As a setback in the House of Lords leaves the UK debating how best to accomplish its departure from the European Union, perhaps the most neglected question is the moral one. Rev. Dr. Richard Turnbull, the director of the Centre for Enterprise, Markets, and Ethics (CEME) and also an Anglican minister, asked that leaders focus less on arguments based strictly upon metrics than upon Brexit’s deeper impact upon individual persons in a speech before the Oxford Union:
The most significant economic argument is concerned with access to markets. The reason it is the most important question is that economic growth is a necessary condition for individual, family, community and national welfare. This is a moral question. Without economic growth we damage employment prospects, reduce the tax base, and stifle innovation. Economic growth is not a zero-sum game and is also a prerequisite for the political debates around wealth and income creation and distribution. In other words, unless we bake the cake in the first place, we cannot debate how the cake should be divided. …
[W]e know the EU represents the largest single market in the world (with the US being second). The UK is the largest market for exports from the EU (though only at around 16% of total EU exports), but for the UK around 44% of our total exports go to the single European market, though that percentage has been falling.
The exact parameters of the UK’s access to the Single Market remain subject to negotiation. However, Economists for Free Trade (formerly Economists for Brexit) found that if the UK were to remove all trade barriers unilaterally, it would increase GDP by four percent and lower British consumer prices by eight percent – even if the EU did not reciprocate. Were Parliament to reject the burden of EU regulations imposed in Brussels, GDP would increase another two percent.
However, the Financial Times reports that the UK may have to “maintain or copy the work of no fewer than 34 European regulators” post-Brexit.
EU regulation significantly tilts the playing field in favor of the most powerful and prosperous (not to mention politically connected) firms, Rev. Dr. Turnbull said:
I think there is a cogent argument that EU regulation is an easier burden to bear for larger firms than smaller and medium-sized enterprises; and, in my view, it is SMEs who are the powerhouses of innovation, entrepreneurship and growth, indeed, collectively also of employment. … You can see how, with a regulation like the Working Time Directive, a larger organisation with the resources of an HR department, would find those rules easier to manage and implement than an SME. … [S]o, a significant number of effective, focused, co-owned and co-invested small investment management firms find the burden of the regulatory regime focused and geared towards the larger investment management firms, with their resources and capacity – all investment management firms with funds under management of more than £100m are treated the same, subject to the same requirements, reporting and regulations. So, I am persuaded that there is a negative impact of EU regulation.
Conservative MP Michael Gove made a similar statement at a conference hosted by the Institute of Economic Affairs (IEA) on January 26 in London. Large firms, he said, “can insist on rules that act as barriers for new firms and … they can also, at the same time, virtue signal by saying that these new rules … are regulations inspired by their love for the environment, or their commitment to families.” Artificially erecting barriers that prevent smaller firms from competing, offering innovations, and allowing their owners (and employees) to prosper also has a moral dimension.
Rev. Dr. Turnbull asks those weighing the specific forms of Brexit to focus on one question: “[W]hat will best enable the maximum flourishing of the economy which in turn will enable the flourishing of individuals, families, communities and the nation? Is access to the single market and its benefits too significant to surrender? Is the regulatory regime of the EU sufficiently oppressive and burdensome that it prevents SMEs from flourishing?”
“The answer to that question might vary from person to person, but let us at least ask the right questions,” he concludes.
