The schools will all get new books. The hospitals will all be rebuilt. Long-suffering public sector workers will finally get a pay rise and there will be a ton of money to fight climate change. Liberal Democrat leader Jo Swinson is promising there will be a £50 billion ‘Remain Bonus’ to spend on public services after she has won the general election and cancelled our departure from the European Union. If she weren’t quite so humourless she might even be tempted to put that figure on the side of a bus.
But hold on. From die-hard Remainers, who accuse the other side of peddling dodgy figures and who pride themselves on ‘evidence-based’ policy-making, that claim is more than little outrageous. In fact, there wouldn’t be any ‘bonus’ from Remaining in the EU. It is a number that makes even the £350m on the Leave bus look like something from a rigorously peer-reviewed academic journal.
The Lib Dems argue the economy will grow faster if we stay inside the EU and that will translate into higher tax receipts. The total they reckon will be £50bn – a curiously precise number, not that they made it up on the back of a fag packet or anything – over five years. So far, so good. Faster growth would indeed translate into more tax revenue and the government would have more money to spend. The trouble is, there are three big flaws in the argument.
First, there will still be a lot of uncertainty. The main reason Brexit hits growth is that is creates instability for businesses. That deters investment and means the economy does not grow so fast. But revoking Article 50 won’t fix that. At least half the electorate will still want to leave the EU. They will be more furious than ever.
While it may be true we would have grown faster if we had never had a referendum in the first place, that doesn’t mean we will if we revoke. Business will still be very doubtful about our place in the EU.
Next, the EU has become far more protectionist since we decided to leave in 2016. It has embarked on a programme of creating ‘national champions’, an industrial strategy, harmonising corporate taxes and clamping down on technology. By remaining we will be signing up to lots of new rules and policies, none of which are in any way right for the British economy. Will that help growth? It doesn’t sound very likely.
Finally, if we cancel Brexit the Bank of England will almost certainly raise interest rates. It has been quite clear it has only held them down this year, despite record employment and rising wages, because of the chaos around our departure from the EU. If we stay, it will put them up, which will hit businesses and home owners. At the same time, sterling will jump in value, which will hurt our exporters. There is just as likely to be a Remain Recession as a Remain Bonus.
In fact, the one point both sides of the argument miss is this. The EU is largely irrelevant to the UK economy one way or another. Taxes, fiscal and monetary policy, domestic regulations, skills, education, infrastructure and rates of entrepreneurship all matter just as much as membership of a big-but-not-terribly-successful trade bloc and arguably more.
Leaving was never going to do much damage to the economy. And Remaining won't make it much better. It would be better if the Lib Dems were honest about that – instead of peddling yet more dodgy figures.