Singapore-on-Thames

Brexiteers want a low tax, deregulated UK, argues Anthony Hilton

THERE is an old saying that you should be careful what you wish for, in case you get it. Those clamouring fo r crashing out of the European Union — going it alone without any deal — are a case in point. They are certainly strident, none more so than the Prime Minister, at least some of the time. But they are reluctant to say what happens if we do crash out. They will wax lyrical about 50 years hence; they are reluctant to talk about the next five.

Others are less reticent. John Springford of the Centre for European Reform wrote last month that a no-deal Brexit would be disruptive for the British economy, which even the hardline Brexiteers concede.

If we trade on World Trade Organisation terms it would mean that tariffs would have to be paid on British goods entering the EU and British goods, particularly agricultural goods, would probably be checked at the port of entry. Checks on the Dover to Calais route would lead to lengthy queues.

But what happens next?

Some financial services will continue but this is only temporary. Springford says the regulatory equivalence between Britain and the EU is granted only until March 2020, less than six months. If the Government wants to extend this, or any other concession, then the EU will demand in turn that we sign up to at least some of the withdrawal agreement, which to remind you is the £39 billion of money owed to the EU, the rights of EU citizens to stay in the UK, and the Irish backstop. In short it is all those things Boris Johnson thinks he can walk away from.

But even if we paid this money it would still not be legally possible to move seamlessly on to the standstill transitional agreement which Theresa May negotiated. We would be in a much worse position than that.

This is because EU lawyers say the transitional agreement is only possible as part of Article 50. If we crash out we will no longer be a member state of the EU, and therefore no longer governed by Article 50 and the standstill agreement no longer applies. We would instead have to negotiate under Article 218, which deals with non-member countries. This article gives any of the other 27 member states and the European Parliament a veto over any trade deals that go beyond tariffs, quotas and goods standards.

Now unblocking the Dover to Calais route might be possible for goods without everyone putting in their oar, but there would still be problems with agriculture as the EU would insist that the UK could not diverge from its standards, and would probably want some form of enforcement. This also would create problems for any embryo trade deal with America, because the latter would want to export chlorinated chicken and hormone-treated beef to the UK, and those products might leach into the EU, or so it might fear.

But the real problem is services, particularly financial services and the end of equivalence.

A comprehensive deal to extend equivalence would, according to Michel Barnier, only happen if it suited the EU. Further, any idea in extending equivalence to other financial services or, for example food or medicines, would be unlikely to win that approval, if only because it would open the door to other non-EU countries which would want the same. William Waldegrave, or Lord Waldegrave of North Hill, is a life peer and was a minister in the Thatcher and Major administrations. He has also produced a book* where he identifies four possible futures for the UK after a no deal: a Singapore-on-Thames with deregulation, low tax, no social safety, longer hours, paid-for health service, capped pensions and restricted unemployment benefits; a subservient, forelock-tugging, 51st State of Donald Trump’s America; a return to Europe without the concessions we now have and where we would accept all their institutions; and lastly as a larger Canada, punching at our correct weight but without our imperial delusions.

Of these, Waldegrave prefers Canada. I suspect though that the Brexiteers will not go cap in hand to the EU but opt instead for the Singapore-on-Thames option. This would, as one (multi-millionaire) said to me, “give the country a good kick up the arse”.

Of course, he and his friends would be the ones doing the kicking.

*Three Circles into One: How did we get here and what happens next? by William Waldegrave

The real problem is services, particularly financial services and the end of equivalence