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BREXIT, how to make (almost) everyone happy

A pro-European Prime Minister would get better treatment and more flexibility from the EU, says Mark Casson

Posted by Rebecca Paddick | July 06, 2016 | International

How can the UK get a good deal from the EU? As the economist Milton Friedman famously said: ‘There is no such thing as a free lunch’. If someone buys you lunch they want something back in return. We want sovereignty from the EU. So why not offer them lunch? We need to offer them something, for otherwise they will offer us nothing in return.

Most voters want full access to the EU market, more control over immigration, and greater independence in legislation; they just can’t agree on how to get it. Why not offer money? At the moment we pay 2% of national income to the EU and get back 1% in regional investment, agricultural subsidies and research grants – a net contribution of 1%.  We could top that up with another 1% in return for greater sovereignty. Someone would have to pay – higher rate taxpayers, for example. It wouldn’t be popular, but it might work. The alternative could be very much worse.

Britain is not alone in wanting more sovereignty – and EU leaders know this. By offering Britain a ‘flexible membership package’ they could set a useful precedent that would benefit other countries too. The money we offered could go to helping smaller poorer countries, EU countries, who would then be keen to support the package. So there is a good chance that the EU would agree.

Euro-sceptics are dedicated not only to leaving the EU but to undermining EU institutions and encouraging other countries to leave as well

Could this really work? EU leaders have said that the UK cannot ‘cherry pick’ and that we are either ‘in’ or ‘out’. But this is because there is no money on the table. It’s just a way of them telling us that there is no free lunch. The EU does not want to punish the British people. Its leaders wanted to punish David Cameron for using EU membership as a ploy in a domestic election, and calling a referendum that he could not win. A new leader who was pro-European would get better treatment and would get more flexibility, as a reward for his or her support. The main obstacle to flexibility is here in the UK. Euro-sceptics are dedicated not only to leaving the EU but to undermining EU institutions and encouraging other countries to leave as well. A Euro-sceptic leader would get no flexibility, and could make the situation even worse.

The Brexit debate has generated ‘more heat than light’. But ‘Project Fear’ and ‘Project Sovereignty’ have now given way to ‘Project Reality’. We need realistic proposals and not more hot air. If we insist on taking all the gain, and leaving the EU with all the pain, we will get no deal. If we set out to destroy the EU, we are more likely to destroy ourselves instead. We need a win-win proposal to put on the table. With the political parties paralysed by leadership contests, ordinary citizens need to show some initiative. So let’s ask for what we as the citizens want, but offer something sensible in return. Who knows? We might even get what we want – but we’ll only get it only if we offer a reasonable price. We can have both sovereignty and access to market, but we will have to pay – surely a great trading nation can appreciate that?

Mark Casson is a Professor of Economics at the University of Reading.

W: www.reading.ac.uk

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