The problem I had with the official Leave campaign was how it let itself be diverted into conjecturing about what trading arrangements Britain would substitute for its EU Single Market membership. Would it be something like the current Norwegian, or Swiss, or Canadian, or Turkish arrangements? There are two flaws with going down this path of speculation.
First, the trading deal Britain establishes with the EU27 is one of those future policy actions that cannot be predetermined. It will derive from what is negotiated with the EU, which will represent a compromise that will appear to serve best the different national economic interests involved. Moreover, the particular trading relationship established with the 27 other EU countries is not the decisive factor for Britain’s economic future. Nor is there some unique perfect alternative to existing Single Market arrangements that would bring about the ‘best’ economic outcome. Each possible British-EU trade arrangement established would not bring about a fixed economic future. Trading deals are only one small component of how the economic future could evolve.
When organisations claim that leaving the Single Market will mean so many jobs are lost, that manufacturing will experience such-and-such a contraction, and that wages will fall by so much, what is ignored is that all these things are driven not by trade access but by productivity. Most countries in the world are not in the EU Single Market. Their economies do well or badly not because of, or despite being outside of, the Single Market, but because of the state of their own fundamentals of investment and productivity, the impact on them of world economic developments, and the national economic policies that they pursue.
Trading arrangements do not ordain Britain’s or any country’s levels of jobs and wages. These are determined by the amount and quality of investment taking place embodying innovative processes, and the resulting level of productivity. Foreign trade is one of the ways nations can realise their economic possibilities, but it doesn’t magic them up in the first place. Models like the UK Treasury one, which claims that it does, falsely turn the genuine correlations existing between trade and growth into trade being a causal driver of growth.