Don’t write us off: there is a reason Brussels fears an ultra-competitive Britain

Remainers like to think of the UK as a non-entity, but it is Europe that is the over-regulated backwater

In recent years, Brexit’s most implacable opponents have revelled in rubbishing Britain’s hopes of succeeding on the world stage. Britain is a diminished country, they insist, incapable of functioning on its own. Consider Emma Thompson’s description of the UK as “a cake-filled, misery-laden grey old island”, or Michael Heseltine’s glorious Freudian slip when challenged about our economy outperforming EU rivals: the UK “is doing significantly better than you might hope”.

Yet at the weekend came a dose of (unintended) optimism, from an equally unexpected quarter: Angela Merkel. The German Chancellor warned of the threat an independent UK posed to the EU. “With the departure of Great Britain, a potential competitor will of course emerge for us. In addition to China and the United States of America, there will be Great Britain as well.”

Merkel’s remarks confound the hardline Remainer delusion of postbrexit Britain as a strategic non-entity. They confirm, too, that European leaders are indeed afraid of a dynamic, competitive, deregulated Britain (a “Singapore on Thames”) emerging on their doorstep.

This is not the first time that EU leaders and officials have spoken in these terms: the difference is that now such fears could become reality. The Government has decided to abandon several key tenets of Theresa May’s Withdrawal Agreement insofar as they apply to Great Britain; a Ukwide customs union, pledges of regulatory alignment and “level playing field provisions” – agreed rules on environmental standards, labour regulations and state aid. These would have forced the British mainland to accede to scores of EU rules, determined by Brussels (often in the interests of those most capable of lobbying Brussels, not consumers).

Merkel went on to add that “Europe must show what the European Union can achieve: That means we must work faster, work more consistently, and the new [European] Commission... should also become operational as quickly as possible.” It may be tempting for some commentators to read this as a declaration of (healthy) competition with Britain. But this would be to ignore the EU’S history.

Europhiles often portray the EU as a “free market” which we are foolishly abandoning. In fact, it is a highly regulated, protectionist bloc, which harms nations’ comparative advantages internally through “harmonisation”, and, rather than compete on the global market, prefers to stifle competition through the common external tariff. The EU’S attempts to bring Switzerland to heel by denying access to the single market show that it is not afraid of bullying where necessary.

Instead of working to improve its own competitiveness, since the referendum the EU has sought to nullify Britain as a competitor – and, with the passing of May’s deal, would have succeeded. Merkel’s comments should remind us of the perils of remaining too closely aligned after Brexit.

After all, the EU has long been reluctant to embrace economic dynamism, while others have adopted innovative approaches towards science, agriculture, medical research, AI and much else. The precautionary principle, EU regulators’ favoured risk management strategy, places the onus on the creators of new technologies to prove their invention is safe where some risk may exist – even if there’s no scientific consensus to suggest any real harm will occur. The result? It’s often too much bother to innovate.

This dirigiste trend seems deeply entrenched; in the last year alone, Emmanuel Macron has promised enhanced protections for French farmers, while Germany has launched a new industrial strategy to defend “national champions” against threats from China and the US.

Singapore, with its statist and authoritarian social policies, may not be a perfect model of governance, but it can teach Brexit Britain much about building a flourishing economy. The PM’S promise of new regimes for fisheries, agriculture and trade in the Queen’s Speech, to “[seize] the opportunities” of leaving the EU, puts the Government on the right side of the ideological divide, at least for now. Meanwhile, Merkel’s intervention is a reminder of the high stakes that make our departure all the more urgent.