Brexit: snake oil strikes again

17/07/2018

While our MPs were playing their games in Westminster, lifting Brexit to new heights of what a Guardian columnist termed "peak confusion", dark forces were nibbling around the edges in an attempt further to undermine Mrs May's White Paper.

At first sight the response to the Mrs May's White Paper, amounting to 154 pages, is pretty impressive. That's the length of the new IEA report which claims that, by 2034, its alternative could mean a GDP of up to 7.25 percent higher than it would otherwise have been.

But, when one finds that the authors are Shanker "Snake Oil" Singham, Radomir Tylecote and Victoria Hewson, it doesn't take long to realise that this is reheated Legatum Institute trash, despite being dressed up in the new title: "Freedom to Flourish".

The declared theme of this paper is "UK regulatory autonomy, recognition, and a productive economy", arguing that "withdrawal from the EU must mean regulatory autonomy for the United Kingdom – sovereignty over its regulations".

This is the means by which the authors argue that their 7.25 percent GDP hike will be delivered, spelt out in detail as requiring the UK to gain autonomy to make its own regulation, standards and system of conformity assessment.

Rejecting the imposition of EU law, it must also ensure that any recognition of EU regulations, standards and conformity assessment system is unilateral, and, finally, when it comes to the UK counterparts, we should seek EU recognition, thus completing the loop on mutual recognition.

Even before exploring the fatuity of this strategy, however, we need to look for the evidence to support the GDP claim, when we find one meagre paragraph which blandly informs us that "estimating the impacts of regulatory reform is challenging".

To overcome this "challenge", Team Singham relies on methodology used in a previous paper, written largely by himself. This supposedly provides the basis for a calculation which involves costing the effects of improved productivity and reduced anti-competitive barriers.

But the core of the calculation (apparently – the working out isn't shown) relies on matching "reforms" from Trans-Pacific Partnership countries and the United States which reduce domestic distortions by 30 percent over a 15-year period (starting from 2019 when the UK withdraws from the EU).

These miraculous events, which the UK must get under way in less than 20 months, are supposed to deliver an annual two percent reduction in distortions, each year estimated to improve GDP by 0.4 percent.

In the absence of any distortions reductions, GDP would grow by around 1.9 percent per year. But with a two percentage point annual distortions reduction, the annual GDP growth rate could increase to 2.4 per cent (for the UK, US and the TPP 11).

Tenuous, I would venture, doesn't even begin to describe this, but it is enough in the minds of Team Singham to justify dumping Mrs May's White Paper and substituting their own.

Autonomy, they say, must be the starting point: it is not simply one of the benefits of withdrawal, but a central requirement of the process that will allow the others to take place. Autonomy is therefore the vital competitive opportunity for an independent UK economy.

Given the importance of this "central requirement", one might have thought that we would be offered comprehensive lists of regulation with details of their costs and estimates of savings once they are removed or replaced with something less inhibitory to competition.

For all the hype, though, when we get down to the detail, we find Team Singham relying on regulatory costs produced by Open Europe in 2016, all based on government impact analyses of some antiquity and dubious accuracy. But how we are then supposed to grow our economy faster by dealing with these regulations simply isn't shown.

By any reasonable expectation, I think can be said with confidence that the papers comes nowhere near justifying its GDP growth figure – this point alone invalidating the thesis. For the sake of an entirely unsupported figure, we are supposed to ditch any idea of regulatory alignment with the EU, and then push for mutual recognition.

At the end of this path, of course, lies "no deal". On multiple occasions, the EU has made it very clear that it will not agree to mutual recognition of standards outside the framework of the Single Market. Therefore, if the UK insists on such mutual recognition, there is not even a resolution of the Irish border to be had.

Putting that element into the mix, the scheme on offer from Team Singham involves pitching for a 0.4 percent annual enhancement in GDP, potentially arising from better trading conditions with the US and TPP countries but, in so doing, putting at risk the £270 billion annual trade with the EU, currently worth ten percent of GDP.

This, though, seems to be the relationship which Davis and Baker are seeking, yet it is one that lacks any coherence whatsoever. At the heart of this flawed strategy is the dogma that we must "take back control", which translates into the UK making its own laws – "sovereignty over its regulations". This is the starting point of Singham et al, which is then (falsely) argued to be economically advantageous.

But even if we take away the EU dimension, we still have the "double coffin-lid" effect, where the UK is still bound by laws made at a regional or global level. Regulatory autonomy does not come with Brexit, under any conditions. To attain that state, we would have to walk away from dozens of international standard-setting bodies.

At this level, even if we could achieve regulatory autonomy, why would we want to? What would be the point of having our own separate standards for aerodrome safety when, to fall below the ICAO Annex 14 standard would be to have our airports made off limits to international traffic.

We might recall that ICAO also sets the technical standards for passports, something about which I was reminded when I sought recently to renew my passport on-line.

The system requires submission of a digital photograph, which is not easy to get right. Mine failed the automated checks, then eliciting a message from the Passport Office, declaring: "The photo you submitted with your passport application can't be used. It doesn't meet the photo standards set by the International Civil Aviation Organisation".

If Brexit demands that the UK has sovereignty over its regulations, then we could end up with our own photo standard, whence our marvellously blue passports would not be acceptable anywhere in the world, other than in British sovereign territories.

One could go on, and it would be useful some time to expose the tricks Singham et al use to give their work spurious credibility. But it is so plainly obvious that this "plan" is a non-starter that we need not waste any more time on it.

But, as we move from one incoherent plan to another, we get closer to a "no deal" Brexit, from which Pete warns the Brexiters have most to fear.

Even the Guardian is cottoning on. After last night's shenanigans, it observes that fears are growing at Westminster that there is now no Brexit deal – not the Chequers plan, nor David Davis's Canada-style trade deal, nor a no-deal scenario – that could command the backing of a majority of MPs.

That leaves the one plan standing – the Efta/EEA option. Systematically trashed by both official campaigns during the referendum campaign, it has nevertheless stood the time as the only thing that could work. And, if it comes down to that or no deal, under normal circumstances, it would be a no-brainer.

Unfortunately, as we move from a no-brainer to a parliament with no brains, a "no deal" has never seemed more likely.