Brexit myths

Author: Christopher Grey


British Euroscepticism has long been dependent on myths that are too numerous to catalogue. 

We could include claims that the judgments of the European Court of Human Rights (ECHR) provide a reason for leaving the EU, even though the two are entirely separate institutions; or that the EU accounts haven’t been signed off for 20 years or more. Indeed the foundational myth of Euroscepticism – which does not survive a moment’s scrutiny - is that in the 1975 Referendum ‘we didn’t know what we were voting for’.

As the current Referendum campaign gets underway we can see several new myths coming into play such as claims that ‘we don’t control our own borders’ (we do, because we are not in Schengen), alongside various obfuscations that amount to myths. These include constantly shifting the definition of what Brexit means, so that when discussing the trade effects of Brexit its advocates invoke Norway, but when discussing the immigration effects of Brexit they invoke Canada.

In relation to, specifically, post-Brexit trade negotiations, there are at least four myths constantly repeated by Brexiters:

  • We’re the 5th largest economy in the world – we’re bound to get a good, quick Free Trade Agreement (FTA) with the EU

The top 10 economies in the world, excluding EU member states are US, China, Japan, Brazil and India. None currently has an FTA with the EU (though some are under negotiation). Actually, large economies have more difficulty in negotiating FTAs, because they are so much more complex. Anyway, it’s not just about economics: if the UK got a good exit deal it could lead to further exits and encourage Eurosceptic parties within individual member states, so the EU negotiating posture is unlikely to be accommodating, as former Cabinet Secretary Gus O’Donnell recently explained.

  • The UK has a balance of payments deficit with the EU – they need us more than we need them

It is strange that a balance of payments deficit is viewed by Brexiters as a strength! In negotiating terms it actually cuts both ways because whilst it can be argued that the rest of the EU( rEU) ‘needs’ the UK as a customer, it also means that the UK is vulnerable to any tariffs as that would push up domestic prices. Moreover, this myth ignores the relativities of UK-EU trade: 3.1% of rEU GDP is linked to exports to the UK whereas 12.6% of UK GDP is linked to exports to rEU. So it is not true to say that ‘they need us more than we need them’. But in any case, the UK is primarily a service-based economy (78% of the economy) and it has a services surplus with rEU. So if a deficit is an advantage in negotiating terms then a surplus must be a disadvantage. So where does that leave UK services?

  • They’re not going to impose tariffs on us and if they do we will do the same to them!

Tariffs would arise if the UK decided to exit the EU and EFTA and would depend on any FTA that was negotiated. That is, they would arise if the UK ended up trading with the EU under WTO terms, something which is often suggested by Brexiters as the fallback, and sometimes the preferred, scenario. But in that scenario, ‘they’ would not be imposing tariffs on us; we would be imposing them on ourselves, and any retaliations would have to be in line with WTO rules. In any case, is a trade war with the biggest trade bloc in the world really something to be relished?

  • Companies like Mercedes and BMW aren’t going to accept tariffs and will pressure the German government to do a deal

This commonly heard argument was made explicitly by leading Brexiter Peter Hargreaves when he said “just imagine the three phone calls [German Chancellor] Angela Merkel would get the following day, the chief executive of [Volkswagen], the chief executive of Mercedes and the chief executive of BMW”. This shows a complete misunderstanding about how international trade works, though. It’s not true that German trade policy is determined by the CEOs of its car companies, but even if it were the Brexit UK-EU deal would have to be agreed by a qualified majority of the (by then) 27 strong Council of Ministers and a majority of the European Parliament. It most certainly wouldn’t be down to the CEOs of a few German companies.

Underlying all this are two contradictory myths peddled by Brexiters. On the one hand, they say that within the EU the UK has no voice, cannot affect decisions, and is wholly subordinate to other countries. On the other hand they say that outside the EU but in negotiation with exactly the same countries the UK has the strength to get whatever deal it wants. Those two propositions can’t both be true; and in fact neither of them is true.

And there is another contradiction, or perhaps an irony, and it is this. For all that Eurosceptics insist that the EU is not what the UK voted to remain in in 1975, and for all that they say that the UK has no influence in the EU, the fact is that the shape of the EU today is very much in line with what successive UK governments have fought for since 1975. The extension of the single market into more and more sectors of the economy, especially the service sector, and the eastwards expansion of the EU to take in the former communist bloc were both key UK foreign policy objectives. That the UK achieved these whilst remaining outside of the main thrusts of EU integration (the Euro, Schengen) is extraordinary. And it makes all the more extraordinary the Brexiters should now seek to leave the EU that Britain has so comprehensively shaped in line with its own interests.

 

 


Christopher Grey

About the Author

Christopher Grey

Christopher Grey FAcSS is Professor of Organization Studies at Royal Holloway, University of London.

Before that he held Professorships at the Universities of Warwick and Cambridge, where he was also a Fellow of Wolfson College. Publications include Decoding Organization: Bletchley Park, Codebreaking and Organization Studies (Cambridge University Press, 2012) and Secrecy at Work: The Hidden Architecture of Organizational Life (Stanford University Press, 2016).

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Christopher Grey

About the Author

Christopher Grey

Christopher Grey FAcSS is Professor of Organization Studies at Royal Holloway, University of London.

Before that he held Professorships at the Universities of Warwick and Cambridge, where he was also a Fellow of Wolfson College. Publications include Decoding Organization: Bletchley Park, Codebreaking and Organization Studies (Cambridge University Press, 2012) and Secrecy at Work: The Hidden Architecture of Organizational Life (Stanford University Press, 2016).

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