Dangers of Leaving

Jacek Rostowski professor of economics at the Central European University, Budapest, has a (subscription only) piece in the FT concerning the UK referendum. He is worried that rejection by the UK could damage the EU irreparably.

Tony Blair is campaigning for the constitution on the grounds that the UK should decide once and for all whether or not it wishes to remain in Europe. The aim is to present rejecting the constitution as more fraught with uncertainty than accepting it.

He is less than impressed by this argument which he says has many logical flaws and presents many risks that the government, in his view is wrong to discount.

In fact, failure to ratify the constitution means only that the Nice treaty will continue to govern the EU. The real danger is an attempt by europhobes and possibly some on the continent to convince British voters that, since others want to go ahead and Britain does not, the UK should leave the Union voluntarily. The electorate might well be susceptible to such suggestions in the wake of a No vote.

This is an idea that I have full agreement with. If the Yes side paints the referendum as a case of in or out, than the general public may well take them at face value. That would mean that leaving the EU would become a real possibility should the Yes Campaign fail. He goes on to claim that the real problem in the EU is the Franco German alliance and that Britain is needed to fight against it. Unlike most in this camp he does not claim that we are winning the argument, but rather that without Britain, winning is not possible. Rather he focuses on what he thinks would be the costs of leaving.

For Britain, being outside an increasingly protectionist EU over which it has little influence would be dangerous, while the consequences for Europe could include the unleashing of powerful nationalistic forces.

I believe that other than rhetoric, the EU would pose little danger to a newly divorced UK. There are many possible structures for free trade agreements and the WTO agreements limit the EU’s room for manoeuvre anyway. As for nationalistic forces, the greatest danger seems to come from resistance to EU legislation on things like immigration. The more protectionist the EU becomes the less relevant it would be anyway and the combined benefit of burning 80.000 pages of EU law, ceasing payments to the budget and free trade with the rest of the world would more than make up for any costs incurred. So lets trumpet the real costs of EU membership between now and next year by which time the public will be ready to vote no, whatever the consequences might be.