A not entirely accurate map Credit - Wik

The Confederation of British Industry is telling us that the costs of Brexit will outweigh any benefits from our doing so. More specifically, the costs of different regulatory systems will be higher than the benefits of not having to follow every jot and tittle of European Union regulation. This is not exactly so if we’re honest about it and the reason why is that the CBI hasn’t understood how regulation works.

They should understand it but then there’s not getting a man to believe what his prejudices insist cannot be true, is there?

The economic benefits for diverging from EU rules and regulations will be “vastly outweighed” by the costs of Brexit, the CBI has warned in its latest call on the Government to push for a soft Brexit.

Well, no.

Any deal must push for more than the alignment of rules or mutual recognition of standards laid out in David Davis’ Vienna speech. Instead, businesses needed “ongoing convergence – where rules remain in lock-step over time” the CBI said.

Really, no.

There are a number of British businesses which export to the US. Or China, Japan and so on. Where regulatory regimes are different from those in the EU. Yet business does manage to export to them, doesn’t it? Sure, there are costs to such different regimes but they’re obviously not insurmountable.

But it’s the other part of this which they’re not getting. OK, so, the EU’s the main market for something. Just imagine. Great, so, a business exporting to the EU will be following those EU regulations, won’t it? Dyson won’t be selling those vacuum cleaners with engines too large for Europeans will it? But GB regulation being different means that Dyson can if he wishes in GB sell those large engines. Which he’ll only do if he thinks that the benefits of doing so outweigh the costs of running two different production lines.

That is, we can entirely agree with the CBI that differential regulation won’t, for some to many products, be the efficient outcome. But we don’t have to do anything stupid about this, like remaining in the customs union. What Brexit allows us to do is go ahead with having that differential regulation – and we can leave market forces to work out for us when it’s worth producing to different standards. For EU regulation will always remain as an option for people to work to and they will do so when that makes economic sense. And just as importantly they won’t when it doesn’t.

That is, as the CBI doesn’t understand, a market in regulatory standards leads us to adopting the most efficient set or system of standards for each different product and or part of the economy. Exactly what we desire and just what EU membership, customs union membership perhaps, doesn’t allow us.

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  1. Since most trade is internal, Briton selling to Briton, leaving the customs union will enable a reduction in regulation costs for most of trade.
    As you say a company whose main market is in the EU will not benefit from this unless it is worthwhile for them to set up two production streams, but I don’t see how it helps to deprive everyone of the opportunity.
    Companies that sell overseas to non EU markets will benefit as they will only need to follow the regulations where they are selling, not those plus the EU ones.
    Since it should be easier for non EU companies to meet slimmed down British regulations the British consumer should gain access to cheaper imports.
    The losers will be those firms too stubborn to seek new markets, those firms benefitting from barriers to entry created by single market rules, and the lobbyists employed to arrange favourable regulations.
    Finally, just because the EU is our largest single market for exports at the moment does not make this true for all time, indeed EU trade as a percentage of overseas trade has been declining for decades, a trend one would expect to accelerate once we are out of the single market and the customs union.

    • Highly likely — but you will know where to complain. Brexit won’t solve all problems, and a big continuing problem is the comparative influence of the Don’t-kill-the-job crowd that benefits from cryptic regulations.

  2. The U.S. decided three decades ago to pursue efficiency by adopting the metric system. This national goal is in law — and no one outside the laboratory does. Real efficiency was achieved by converting once, at the border, rather than forcing everyone to change. The thing about liberty is that anyone can choose tyranny on a case-by-case basis. Beware a cartel of businessmen arguing for “soft” liberty.

    • Well yes I agree that the continued existence of the imperial system is proof that the Brits are an intransigent lot who get spit-flying rabid about where their passports are printed, freffen sake. Decimalising the currency pushed the entire nation nearly to the brink of sanity and asking them to think in terms of litres and metres would likely bring on mass suicide. Oh for the good old days of thruppence ha’penny farthing.

      • “Oh for the good old days of thruppence ha’penny farthing.”

        Rather “and three-three” (5/16ths of a shilling)

        Can’t say I ever had any problem working out share values in shillings & pence. Duodecimal is actually a more logical system. Base ten will always be a bastard for real world calculations.
        £0.015625 anyone?

    • Your post implicitly ridicules Brits for being so hidebound to archaic measurements as to not favor global harmonization. But my point is that everyone knows his own costs and benefits, and harmonization is not a benefit, without something separate that is a benefit.

  3. There’s a debate to be had about imperial vs metric vs SI. Metric is not the no-brainer some folks think. As a numerate type I can work in any but I prefer imperial. The units are so practical. Of course a weight system which in the UK goes in factors of 16, 14, 8, 20 to get from an ounce to a ton might be considered unnecessarily quirky…

    • Thing that amuses me is so many things that are described as metric are in fact just imperial in disguise. The worktops in my very Spanish kitchen are 915mm from the floor. Just happens to be exactly 3 ft. Which is the standard height for kitchen worktops. I buy Scandinavian made hardboard sheets in a French owned Spanish DIY store measuring 2438x1218mm. Door sizes rise in 3 inch increments.
      Truth is, pretty well everything you use conforms closely to an imperial measurement. Which is not surprising, given that the imperial standards were derived from measurements folk needed to make in their everyday lives. And not an arbitrary scale set by a bunch of intellectuals in Paris, who couldn’t tie their own shoelaces without expert assistance

      • It gets even more amusing. The Soviets decided to be rational. So, that one tenth of an inch gap between the pins of computer chips became 0.25 mm. Much more logical, oh yes.

        So, the 286 chips they couldn’t build and imported instead did not fit the motherboards they could build and didn’t import.


      • There, you see: SI does not mandate that the numbers be round. (That would be an “extra-cost option.”) It only mandates that you describe your countertop in the same units in which a Slovenian would describe your countertop. Again: Where’s the value?

      • Are French TV sizes still stated in ‘pouces’ (inches)? Certainly you can ask at the market for your fruit and veg in ‘livres’ (or ‘pfunds’ in Germany), though you’ll get ~500g.

        Technically, Imperial measures are no longer based on prototypes in the NPL, but are defined in terms of SI units. So the inch is no longer some irrational number (~25.39997 if memory serves) of millimetres, but is exactly 25.4mm.

  4. Sure. But why does the CBI love the EU in the first place?

    Partly because the CBI is composed of the sort of people and businesses who benefit from the EU’s continental crony capitalism – crapitalism, as Molyneux calls it.

    But I reckon there’s a deeper sociological thingymajig going on. The EU has become a fetish object and shibboleth for both the elites (in business, politics, academia, media, etc.) and people of ordinary means who feel sure they’re just temporarily embarrassed metropolitan smugocrats.

    They spend a lot of emotional energy projecting their hopes, dreams, and identity on the unlikeliest of vessels: a distant transnational bureaucracy run by faceless bugmen.

    The question is why?

  5. “Is there any plan to actually ease regulation in the UK for internal consumption?”

    Rhoda’s question is the key. Whenever you negotiate a deal with the EU they try to force you to accept their bizarre and illogical belief system upon you. So they force (or try to force China and Malaysia and South Africa) to enact laws about climate change, minimum wages, insecticide use before they can sign a trade deal. Trudeau tried it on with China and got batted back. May and Co won’t even try to bat it back. They could have approached the EU with an offer but instead they waited for the EU offer – trans-gender guarantees for steelworkers et al

  6. Still looking for the evidence that non-EU territories in North and Western Europe are schitholes on average. I mean Andorra, Monaco, Isle of Man, Jersey, Guernsey, Liechtenstein, Switzerland, Iceland and Norway are all richer ( gdp/head by ppp ) than their nearest EU neighbour. There must be an exception surely to back up the CBI claim that leaving the EU will probably make us poorer, but what is it?

  7. 30 odd years ago working on an infrastructure project I commented on the odd sizes for all the drainage works, it was pointed out in a kindly manner that I think of the equivalent imperial values as that’s what they had to connect to so that’s what they worked to and I might then note that the sizes made more sense

  8. On their site carolyn fairbairne says “The EU’s Community Design Regulations helps London stay centre stage in the fashion world. And the list goes on.”

    How do the EU’s regulations manage this?