Daniel Hannan is supposed to be the thinking man's Brexiteer. He writes on Conservative Home HERE and is highly critical of May's deal, which he thinks is the wrong way round. We should stay out of the customs union and keep in the single market he says. There may be a grain of truth in this but it doesn't solve the Irish border problem and he talks as if we can just pick and choose as we like. He ignores the EU totally as if they're simply a passing stallholder with an array of goodies on offer.
Figures from Eurostat HERE show how we compare.
The figures are surprising. Some countries like Slovenia and Lithuania export five or six times as much into the single market as they do outside it. Essentially, every one of the EU27 (except Cyprus) is better at exploiting the single market than we are. And let's not forget Margaret Thatcher was the driving force behind the SM. Exporting into the SM as a member is as easy as exporting can get. It is virtually the same as selling into your own domestic market - which is really what the single market is.
But Brexiteers say we need to leave the EU because our exports outside of it are growing faster than those inside. This is the wrong way of looking at it. The EU is our home market or at least we should think of it as such. It's the reason we joined and we can see from the figures how other EU countries manage to export mostly inside the bloc.
Brexiteers are repeating the mistakes of the past. If you concede your home market to others because you can't compete, you are on a slippery slope. It is blaming the customers for lack of sales. If the EU27 don't want our goods we need to look at ourselves and our goods or the way we market them, rather than blame the EU27.
Turning away and looking for easier sales in softer markets elsewhere is not a long term or sustainable solution. The wily competitors who are taking business in your home market will soon be taking business in your new found export markets. Like an athlete, you cannot learn to compete by avoiding competition.
The government's supporting technical reference document (HERE) to the economic assessment talks about the advantages of being in a big trading bloc on page 5:
13. In the long run, theory and evidence suggest that international trade increases output and raises living standards through four key channels:
- Domestic specialisation allows each country to put more resources into what it does best, leading to higher productivity and real wages.
- Greater variety of inputs and products for businesses and consumers, with increased competition and lower prices leads to: i. More efficient production for businesses; ii. Increased consumer choice.
- Access to new markets allows firms to scale their production up, leading to efficiency gains where there are increasing returns to scale.
- Exposure to competition leads demand to shift away from the least competitive firms while the most competitive (and productive) firms gain opportunities to expand into new markets.
The idea that we can shrink our home market by 85% and somehow become more productive and competitive flies in the face of this conventional and widely accepted wisdom. If we cannot become a global trading behemoth inside the EU we won't be able to outside it.
