Dr Brian Benfield on Brexit: Sovereignty dividend awaiting collection

Brexit's critics point to nine difficult years as proof the vote to leave the European Union was a mistake. But the argument for Brexit was never immediate prosperity; it was recovering Britain's constitutional freedom to set its own laws, trade terms and immigration policy. That freedom was won. It has barely been used. Governments have largely reproduced European-style regulation at Westminster rather than building a more competitive alternative, while immigration policy became a domestic choice rather than a Brexit failure. The Office for Budget Responsibility estimates a long-run productivity cost of around 4%, but the constitutional prize, a sovereign Britain free to trade and legislate on its own terms, remains uncollected. The real test, the author argues, is still ahead..By Dr Brian Benfield*.Brexit has acquired an unfortunate political paradox. Those who opposed Britain's departure from the European Union (EU) now point to the difficulties that followed as evidence that leaving was a mistake.The primary case for Brexit was never that Britain would become richer overnight. It was that Britain would recover to itself the lost constitutional freedom to govern itself. To make its own laws, determine its own immigration policy, negotiate its own trade agreements and free British business from a one-size-fits-all regulatory regime devised by bureaucrats for 27 countries with very different economic, cultural, financial and political circumstances.The central objective of Brexit was sovereignty. That objective was achieved. Yet so far, Britain has all but completely failed to exploit it.The first and perhaps most consequential failure was Prime Minister Theresa May's handling of Brexit. Her government's approach suggested a deep reluctance to accept what leaving the EU meant.The May Government procrastinated over an agreement that would allow Britain formally to leave while preserving as much of its existing relationship with the EU as possible, completely losing the momentum and initiative.The result was an arrangement that satisfied no one. The proposed Northern Ireland backstop became the most notorious manifestation of the problem: Britain was supposedly leaving the EU while accepting arrangements that could indefinitely constrain its freedom to determine its own trade policy.Brexit was treated as a problem to be minimised, rather than an opportunity to be optimised.Britain under Boris Johnson finally left the EU on 31 December 2020, some 4 years and six months after the referendum in June 2016.Then came Covid, the energy crisis, inflation and the disruption of global supply chains, making the economic benefits of Brexit extraordinarily difficult to isolate. Yet Brexit became the convenient scapegoat for almost every subsequent disappointment.Brexit was plainly not costless. The Office for Budget Responsibility estimated that the post-Brexit trading relationship could reduce Britain's long-run productivity by around 4%, relative to remaining in the EU.However, that is not the end of the calculation. The question is whether the freedoms acquired will ultimately produce benefits that outweigh those costs.Britain has recovered its sovereignty. Important benefits of Brexit are therefore not visible in quarterly GDP figures. They are constitutional.Britain is no longer bound by the EU's socialist legislative and regulatory machinery. It can amend or repeal inherited European legislation without seeking Brussels' permission. The Retained EU Law (Revocation and Reform) Act 2023 has already removed the special status of retained EU law and provided mechanisms for replacing or reforming it..Read more:.Ten years of Brexit: The Economist's brutal verdict — Britain lost a continent, found no role, and is still searching for silver bullets.This is potentially revolutionary, but only if government uses that freedom.There is little point in escaping European regulation merely to reproduce it in Westminster.A genuinely post-Brexit Britain should create a substantially more competitive regulatory environment: Far simpler business regulation, much faster planning decisions, appreciably lighter employment regulation, considerably more flexible financial markets, and a tax system designed to attract investment, not to drive it away.The same applies to industrial policy. Outside the EU, Britain has greater freedom to support strategically important industries without being constrained by the EU's state-aid regime.Brexit has supplied Westminster with discretion. It has not, apparently, supplied it with wisdom..The same principle applies to international trade policy.The argument for Brexit was never that Britain should trade less with Europe. It was that Britain should be free to trade with Europe and the rest of the world on terms determined in Britain.That opportunity is beginning to materialise. Britain has concluded agreements with countries including Australia, New Zealand and Japan and has joined the CPTPP, giving it a place in a major Indo-Pacific trading bloc.Geography ensures that Europe will remain Britain's largest and most important neighbouring market. Nothing about Brexit changes that.Geography, however, is not destiny. A sovereign trading nation should seek to maximise trade in every direction rather than subordinate its commercial policy to a single regional bloc. The objective should therefore be more trade, not less: Europe plus the Commonwealth, North America and the rapidly expanding economies of Asia.Immigration provides perhaps the clearest illustration of the difference between acquiring sovereignty and exercising it.One of the principal arguments for Brexit was that Britain should determine who could enter the country rather than accepting free movement as a consequence of EU membership.That objective was achieved. However, Britain has since chosen to permit extraordinarily high levels of non-European immigration.That was not a failure of Brexit. It has been a policy choice by successive British governments..Read more:.Bregret now UK's majority view — so why won't anyone call another Brexit referendum?.Brexit did not guarantee lower immigration. It gave Britain the power to regulate it.The same applies to illegal immigration. Brexit did not magically solve the problem of people crossing the Channel in little rubber boats. Nor did it cause the phenomenon. Controlling the border remains a matter of domestic government policy, enforcement and international cooperation.Again, Brexit supplied the instrument. Successive British governments have failed to demonstrate the political will to use it.This is why it is far too premature to declare Brexit a failure. The real test lies ahead.The proper counterfactual is not Britain in 2026 compared with an imaginary Britain that remained in the EU. It is Britain over the next 20 or 30 years under two different constitutional arrangements.In one, Britain remains subject to the continuing evolution of socialist EU rules and the institutional constraints of membership.In the other, it is a sovereign country trading extensively with Europe while free to determine its own tax, regulatory, immigration, financial, industrial and commercial policies.The second could prove immensely advantageous, but only if Britain displays the necessary intestinal fortitude to use its new freedom intelligently.This is where Brexit supporters should direct their criticism. Sovereignty is not an economic policy. It is the capacity to actually choose an economic policy.If Westminster merely replaces European bureaucracy with British bureaucracy, imposes regulations equally onerous as those emanating from Brussels, raises taxes, restricts enterprise and permits uncontrolled immigration, Brexit will indeed have been an utter waste of opportunity. Britain would simply have exchanged one bureaucracy for another.Brexit now needs a second act. The first act was departure.The second, and far more important act, is what Britain does with the freedom it has recovered..Read more:.Dr Brian Benfield on the regulatory state: A protection racket and the rise of “new communism”.That requires genuine de-regulation rather than the cosmetic re-labelling of European rules. It requires planning reform, a far more competitive tax regime, greater freedom for enterprise and innovation, disciplined public spending and an immigration policy aligned with Britain's economic, social and cultural interests.The point of sovereignty is that Britain should be free to deal equally with all parties.The paradox therefore is that Brexit may have failed to deliver several of the benefits promised by its advocates without proving that Brexit itself was wrong.The problem is clearly that Britain has not yet fully realised Brexit.Britain has recovered the power to make its own laws, determine its immigration policy, negotiate its own trade agreements and construct its own regulatory environment.The prize remains available. The mistake was not Brexit. The mistake was imagining that leaving the European Union was the destination.It was only the departure gate..*Dr Brian Benfield, retired professor, Department of Economics, University of the Witwatersrand, is a Senior Associate and Board member of the Free Market Foundation..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Dr Brian Benfield on Brexit: Sovereignty dividend awaiting collection

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