Why it’s time to bust the many myths surrounding Brexit
2 MAY 2016 • 10:57PM
Brexit: fact or fiction?
It is very hard for anybody not intimately involved or familiar with the EU and the workings of the UK business sector and economy to discern the nature of the advantages of Brexit. It has been made even harder by the relentless promulgation of supposed self-evident â€œfactsâ€ by the government machine and its cronies. As a consequence a number of myths have begun to crystallise around the debate which beg to be challenged and debunked. Here is a myth-busting guide addressing some of the myths and those who seek the truth about Brexit.
Myth: Britainâ€™s economic health is dependent on trade with the EU.
In fact only 6pc of businesses export to the EU and only 13.3pc of our economy is associated with exports to the EU. Whereas the other 87pc of the UK economy is also burdened by the costs and regulations from Brussels. Freeing us from this would make us massively more productive at home and more competitive in global markets.
Myth: you can only trade if you have a trade deal. In fact the vast majority of trade in the world takes place between countries who have no trade deal. Take China for example which trades with both the UK and the EU without a trade deal. The UK has a trade surplus in services with the US, with whom we have no trade deal, that is nearly twice as big as the one with the EU.
Myth: The US would stop trading with us if we leave the EU
It would be economically irrational if it did, since the US is already our number one export market and target for business investment, even though we have no free trade arrangement.
Myth: we absolutely need a trade deal with the EU
We donâ€™t. Britain would still be better off outside the EU even if no trade deal were reached. We would have more than Â£10bn of net contribution to invest in stimulating the economy and in public services like the NHS and we could make trade deals around the world. The average EU external tariff is 3pc and few are bigger than 5pc. This is a rounding error, and would produce a marginal shift in trading patterns, probably in favour of UK domestic production.
Myth: the EU wonâ€™t agree a favourable trade deal
The UK has a massive trade deficit with the EU and particularly with powerful and influential EU countries such as Germany, the Netherlands, Spain and France. Any barrier to trade would hit these countries much more than the UK.
Myth: the free movement of people benefits the economy Free movement puts a huge strain on public services such as the NHS and schools as well as our infrastructure, all important for the economy and for SMEs in particular.The UK is forced to foot a bill of Â£350m a week to fund the EU, half of it squandered on projects elsewhere in the EU, the other half top-sliced by EU bureaucrats before they give us projects which often donâ€™t suit our needs, which could be used to fund these vital services,.
Myth: Food prices will rise if we leave the EU
In fact the EU has large external tariffs and quota systems for food and drink. It is one of the few areas where high tariffs persist. So, for those many products we cannot produce at all in the UK because of our climate, or cannot produce enough of, we would be able to import from around the world, free of tariffs.
Myth: the whole of business and the City are against leaving the EU
The business, finance and investment community is divided on the issue. It is true that there are those who side with the Prime Minister. The EU suits many who are able to use its bureaucracy as a barrier to entry to smaller competitors and a means of segmenting markets or avoiding taxes. So it is perhaps not remarkable, given that around half of business people in surveys say they are for leave, that hundreds of the best business people in Britain have signed up to support the leave campaign. It is notable that more than 100 leading City figures last week signed a letter in support of leaving the EU and that in the same week eight of the top economists in the country wrote a joint report, supporting the case for a better future out of the EU. All of this is in stark contrast to doomsayers in the phalanx of officials, the Treasury, the CBI, and even a former Prime Minister, all of whom have likely never run a business, let alone created one. These are the same people, for the most part, who led us into the disastrous European Exchange Rate Mechanism, who insisted we should join the euro and who presided over and failed to predict, the great recession. My choice is to put aside the myths peddled by the self-interested and the vested interests of a passÃ© establishment and instead look to the future. As some one who has been in business all my life, who co-founded and grew a business of my own, and who has seen the workings of government in the UK and Brussels up close and personal over many years, I know where I want to be in this debate. I want to be with the optimists and the creators of the business community, leading the UK out of the EU and into a world with no boundaries, not with the promoters of the failed EU project, who talk down the UK at every opportunity.
John Longworth is chairman of the Vote Leave business council