Boris Johnson agrees with MoneyWeek – we should vote to leave the European Union. But what does he say to those who are nervous of the consequences? We put the difficult questions in this exclusive interview.
What’s the biggest downside for UK companies, and hence investors, if we vote to leave the EU?
I can think of only two British industries that may suffer a significant loss of business if we leave – lobbyists and lawyers. Brussels is a goldmine for them. But they are fields where Britain leads the world and I am sure they will find new clients easily. Most businesses in this country will thrive. We will be free to run our worldwide trade policy rather than having to subcontract it to the EU. We will be able to reclaim our £350m-a-week membership fee to spend on our own priorities. The City will be free of the ever-present threat of hostile financial regulation. I am tempted to say that the only thing British companies will have to fear is fear itself.
It is commonly thought that big companies are more in favour of staying in the EU, while small companies lean towards leaving. Is this so? And if so, why? What makes the EU a better place for big business than for small?
Opinion is far more divided than the CBI (Confederation of British Industry) and other europhile big-business groups would have you believe. Polling earlier this year showed that only half as many small business leaders as those of large firms planned to vote Remain. I can understand why. The 100 most expensive EU regulations alone are estimated to cost the economy £33bn a year and small businesses bear the brunt. Even though only about one in 20 British firms trade with the EU, they are all lumbered with European rules.
Multinationals can afford the lobbyists to work the corridors in Brussels and stamp their mark on new regulations – regulations designed to suit big businesses that work across borders, not small firms operating purely in their domestic markets. Too often, the result is to stifle innovation and new competition from ever taking off. The prime minister’s renegotiation deal with Brussels included a commitment to “lowering administrative burdens and compliance costs on economic operators, especially small and medium enterprises”.
However, we’ve been here before. The EU’s Lisbon Agenda, launched in 2000, pledged to make the EU “the most competitive and dynamic knowledge-based economy in the world”. Nine years later, the EU admitted it had been a failure and abandoned it. Sadly, competitiveness, enterprise and innovation will always take second place to the politically driven integration project. Entrepreneurs with new ideas and small businesses are the people who suffer.
The more likely Brexit looks in the polls, the more sterling falls. Should we expect a currency crash on the event of an out vote?
That does not quite stack up. Sterling started falling in autumn 2014 when prospects for the pro-Brexit cause looked pretty bad – not many people outside our ranks in the Conservative Party thought we were going to come back to office with an overall majority and a mandate for a referendum.
The fall in the pound – which is now back up to not far off its January levels against the dollar – has more to do with investors thinking there is little prospect of interest rates going up from the floor in the near future. I’m sure that if there are any blips in reaction to a vote to Leave, the markets will soon realise that the fundamentals of our economy remain strong and that we are embarking on a positive new era.
Does the rest of the EU have more to lose than the UK in this referendum? If we vote out – and, as a rich and stable country, albeit not a eurozone country, show that leaving is possible – would you expect to see in fast succession Grexit, Spexit, Italexit and possibly even Germexit?
If by the rest of the EU you mean the Brussels institutions, then yes, they do have something to lose – hopefully a bit of power. If we vote to leave they may well find themselves at last having to ask some very serious questions about whether more centralisation of decisions in their hands is really the only answer to everything.
If by the rest of the EU you mean the people living in it, then I believe they would be clear winners. Whether they want to stay in or get out, they will have a template for democratic decision-making. There is growing public appetite across Europe for a vote – I could add pressure for Czexit to your list. Although it is unlikely all the countries you mention would choose to leave if given the choice, we should remember that Britain is by no means the most eurosceptic EU member.
A recent poll in Sweden found that only 39% of people thought it was a good idea for their country to be in the EU, down by 20 points in just six months. So perhaps we should get ready for Swexit. Jean-Claude Juncker, president of the European Commission, famously said that there “can be no democratic choice against the European treaties”. But even he cannot ignore any longer the widening gap between the tunnel vision of the superstatists and the mounting democratic pressure for decentralisation. Even the combined weight of the Brussels fat cats cannot keep the lid on the kettle indefinitely.
Is the eurozone doomed regardless of our vote?
Just when you think there is light at the end of the eurozone tunnel, the single currency always turns into a tunnel-building machine. We are now facing another blow-up of the never-ending Greek disaster along with an Italian banking crisis. I am not going to forecast how and when the eurozone crisis will end and if the single currency will survive in its current form. But some things are clear.
We know the euro has brought crushing economic misery, resentment and division to wide swathes of Europe. And we also know very clearly how the EU wants to get out of the crisis – by the same old discredited methods of centralisation, with full economic, fiscal and political union of the eurozone. It is impervious to calls for a change of direction.
If we stay in, we will be outside the new eurozone pseudo-state where the key EU decisions will be taken. We may have some powers to block the most damaging proposals, but we will have little opportunity to influence positive change and will remain subject to all the strictures of the EU.
How much domestic political upheaval can we expect in the event of a Brexit? Can David Cameron remain prime minister?
This is a referendum on Britain’s membership of the EU, not on the prime minister. He is at the head of a strong and successful Conservative government and a Conservative Party that, if we win the vote on 23 June, will unite behind him as the leader who will take charge of the negotiations for our amicable departure from the EU.
We’ve heard a lot from countries that would prefer the UK to stay in the EU. We’ve heard from none who think that leaving would be a good idea. Do you know of any that are supportive? Is there really an “Anglosphere” waiting on the sidelines to engage with a non-EU Britain?
It is true that Davos man has been mobilised to support his friends in the Remain camp. But when the British people take the democratic choice to leave the EU, your first question becomes redundant. Our friends around the world will still be our friends and they will have a new reality and a new opportunity in front of them. The EU and the rest of the world will have the chance to do a deal for free trade with the world’s fifth-biggest economy and one of the fastest-growing major Western countries.
Of course, when we leave it is important that we are open to the whole world, not just the Anglosphere. But it is true that one of the tragedies of our EU membership is that we were forced to loosen ties with our natural friends in the English-speaking world. We will have the chance to rebuild those links.
John Howard, rated by many as the greatest Australian prime minister of modern times, said recently: “If I were British, which I’m not, I’d vote to leave. You have lost your sovereignty… The future of the world is now so much more in the Asia-Pacific region and in a way the British, because of their long history with the rest of the world, could perhaps take better advantage of that acting on their own.”
Most workers haven’t seen their living standards rise in decades. They blame globalisation – and they are turning against free trade. If democracies are becoming more protectionist than before – and globalisation is going into reverse – isn’t it going to be much harder to negotiate non-EU trade deals than you suggest?
There are some protectionist voices, for example Donald Trump and Bernie Sanders, making a lot of noise in the US presidential election, and Europe may be slow at negotiating trade deals. But I do not accept there is a worldwide trend towards protectionism. You only have to think of the pressure from Africa against the scandalous tariffs the EU imposes on African food. I mentioned Australia.
It has just completed three trade agreements – with China, Japan and South Korea. Earlier this year, 12 countries around the Pacific Rim signed the Trans-Pacific Partnership. The opportunities for agreement are there and a nimble, independent country that has reclaimed its seat at the World Trade Organisation has the best chance of doing the deals that are in our own interests.
You used to be very keen on Turkey joining the EU. You also used to be pretty keen on high levels of immigration to the UK. What’s changed your mind?
Whether it is in our trading rooms or care homes, our laboratories or our plasterwork, Britain benefits hugely from talented and dedicated immigrants. But we need to get control over the current chaotic and unfair system. The government was returned to office on a pledge to cut immigration to the tens of thousands. But European rules mean we can’t turn EU citizens away even if they have criminal records. If we suspect they may be a danger to our national security, we can’t refuse them entry unless we can demonstrate exactly why they would be a risk.
The open door to Europe means that to have any control at all on numbers, we make it far harder than we should for Indian software engineers or Canadian architects to come here. The European free-for-all is unfair on people from the rest of the world. We should be able to allow people to live and work in Britain based on what they can contribute, not what continent they come from. My ethnic origins make me a typical British mongrel. As a one-eighth Turk, I am a true Turcophile.
But given how much poorer Turkey is than this country, it would be folly to open our doors so that nearly 80 million people have full rights to come to Britain, which would happen if they were allowed to join the EU. Once we are out of the EU, we will be able to apply the same rules to Turkey as to everywhere else and admit people based on their talents or whether they have a valid asylum claim.
The referendum is effectively about politics (sovereignty) versus economics (there is bound to be short-term trouble at least). There are a lot of voters who would vote out (for freedom!) if they weren’t worried about short-term effects on their finances. What would you say to them?
Hold on a moment. I do not accept there is a conflict here between politics and economics. My support for leaving the EU is largely based on economics: seizing the chance to leave a stagnating bloc and giving ourselves the opportunity to reconnect with the world. The democratic argument – taking back control over our own laws – is what will enable us to make sure the economics work for Britain.
Sovereignty isn’t an absolute (North Korea is both totally sovereign and absolutely miserable) and any Brexit deal will involve compromise. What degree of it would you give up to keep our free-trade deal with the EU? What does a realistic post-Brexit relationship with Europe really look like?
It is true that any agreement with another country involves sticking to commitments and to that extent it means tying your own hands. That is not the same as giving up sovereignty, which means giving away the power even to make those commitments. The relationship we have with the EU is different from other treaties. It has declared itself a sovereign body that can grab all decision-making in any area where it claims sovereignty. Its unaccountable judges lord it over our elected representatives. No other international body claims these powers.
Brussels could give Pyongyang a lesson or two in how to avoid democratic accountability. Many in the eurozone want to speed down the road to integration. We should leave them to it rather than stay on in limbo as the key decisions are taken in another room by members of the euro. It will be in the interests of both sides for us to trade as friends and neighbours. We won’t suddenly stop cooperating in areas like security. There will be no seismic change, just a gradual adjustment.
Strangely, it was Lord Rose, the head of the Remain campaign, who put it best when he said: “It’s not going to be a step change, it’s going to be a gentle process.” I promise you he is not secretly on the Vote Leave payroll.
How hysterical should the UK’s farmers – both small and very large – be about Brexit?
Farmers are looking forward to Brexit with optimism – a recent Farmers Weekly poll found that 58% planned to Vote Leave. Farmers are sensible people and they realise the scales are stacked in their favour if we leave. Britain supported its farmers before we joined the Common Market and we will do so after we leave. David Cameron earlier this year committed himself to retaining the farm support system regardless of whether we stay in or leave. Britain contributes about £5.5bn a year to the Common Agricultural Policy (CAP), but we get back only £2.7bn.
So we could continue to support farmers to the same extent we do now and still have money left over for other priorities, such as the NHS. Europe will need to reach a deal with us to continue the free trade it currently enjoys with Britain – they sell £10bn more food here than we export to Europe.
For more than 40 years, it has been impossible to have a meaningful debate about this vital area of national life. If we leave, we can design our own agricultural policy to strike the right balance between making sure we have a plentiful supply of cheap and delicious food, creating an internationally competitive farming industry, sustaining farmers’ livelihoods and protecting the environment and the beauty of the countryside.
Farmers will benefit from simplifying the maze of EU regulation that imposes such huge costs for so little result. This dictates everything from the precise width of gateways to the dimensions of plaques farmers must put up to publicise EU funding. Britain has been fined £642m since 2005 for breaches of pettifogging rules like these. When the prime minister renegotiated our membership of the EU, he did not even try to win changes to the CAP, which sucks up 40% of the European budget, much of it lost to waste and too many dodgy claims from olive farmers in the Mediterranean.
Despite relentless trench warfare in Brussels, we have not achieved the drastic reform the CAP needs. The European set-up was largely designed for French farmers and it can still feel like that.
How hysterical should the City be about Brexit?
The hysteria comes from the people who do the City down. They are the people who told us that if we stayed out of the euro, it would be decimated and we would hear the giant sucking sound of jobs going down the plughole from London to Frankfurt. Of course, they had said the same thing earlier about our membership of the exchange-rate mechanism. When we crashed out of that we had our longest-ever period of economic growth. Now they are at it again. We should ignore them.
I have every confidence that London will thrive outside the EU. It is the financial capital of Europe, if not the world, with an unrivalled concentration of talent, firms and markets, together with a business-friendly tax, legal and regulatory environment. No European country would cut its firms off from this astonishing resource. Look at the letter signed by more than 100 heavyweights in the City who said that outside the EU London would be “most likely to strengthen its lead as the world’s largest international finance centre”.
For the City as for the rest of Britain, staying in is the risky option. As those City heavyweights say, Brussels “represents a genuine threat to our financial services industry”. The safe option is to Vote Leave.
Factfile: Boris Johnson
Boris Johnson was born in New York and lived in Washington DC, London and Brussels before going on to read classics at Balliol College, Oxford, where he won the presidency of the Oxford Union. After graduating, and spending a week as a management consultant, he began work in journalism at The Times and The Daily Telegraph. He was appointed editor of The Spectator in 1999, a position he held till 2005, and was elected as MP for Henley in 2001.
He briefly served as shadow arts minister before being sacked for lying about an extramarital affair. He then made a comeback under David Cameron as the shadow minister of higher education and was elected mayor of London in 2008. Johnson is also a prolific author and has written 11 books, including The Dream of Rome, which contrasts how the Romans made Europe work as a single civilisation with how the EU is doing. He returned to parliament in last year’s election and is the current bookies’ favourite to succeed Cameron.