12 Feb 2016

London School of Economics' CEP publishes partial and inaccurate Brexit report

The Centre for Economic Performance at the London School of Economics and Political Science describes itself thus:

The unit has published a 14 page 'report', a CEP Brexit Analysis with the title, "Life after Brexit: What are the UK’s options outside the European Union?". Its authors are Dr Swati Dhingra and Dr Thomas Sampson (Edit: this author information has been amended to correctly reflect the preamble on the report and the LSE website).

It isn't necessary to go beyond the first four bullet points of the report to grasp its direction of travel and intentions. This is a naked piece of propaganda, dressed up as an analysis, that relies on reader ignorance to get away with its deliberate attempt to scare people away from voting to leave the EU. The subtext is 'Brexit is dangerous'. The first four bullets with my annotations (red underlines and blue text) are shown below:


Taking each bullet in turn...

1. Quite how a country having independence - something Britain did actually enjoy before the EU and most countries in the world still enjoy - is a 'leap into the unknown' is a mystery. But this is a stock EUrophile phrase to make people nervous of cutting the EU apron strings.

2. The market of which we are a part is the European Economic Area (EEA). The EU is a political union which, along with several non EU countries, makes up a customs union. Three members of the EEA are part of EFTA and not in the EU or part of the customs union at all, and are responsible for their own trade deals. :

The FLEXCIT plan for leaving the EU and re-establishing Britain in the global community as an independent country, has as its first stage Britain rejoining the EEA and therefore maintaining market membership - not just access - until such time as a comprehensive trade agreement can be negotiated. Brexit is not a default departure from the EEA.

But more importantly, the authors raise the question of what happens to three million EU citizens living in Britain and the two millions British citizens living in the EU after Brexit. In the 'report' they declare:
There is a presumption in international law that when treaty rights have been executed, those rights are unaffected by withdrawal from the treaty (House of Commons, 2013). This suggests that individuals and businesses that have taken advantage of the Single Market to move either from the UK to the rest of the EU or in the opposite direction would probably be allowed to stay. But this outcome is not certain and would certainly be a subject addressed by any withdrawal agreement.
There isn't any uncertainty at all. Articles 65 to 72 of the Vienna Convention on the Law of Treaties specify the procedures to be followed and the consequences of termination or suspension of a treaty.

Article 70b of the convention states that the withdrawal from a treaty "does not affect any right, obligation or legal situation of the parties created through the execution of the treaty prior to its termination". So there is no suggestion that such people would 'probably' be allowed to stay where they are. Their status is guaranteed as a result of, in the words of Lord McNair, the "well-recognised principle of respect for acquired [vested] rights". The only possible reason for Dhingra and Sampson's uncertainty in this area is either a lack of understanding, or a deliberate attempt to create needless fears and doubts in people. Acquired rights are regarded as a fundamental principle of international law, or a customary law if you will, which even non signatories accept.

3. Unsurprisingly, unambiguous certainty return to Dhingra and Sampson as they declare that "There are economic benefits from European integration, but obtaining these benefits
comes at the political cost of giving up some sovereignty". Presumably there aren't any economic benefits from independence and control of our country's trade policy and ability to negotiate our own agreements.

The issue here is that far from giving up some sovereignty, Britain's EU membership has relegated our nation state to the status of province of the EU supranational entity. When an EU member state's parliament is unable to legislate as it sees fit in areas that the EU has taken control of, and that nation's supreme court's rulings can be struck down by the ECJ, then what has been given up is not 'some sovereignty' but substantive control of the country.

There are not many areas where the EU does not direct or limit our actions. Playing this down is a tool of the EUrophiles, deployed to underplay the sheer depth of this country's subservience to the EU.

4. Norway. We've been here before time and again. Leaving the EU to rejoin the EEA scares the EUrophiles because it removes the EU's political control of a nation while enabling to continue the existing trade relationship. It removes the greatest leverage the EU has when trying to make nations bend to its vision of how things should be done (ie by Brussels). The 'fax law' meme makes its customary outing. So the usual rebuttal to it comes out of the hangar for a quick circuit below:

The downside of EEA membership is that non-EU members of the regional trading arrangement still need to implement and abide around 20% of laws, which are there to service the operation of the single market, such as the free movement of goods, persons, services and capital. They also need to maintain a commitment to regulatory convergence and implement common enforcement systems. But it is still far better than anything any EU member state enjoys.

Another plus side is that a non-EU member of the EEA does not have to apply common tariffs and can also negotiate and agree its own trade agreements. This immediately provides additional scope and flexibility for British exporters, and the prospect of other British businesses of exporting to currently untapped markets on favourable terms where the EU has no deal.

But what of Dhingra and Sampson's claim that Brexit "would mean paying about 83% as much into the EU budget as the UK currently does"? It simply isn't true. That figure can only be arrived at by including grants and payments Norway makes that are not remitted to the EU budget, such as the money it channels to former communist states to aid their economic rehabilitation.

According to the Norwegian government's own figures, its total EU mandated payments (gross) are approximately £435m (€600m) per annum. With a population of five million, that is approximately £86 (€120) per head (gross). Net payments, however, are about £340m (€470m) per annum, or about (€94) £68 per head per annum.

On the other hand, in 2014, the UK gross contributions to the EU were £19.2bn, less £4.9bn rebate. That gives an equivalent gross payment of £14.3bn. After receipts, our net contribution was £9.8bn. With a population of 64 million, that puts our gross contribution (without rebate) at £300 per head, our equivalent gross payment at £223 per head, and our net per capita payment £153 per head per annum – more than twice the Norwegian payments.

It is also worth noting that the amount Norway paid in total to EFTA (which includes the cost of EEA administration and operation fees) in 2014 was 12 million Swiss Francs or around £8.4 million pounds.This means Norway paid something less than £8 million for inclusion in the single market, approximately £1.60 per head per annum.


This work is staggeringly poor. We should respect people taking a pro-EU view. But they should be honest about it and use facts, not falsehoods. Frankly the LSE should be ashamed of the lack of integrity and academic rigour on show from its faculty. It demeans the college.