.”
The report insists that the coronavirus crisis has strengthened the case for a swift UK exit from the EU, not least because the country will be in desperate need of the flexibility essential to getting firms back in business and people back in jobs. And it points to the many gains from sticking to the timetable, such as the freedom to: strike free trade deals with big economies such as the USA, escape from the regulatory straitjacket of the EU, boost technological innovation, and revive the fishing and farming industries.
“There was always a strong argument for leaving the EU as soon as possible and therefore accepting a short transition period. It made sense to get on with the process in order to bring closer the period when the economy could benefit from the gains expected from Brexit and to minimise the baleful influence of uncertainty.
“The Covid-19 crisis has strengthened these arguments. Most importantly, to recover from the economic effect of the crisis, we are going to need to ensure vigorous growth of the private sector. This is the way to deal with the huge levels of government debt that will result from the various measures taken to boost the economy.”
The report adds that if Britain were leaving a successful trading relationship with the EU, there might be some merit in the case for delay. But this is far from the case. It cites official data showing that UK exports of goods to the EU have been completely flat over the period 2000 – 2019, while its exports to non–EU countries under World Trade Organisation (WTO) rules have grown substantially. Much the same is found with exports of services.
It states: “In sharp contrast, goods exports to the UK’s fourteen largest of the trading partners under WTO rules grew over these two decades at the real compound annual growth rate of 3.4 per cent – i.e. six times faster than goods exports to the EU 14. It is this trade that has created employment in the UK over these years.
“This ONS data shows that the advantages of exporting to our near neighbours in the EU frictionless and tariff free, as well as the supposed disadvantages of trading under WTO rules to countries scattered around the world, facing tariffs, quotas, non-tariff barriers, and fluctuating currencies, have been vastly exaggerated in the post-Referendum debate.”
The report underlines the dismal results of UK membership of the single market by comparing UK export performance to the EU with that of other countries, the vast majority of which are outside the single market. The UK is close to being in the international relegation zone.
“In the rank ordering of countries by the rate of growth of their exports to the EU, the UK is in 150th place of the 209 states and territories whose exports to the EU the IMF records. It is sandwiched between El Salvador and Cameroon, just ahead of several distant Pacific, African and Caribbean mini-states.”
The report also dismisses the spectre of the “cliff edge” – the claim much made by Remainers that a No Deal exit would mean Britain crashing out of the EU devoid of a means of operating a tariff regime and customs and regulatory paperwork at EU borders.
It highlights the extensive preparations already made for a No Deal departure and points out that because of the global trade slump sparked by the worldwide lockdown, now is an ideal time to make the transition as there is plenty of slack in the system and UK companies are already reshoring their manufacturing and reconfiguring their supply chains.
ENDS
For press enquiries please ring +44 (0) 20 3585 5290.
Click here to read the report in full.