Take your pick!
- £100bn
- £4,300 per household
- £2,200 by 2020
...the debate on the precise economic impact of Brexit appears to be alive and kicking. One thing that has not been under debate for some time, in spite of the more strident political voices, is that exit will produce some sort of economic cost - the Treasury, the IMF, the OECD, the Bank of England, the CBI, the LSE, the National Institute of Economic and Social Research, 3 out of every 4 academic economists, are unanimous in their expectation that exiting the EU will be in the whole negative for the UK economy.
So how should we make a choice when faced with a likely cost but great uncertainty around its magnitude?
One choice may be to ignore the economist's arguments. The uncertainty surrounding the impact of Brexit is reflective of the imprecision of the approach. Therefore why trust it – after all these are the same economists who failed to predict the financial crisis of 2008. Critics of macroeconomics liken the debate on Brexit to the debate around joining the Euro - the economic benefits of the European Union being another example of the Faustian Pact between a metropolitan political elite and the followers of the dismal science. However, despite significant mainstream political support for the Euro, the economic consensus was always against joining the single currency, with the subsequent economic ruptures being a validation of the theoretical evidence on optimal currency areas.
A more productive way forward may be to consider how the costs of departure interact with the sources of possible benefit.
Upon leaving the EU, the need to defer decisions to the army of European bureaucrats and lawmakers in Brussels, is no longer required. Important legislation could be debated while considering uniquely what’s best for the British people. Departure will almost certainly increase the control the British people have over their own lives. However, how and to what extent that benefit will be felt remains an object of speculation. Sweeping away the thousands of European diktats currently entangling British enterprise will be a difficult and laborious process. At the same time, businesses embedded into European supply chains will continue to defend their interests and fight every changes law by law.
And in any case, an affinity between economy and sovereignty is not simply a superficial connection but runs to the very heart of what is being considered. The foundation of the economists’ case is that more trade, and reductions to the constraints to trade, have widespread benefits for the economy (notice that proponents of Brexit also employ this logic). However, it is a consequence of removing these constraints and the widening and deepening of the single market, that are largely responsible for a loss in sovereignty that many in the pro-Brexit camp rail so bitterly against. One cannot have freer trade without some loss of sovereignty.
What do we mean by this? Take for instance, a unified market in the production of cars. In order for that market to operate efficiently, it would need a unified safety regime regulating the production of those cars. The alternative would be a British safety regime for British cars and that defies the creation of a single market - where goods produced for one country can be sold freely in any of the other constituent territories. And hence, a trade-off arises between either having a free market in those cars or having full control over the safety regime that governs their manufacture. A safety regime that is common across all 28 member states, must take into account the wishes and interests of all 28 countries, thereby sacrificing the absolute free will of each country for the needs and desires of the 27 others.
So perhaps, the uncertainties about a post-Brexit world are not so important after all - since any rise in control over the rules and regulations that govern our markets will be reflected in the impoverishment of those markets as a whole and the reverse also being true. This leaves the British people with a far simpler choice: To what extent are you happy to sacrifice growth for a greater ability to shape that growth in the future?