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News : UK Economy Last Updated: Apr 9, 2014 - 3:22 PM

British diplomat wins €100,000 prize on Brexit plan
By Finfacts Team
Apr 9, 2014 - 12:56 PM

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Iain Mansfield, a 30-year old member of the diplomatic service based at the British embassy in Manila, on Tuesday evening was announced as the winner of the €100,000 IEA Brexit Prize - - “Openness not Isolation” - - a blueprint for a possible exit of Britain from the European Union.

Mansfield is the director of Trade and Investment at the UK’s embassy in the Philippines and has previously worked for the Department of Business, Innovation and Skills and his winning entry calls for the UK to join the European Free Trade Association, as well as for the introduction of a ‘Great Repeal Bill’ to bring about a comprehensive review and, where appropriate, repeal, of EU regulations. These measures would prevent economic shocks in trade and would reduce the bureaucratic burden on British business, unshackling the wider economy.

He writes: “In the event of an exit, there exists a scenario for an open, prosperous and globally engaged UK that is eminently achievable” and he concludes that a Brexit must ultimately be a political rather than an economic decision, yet calculates that if it occurred, the UK economy would experience a £1.3bn increase in GDP. Significantly fewer regulations, coupled with greater trade with emerging economies, could provide an overwhelmingly positive future outlook for an independent Britain.

The submission argues that the single highest economic priority in the event of a ‘no’ vote would be to ensure the maintenance of zero tariffs on trade between the UK and the EU in all areas apart from agriculture. It also strongly makes the case for the importance of an exit from the Single Market. Staying in would mean retaining almost all of the most onerous and controversial aspects of EU membership. 

Lord Lawson, the former Conservative chancellor, was a member of the judging panel of the Institute of Economic Affairs -- a free-market think tank.

David Cameron, prime minister, has promised a referendum by 2017 if he is still in Downing St.

To compensate for reduced access to the Single Market, a post-EU UK should:

  • Negotiate membership of the European Free Trade Association (EFTA), though remaining outside the European Economic Area. The precise degree of closeness should be somewhere between the positions of Switzerland and Turkey.
  • Pursue free trade agreements with major trading nations such as China and the USA.
  • Deepen its engagement with organisations such as the G8, G20 and OECD.
  • Cultivate bilateral strategic relationships with traditional allies such as Australia, Canada and France.
  • Forge new relationships with emerging powers in Asia and Latin America.
  • Establish a formal ‘EU out-group’ of European countries outside the EU but with close trading arrangements, to allow these countries to speak with a stronger voice in discussions with the EU.

Key recommendations:

  • Regulation. A tailored approach to regulation would undoubtedly produce better results than the one-size-fits-all approach necessitated by EU membership.
  • Specific regulations to repeal due to their damage to the UK economy include: The Working Time Directive, several agricultural regulations such as EU bans on pesticides, binding renewable energy targets, and health and safety laws imposed on businesses and SMEs operating purely domestically. All of these push up costs for both UK businesses and consumers.
  • Judicial. The government should establish and resource a cross-party commission to reassert the supremacy of UK law and British courts.
  • Inward Investment. The government, by engaging business organisations, should conduct a strong and sustained outwards campaign to communicate the reality of terms of exit. Measures such as tax breaks and supply-side incentives should also be introduced to help preserve the UK’s position as the number one inward investment destination in Europe.
  • Economic incentives include: A reduction in the rate of corporation tax to 15% over 5 years; the creation of special economic zones in poorer regions of the UK with incentives for investors such as National Insurance holidays and tax breaks; and a rise in the Research and Development tax credit for new investors by 25% over the standard rates for two years to encourage investment and job creation.
  • Reducing the deficit. As a net contributor to the EU, after reallocating funds the UK would enjoy a £10bn surplus. This should be used to pay down the deficit, but some must be spent on increasing the UK’s administrative capacity in areas that have previously been the competence of the EU.

Commenting on his win, Iain Mansfield, who is director of Trade and Investment at the British Embassy in Manila, said: “At the core of Brexit policy should be an embrace of openness: openness to global trade, openness to worldwide diplomatic partners, and openness to international business and investment. Leaving the EU would involve an inevitable trade-off between access to the single market and independence from European regulations, legislation, and budgetary contributions.

“I take no position on whether a Brexit is desirable, but in the event of such a decision by the people of Britain, my paper sets out a course of action that would maximise the potential for an open, prosperous and globally engaged UK.”

 Lord Nigel Lawson, chairman of the judging panel, said: “'The British people have been promised a referendum on whether the UK should leave the European Union. There are few more important decisions than this. In advance of that decision the issues need to be fully debated, and an essential element of the debate will be an understanding of how the UK might conduct itself if and when we leave.

“Iain Mansfield's prize-winning entry provides an excellent starting point for this important debate, written with the experience of a serving member of the Diplomatic Corps with a solid background in trade policy.'”

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