THE TREASURY’S EU DOCUMENT IS PACKED WITH FACTS AND ANALYSIS

PETER JONES

According to Conservative Eurosceptic MP John Redwood, the Treasury’s assessment of the damage that would done to Britain’s economy by leaving the EU is “worthless” and “idiotic”.

Actually, the only thing that is idiotically worthless in this particular Brexit debate exchange is Mr Redwood’s comment.

Having read the 200-page document, I was struck by how jam-packed it was with facts and analysis. It is guilty of a bit of glossing over and sexing-up but, having listened to Mr Redwood’s BBC interview, that pales in comparison with his airy assertions which, at best, fly in the face of economic and political reality or, at worst, are just fatuous.

Out-ers have three main charges against the Treasury case.

First, that when viewed as a whole it has to be politically biased because it has been produced by civil servants working for a government which is pro-remain, therefore it has been deliberately biased towards supporting the argument for staying in.

Well, let’s take the facts as presented regarding trade.

About the only thing on which in-ers and out-ers agree is that Britain’s economic interests are best served by a free-trade world in which the costs of sending goods and services across borders are reduced to nil.

This is because, as the document says, total trade (imports and exports) as a percentage of GDP, has risen from 23 per cent of GDP in 1965 to 64% in 2015.

In other words, Britain has made a big success of freer trade.

Cheaper imports have reduced our cost of living and increased exports have created lots of jobs. The EU has been a big part of this success story.

Citing independent studies, the report says that Britain’s trade with EU member states is between two-thirds and four-fifths higher than it would have been if the UK had been outside the EU and dependent for its EU terms of trade in World Trade Organisation rules.

The snag with this particular argument is that Britain runs a trade deficit with other EU states. This is largely because our manufacturing sector has declined faster than Germany’s, a decline which however should be eventually offset by current much faster growth in service exports, provided we are still in the EU.

The second charge is that the Treasury has got these type of assessments wrong in the past, so this is probably wrong.

Yes, it has got some things wrong, notably over joining the euro, but it has also got a lot of things right, notably over cutting the deficit and restoring growth.

Economics is not an exact science; if it was, there wouldn’t be any recessions. The argument here is not about exactness of predictions, but where the balance of risk sits.

Which brings me neatly to the third charge.

In Mr Redwood’s version of this, the Treasury’s arguments about the damage to the economy Brexit would cause are idiotic because he has been assured by German politicians that Germany wants its trade with the UK to be undamaged irrespective of whether Britain is in or out of the EU.

This is just preposterous nonsense.

The idea that Britain would get a free pass to everything it likes about the EU while being at liberty to ignore everything it dislikes in return for quitting and damaging the EU defies all economic and political logic.

Under current trade agreement rules, it is simply impossible for the EU to agree a special EU-UK free trade zone.

The balance of economic risks quite clearly points to there being a lot more risk to the UK economy in being outside the EU than being in it. Read the Treasury document and see for yourself.

Peter Jones is a freelance journalist based in Scotland writing mainly for The Economist and The Times.

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