The idea that being in a Customs Union with the EU is going to unleash economic growth is, I am afraid, fantasy economics. The received wisdom in some quarters that Brexit has been a complete failure is also fantasy. Yes, our politicians could do far more to benefit from the freedoms they now have, but much has changed for the better here whilst the EU has continued along its integrationist path since we left. A Customs Union would, if anything, bring more paperwork rather than less, especially if it was based on the Turkish model. We would also lose the long-term benefits from having agreements with considerably faster-growing economies in other parts of the world.
Did we leave the EU because we thought it would improve trade flow with the EU? Of course not. We left because we wanted to hold our rulers to account and we believed that being subsumed into a United States of Europe was not where the UK should be. We could also see that the EU has a shrinking share of international trade and, in order to help long-term growth, we had to be able to control our own economic and trade policy. So far we have failed to make the changes needed to fully take advantage of this, instead continuing to bumble along believing that we can work less for more. The belief at the time from Leavers that the effects on trade with the EU would be minor has been found to be true. The UK economy has continued to expand faster than other major EU economies despite the present government and its predecessor doing almost everything they can to kill entrepreneurial activity in this country.
We learnt in the 1980s how to boost economic growth, the first lesson being work: there is nothing without people seeing it as being worthwhile to work. Secondly: encouragement of entrepreneurial risk by allowing successful business owners and investors to keep a high proportion of the money they make. And thirdly: limit employment and other regulation to a minimum. It is quite simple really, but our pathetic leaders think instead that they can increase tax on those stupidly working in order to shovel it into the mouths of those who find that they can live quite adequately without any need to work or contribute to society. We cannot continue to have a situation where many of those working and paying taxes are taking home less than those being paid state benefits. In addition to financial benefit payments there are the additional freebies one becomes entitled to when on benefits such as travel, home insulation, laptops, education etc. that somebody working and paying taxes has to pay for out of taxed income.
As a nation we have got to get the incentives back to the way they should be: work should pay and being on benefits should be tough. All benefits including pensions should be frozen at least for as long as tax thresholds are frozen. Trying to fudge the issue by increasing the minimum wage is not working either, as this is now so high that the unskilled are being paid the same as graduates coming out of university saddled with debt. It is also higher than virtually every other country in the world, and unsurprisingly therefore acting as a magnet for unskilled immigration. The hospitality and retail sectors in particular are finding it extremely difficult to keep prices down with such a high minimum wage, especially when coupled with the dramatic increase in employers’ NI levied since April and high energy costs.
I have been running my own business for 40 years, but would not encourage anyone to start one in the UK now – and definitely not one that employs people and has to invest in machinery and equipment with long paybacks. This is not because there is not a potential market for all sorts of products, but because we the wealth creators are seen as the enemy by our rulers; there to be punished rather than encouraged. Life is too short to spend more than half of every working week toiling to pay tax which one then sees squandered on a bloated public service and those who can’t be bothered to work.
Quick fixes as proposed by the Lib Dems and some in the Labour Party such as joining a Customs Union with the EU backfire over time. The UK loses the freedom to set its own tariffs and would be tied into a one-size-fits-all structure. It will come with common rules and a cost and, as we discovered during the Brexit debate, we were paying considerably more in membership fees than we were saving on tariffs. There are mechanisms to enable the free flow of trade with the EU that businesses such as ours use; these have been developed largely by the freight industry and copy what US exporters to the EU have been using for years. It enabled them to leapfrog the UK in terms of export volume to the EU and works extremely efficiently.
Whilst the profile of UK trade with the EU has changed, so it has with the rest of the world. Joining a Customs Union is likely to see this reverse, which will lead to greater stagnation rather than more growth. Economic activity is down to humans believing it is worthwhile to make, sell, buy or trade; regulation kills this desire. A Customs Union is just more regulation and processes, and if we followed the Turkish model when selling to the EU almost every shipment would require the completion of an ATR form and endorsement by a Chamber of Commerce. This is very time-consuming and expensive, and would kill our trade with the EU which is based on speed of delivery. It is also important to remember that only 15% of UK businesses actually ever traded with EU customers and suppliers, while 100% of UK businesses would be caught by the rules imposed in order for a Customs Union to function.
I would urge anyone serious about UK economic growth to return to the lessons of the 1980s and 1990s, when the economy truly burst into life. Above all, we must stop forgetting those lessons — as we have over the past thirty years — by piling on ever-greater regulation and taxation that is crushing the very people trying to build businesses, at enormous long-term cost to the country.
Alastair MacMillan runs White House Products Ltd, a manufacturer, distributor and exporter of hydraulic components to over 100 countries. He is a supporter of the Jobs Foundation.
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Any rational argument on this topic is pointless, our betters (some in their own imagination only admittedly) apply the mantra “EU = good, UK = bad”. It’s for many (and unfortunately those in a position to act out their prejudices) really that simple.
Any rational argument will fall on the ears of the imbecile Starmer and his more imbecilic bunch of arseholes known as the government until these dickheads are DEAD I see no future for the UK.