Business splits emerge over EU membership
Economist says Rake is ‘out of date’ over Europe
Ruth Lea, a former head of policy at the Institute of Directors, has challenged Mr Rake’s assertion that “there is no credible alternative” to being part of the EU.
In an open letter, Dr Lea says that a British exit from the 28-country union would not be the disaster for British companies that the CBI president suggests.
Now the economic adviser to the Arbuthnot Banking Group and chairman of Economists for Britain, Dr Lea says she read his speech to the CBI’s annual dinner last week “with bemusement”.
She writes: “Putting aside the CBI’s appalling track record on key policy matters (support for the UK membership of the euro, for example) or the fact that business is divided on the pros and cons of full EU membership (note Lord Bamford’s intervention), your assessment of the UK, the EU and the global economy is, quite simply, more than a generation out of date.”
Dr Lea reveals statistics showing how the EU’s share of global trade is is sharply in decline and argues that Britain would be perfectly capable of trading with the bloc from outside as from within.
“So your statement that we have a choice ‘…between shaping the future or retreating into the past’, implying the EU is the future, is redolent of the 1970s, 40 years ago. The EU may have been the ‘future once’ but it is clearly not the future now,” she says.
“The UK needs a new, looser relationship with the EU, which gives the UK freedom and opportunity to fully benefit from the changing global economy.”
Dr Lea is one of Britain’s most outspoken economists. She was famously “made redundant” by the Institute of Directors, allegedly after pressure from the Labour government in 2003 over her robust concerns about government economic policy. She was director of the Centre for Policy Studies from 2004–07 and director of Global Vision until 2010.
She is an advocate of a new relationship between Britain and the EU, proposing that EU membership should be replaced by a Swiss-style relationship with the the bloc. She has robustly and consistently opposed British membership of the euro on economic grounds.
This weekend she says the Prime Minister’s negotiations for a better deal for Britain should include greater flexibility over regulations, an ability to negotiate trade deals with other partners, and a new deal on immigration.
“The Prime Minister has, of course, recognized that the UK-EU relationship needs reform and will be renegotiating terms before the in-out referendum. I support these negotiations. Let us see what can be achieved. But if the negotiations do not deliver any significant changes, we have nothing to fear from leaving and much to gain,” she says.
“You said that ‘…no-one has yet set out a credible alternative future to EU membership…the current alternatives are not realistic options’. I beg to differ.”
She says that “there is absolutely no reason to believe Britain would be ‘isolated’ in the global trading system”.
She adds: “Of course, Britain would have to continue to comply with EU product regulations in our trade with the EU, much as the USA has to now when it trades with the EU. But, as many of these regulations are harmonised internationally, this should not be seen as a major problem. And, if ‘Brexit’, we would have the bonus of being able to determine own social and employment regulations, as the USA does now.
“The UK’s market is too important to continental Europe’s exporters to be allowed to languish. In 2014 Britain had a visible trade deficit with the EU of £77bn, of which over £30bn was with Germany. The UK would also surely consider rejoining EFTA, with its extensive list of bilateral trade deals.
“This ‘alternative future’ does not just strike me as ‘credible’, it strikes me as wholly appropriate for the 21st century. We could amend/repeal EU-driven business regulations, we could negotiate our own trade deals and we could develop a non-discriminatory immigration policy. And we could trade freely.”