We're familiar with the warnings about the cost of Brexit. The 'People's Vote' campaign released an estimate yesterday suggesting that Theresa May's deal will leave the UK £100bn worse off a year. Tomorrow, the Treasury will unveil its forecasts of the economic impact of Brexit. But what about the price of staying put in the EU?
Whatever those clamouring for a 'People's Vote' might claim, no Brexit does have a cost. Firstly, the price in terms of political capital will be significant. What does going back on the referendum result say to the 17.4million voters who voted Leave? What about the damage done to trust in our institutions and our politicians? Or to the idea that voters can change our country’s destiny by the power of their choices at the ballot box?
It's important to remember too that there is no such thing as continuity Remain. If Britain does stay in the EU, life will not be how it was before the referendum result, whatever you might hear from those keen to pretend the 2016 vote never happened.
Under Britain's current membership of the EU, the UK receives a rebate equal to 66 per cent of the difference between what we contribute to the budget and our receipts from EU spending. But earlier this month, the EU's budget chief Guenther Oettinger made it clear that Britain would lose this £5.6bn rebate even in the "pleasant but improbable" event of it staying in the bloc. He’s not the only one dishing out the truth about the cost of remaining. Guy Verhofstadt has said that we would lose various opt-outs negotiated over decades as the rest of the EU integrated. Most controversially, this includes a permanent exemption from joining the single currency. On top of this there are now demands that decisions on migration and asylum are taken away from member states to the EU level. And Merkel and Macron have both called for an EU army. If Britain were to stay in the EU, there would be no way of guaranteeing an opt out from any of these things.
We also know that to remain in the EU means that Britain's membership of the Single Market and the Customs Union continues. Yes, these offer big benefits to many of Britain's largest employers who would be able to work on a level playing field across the continent. But to many small companies that don’t export, they would have to continue to adhere to rules that they have no ability to shape or hold accountable those that do. Open Europe calculated that the most expensive 100 regulations add over £33bn of costs to Britain's economy — including £4.2bn from the Working Time Directive and £3.4bn from the EU Climate and Energy Package. But it's questionable that all these extra costs would in any way benefit small retailers that sell only to British customers.
To make matters worse for such businesses, these costs of doing business in the EU will almost certainly continue to grow. GDPR rules were introduced this year, and while large companies that handle EU data will still have to comply with these rules when Britain leaves the EU, Brexit could mean that this burden is lifted for other smaller businesses that don't. The removal of such regulation would be a big relief: already FTSE 350 companies spend over £800m on complying with the rules — and that’s before the cost to the public sector is counted.
On the world stage, too, it is important not to underestimate the cost of Britain staying put in the EU. The global Brexit narrative will be a thing of the past and going back on the referendum result will mean a meeker and weaker Britain in the eyes of other countries. After all, if we cannot even negotiate in good faith with our friends, we can hardly be expected to traduce and tackle tyrants. We certainly will lose the ability to shape the world if we signal to other countries that we cannot even shape our own destiny.
So the status quo is clearly no longer an option and its proponents would do well to be honest about that now. Otherwise the drip feed of rebates cut, of opt-outs gone, and the creep of extra statehood will build up. There is a small but possible chance that the cost of Remain – or even reapplication after no deal – might be to force the UK to sign-up in the long-run to the Euro and to Schengen. All of this, delivered by a procession of previous prime ministers, Brussels bureaucrats and establishment figures that ignore the vote from two years ago will risk that build up becoming seriously unstable. The dam may never break but if it did, it may plausibly lead to a Brexit led by a populist they’d like even less than Theresa May.
The Prime Minister's compromise deal is an attempt to balance the costs and benefits of a great many groups and peoples, the hopes and dreams that many voting for Brexit had and to mitigate the fears that many of those voting Remain had. If the PM is serious about her deal – and if she wants to lead the country to better days ahead – she will need to head off the option of Britain remaining in the EU for good. That means not just spelling out the costs of Brexits she doesn’t like – or the price of no deal – but setting out the costs of going back cap in hand to the EU too.