A group of “business leaders” writes to the Telegraph:
Britain’s competitiveness is being undermined by our membership of a failing EU…Brussels’ red tape stifles every one of Britain’s 5.4 million businesses.
The BBC gave uncritical coverage to this claim (01’22” in). However, it raises several questions:
- If it is membership of the EU which is undermining competitiveness, why is it that Germany is doing so much better at exporting to China than the UK? Last year, its exports (pdf) to China were €71.4bn (£51.7bn) compared to the UK’s £12.8bn, which meant such exports represented 2.4% of GDP against 0.7 per cent for the UK.
- If EU membership determines business regulation, why is it that the volume of regulation varies so much from country to country within the EU? To take one of several indices, the Heritage Foundation puts the UK 15th on its index of business freedom, whilst France is 32nd and Italy 62nd. As Rick says, whether you look at product or labour market regulation, “compared to most other countries the UK is lightly regulated.”
- Which EU-imposed regulations do you propose to scrap? Although the letter is silent on this, Tim Congdon at least has been more honest, citing energy policy, the working time directive and caps on bankers’ bonuses as examples. For some reason, though, few Brexiteers seem keen to argue that Brexit will allow us to shut down green energy producers and build coal-fired power stations; make employees work longer; and pay bankers more.
- If Brexit really will make us more competitive, we’d expect to see sterling rise as expectations of Brexit increase, in anticipation of the smaller current account deficits that Brexit would produce. But this is not what has actually happened. Sterling’s fall since the autumn is widely blamed upon the increased risk of Brexit. And most economists, including the Bank of England and NIESR think Brexit would depress sterling. Why are most economists and financial market participants wrong?
Such questions raise a suspicion. It might be that some businesses are blaming Brussels for what is in fact their own inability to export and grow.
In this context the contrast between the BBC’s uncritical coverage of the letter and its ignoring the pro-Remain letter from over 200 economists looks not so much like a reasonable if mistaken editorial judgement but a brazen piece of ideology. It is symptomatic of a deference to business opinion – a deference which inhibits it from asking why it is that business is, in some respects at least failing.