The situation is different as between goods and services and I will discuss financial services on another occasion. But for goods exports, if we left, not only would the single market still exist, but a British company trying to export into it would still enjoy the advantages of there being a single set of regulations governing all 27 other countries. In other words, the single market’s advantage to us derives, not from the fact that we are in it, but rather from the fact that they are in it.
This is profoundly at odds with the statements of many business people who give the impression that, the day after we left the single market, they would be faced by either an insuperable obstacle or unbearable costs. Of course, post exit they would need to comply with the EU’s regulations. Yet they already do. Would one of those industrialists who claim it is so important for us to stay in the single market please explain just how their business would be adversely affected after we left?
It is important to realise that “no change” for them does not mean “no change” for the rest of us. For outside the single market the UK government would have the ability to rescind EU regulations, and all those parts of the economy which are not involved with exporting into the EU – that is to say about 85pc of it – would no longer be bound by them.
Of course, the advocates of continued EU membership argue that if we are not in, then we cannot shape its rules. But how much ability do we really have? We are only one of 28 EU member countries and in a whole host of areas we are effectively operating in a minority.
The acid test of how beneficial it is to be in the single market is surely the relative performance of different countries at selling into it. Until recently the facts have received scant attention. Accordingly, we owe a huge debt of gratitude to the academic and businessman, Michael Burrage, who, in an interesting publication for the think tank Civitas, has compared the export performance of various countries, before and after the formation of the single market.
His conclusions are devastating. Umpteen countries not only export heavily into the EU but the rate of growth of their exports has been higher than the rate of growth of exports to the single market from the UK, and indeed the rate of growth of intra-EU exports from just about all EU members. Being outside the single market does not seem to be any sort of barrier at all.
The debate about the single market represents the triumph of illusion over experience. Something similar happened, you may recall, with the issue of the UK joining the euro. Dire consequences would follow, it was said, if we remained outside. Again, notice, the image of exclusion. It was rather as though we British would be like poor street urchins in a Dickensian novel, peering in through frosted glass, at the congenial and prosperous folk making merry within. Yes, I am talking about the euro. Some source of merriment that turned out to be!
What happened with the euro is that people thought in soundbites and slogans without addressing the fundamental issues. They were mesmerised by supposedly large gains from lower transactions costs and exchange rate certainty. And they were bamboozled by the threatened exodus of businesses from Britain – everyone from Japanese carmakers to American investment banks – if we stayed outside. Does this ring a bell?
Is it a coincidence that it is largely the same organisations and individuals that got the euro issue blatantly wrong who now insist that we absolutely must stay in the EU?
Roger Bootle is executive chairman of Capital Economics. firstname.lastname@example.org