Brexit Beckons: Thinking ahead by leading economists

"Indeed and, going back to what we were just saying, there were some people on the Brexit side who before and immediately after the vote were advocating some form of the Norway option. As Richard says, most economists think that the Norway option would be optimal. It’s not obvious to me, because the Norway option still has some of the disadvantages that I was just talking about—that you have to accept the rules while having a significantly lesser voice in how those rules are constructed. “It’s not obvious, once you’ve taken the decision to Brexit, that you shouldn’t go the whole hog.” There is a counterargument to that, which is to say, ‘Well, actually, even if you thought Brexit was not the right thing to do from an economic perspective, if you’re going to do it then maybe you should do it properly.’ ‘Properly’ meaning making your own regulations, making your own trade deals—although Norway can, to a certain extent, make its own trade deals—and setting your own immigration policy. Norway cannot set its own immigration policy with respect to citizens from other EU and EEA countries. It’s not obvious, once you’ve taken the decision to Brexit, that you shouldn’t go the whole hog. There are some interesting ones on what caused the Leave vote, from an economic perspective. To what extent was it immigration? To what extent was it economic decline? Diane Coyle’s essay on that is very interesting. She is very much a believer that technological and globalisation have, on the whole, improved our economic outcomes. But she also feels—very strongly—that the policy response, in the 80s and 90s, to deindustrialisation in the parts of the UK that were left behind by globalisation, was very badly lacking. There’s this idea that it was a failure of previous governments to have anything that looked like an industrial or regional development strategy. Exactly. Diane and Kevin’s pieces are complementary. The other important chapters are those that are looking forward and deal with the UK’s future trade relationships both with the EU and the rest of the world. There’s an incredibly good line-up of trade economists—including Alan Winters and Jim Rollo—who have been doing this stuff for decades. Richard Baldwin is also a very eminent trade economist. Their moment has now come. Trade economics is back in fashion. “Free trade in cars is not just a matter of having zero tariffs—it’s a lot more complicated.” The important thing that comes from looking at all their chapters together is the extent to which free trade is not just about abolishing tariffs. There are a number of different aspects to that. First of all, even trade in goods is much more influenced by regulation than it used to be. Cars are the classic example. Parts shuffle back and forth across borders before being assembled. Regulation matters a lot: We have emissions standards, safety standards, and all the rest of it. Free trade in cars is not just a matter of having zero tariffs—it’s a lot more complicated. Then, when you get to trade in services and movement of capital, and the role of the City, things get even more complicated. Just the sheer complexity of the issues that are involved both in reshaping our trade relationship with the EU, and in working out what our relationships with other countries in the future will be, is just fascinating. Expensive and complicated. We’re a very, very long way off. We don’t even know what we want yet."