LeaveHQ, 24/05/2016  

To win this referendum we have long maintained it was absolutely necessary to neutralise the economic argument of the Remain campaign and offer a positive of what the future of an independent Britain would be like. Adopting a detailed plan such as Flexcit: The Market Solution has the virtue of achieving both of these aims as well as answering all of the doubts and uncertainties that are raised in the campaign.

Because Vote Leave have decided against such a strategy they have left themselves extremely vulnerable. Thus we the Treasury analysis which tells us:

A vote to leave would cause a profound economic shock creating instability and uncertainty which would be compounded by the complex and interdependent negotiations that would follow. The central conclusion of the analysis is that the effect of this profound shock would be to push the UK into recession and lead to a sharp rise in unemployment.

Vote Leave have essentially set up a series of straw men for the opposition to destroy; they are doing the Remain campaign’s legwork. By advocating leaving the Single Market in one fell swoop it has allowed the opposition to base their entire campaign on the “worst case” scenario.

The Treasury has analysed two scenarios which provide a “shock” or a “severe shock”; both are obviously going to concern the average voter. What they have not been offered is by far the most likely post-Brexit scenario: that Britain leaves the EU and remains in the EEA; the EFTA/EEA option.

The Treasury’s highly dubious analysis of the long-term impact of Brexit included three scenarios:

1.   Britain leaves the EU and remains in the European Economic Area

2.   A bilateral agreement option

3.   Trading under WTO rules only

As you might expect, the EEA option was the least damaging; with GDP projected to be 3.8% weaker in 2030 than it would have been as an EU member. This is itself is highly pessimistic considering the business environment remains the same. The analysis also assumes the government would have done little to boost the economy via domestic reforms and pursuing new trade agreements. We can expect the EEA option to be economically neutral within the short term.

In yesterday’s analysis the EEA option is notable by its absence and we have only the “shock” scenario, based on the Canada style option, and the “severe shock” scenario; based on the WTO option:

Given that the EFTA/EEA option is by far the most viable and one of the few realistically achievable options; it should not be left out of any reasonable and honest analysis. Despite Vote Leave not campaigning on it, there is now a significant and growing faction in the Leave camp openly endorsing it. It is accepted in Whitehall as the best way of transitioning out of the EU and it is the only secession deal that will be passed through the Commons.

The most likely explanation is that the Treasury left this scenario out because the economic impact is minimal even when analysed as negatively as possible; it would avoid recession and this would have ruined the whole theme of the report.

Instead, the Treasury capitalises on the uncertainty that would follow the post-exit scenarios proposed by Vote Leave. Their rejection of the Norway option has paved the way for this report; these are the body blows that will finish the Leave campaign and turn the tide for the Remain campaign.   

The Treasury tells us that four processes would need to be completed:


Process 1: agreeing the UK's terms of withdrawal from the EU under Article 50 of the Treaty on European Union.

Process 2: agreeing the UK's new trading relationship with the EU. 

Process 3: agreeing the UK's new trading relationships with the rest of the world including over 50 countries with which the UK would need to negotiate new trade arrangements. 

Process 4: changing the UK's domestic regulatory and legislative framework.

We are told that each of these four processes, "would be complicated in their own right” and "conducting them all at the same time, on any terms that would be acceptable to the UK and within the specified two-year period for leaving the EU would almost certainly be impossible".

By this point the straw man has well and truly been destroyed. As the Treasury will be well aware, none of this is an issue if we leave via the EFTA/EEA option; which is why we will take that route. The Leave campaign would not defenceless against this if it had adopted The Market Solution.

The Treasury will also be well aware that the UK will not have to renegotiate its existing trade deals. Our trading relationship with the rest of the world is maintained as it is by relying on the well-established presumption of continuity; making this a relatively minor administrative issue.

Our domestic regulatory and legislative framework would remain unchanged as we would, as with most newly independent nations, repatriate the entire acquis and review the body of law over time and make the necessary changes at a pragmatic pace.

We can argue all day about whether the Treasury is behaving responsibly in predicting doomsday and how “free and fair” this referendum is; but the fact of that matter is that Vote Leave have given the government an open goal and they are simply putting the ball in the net. The government now has a free hand to make the case that leaving the EU will cause a recession.

To win we needed to offer reassurance on the economy; instead the newspapers are full of warnings about the risk of recession. This will cost us. 

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