The Regulation Argument for Brexit

At one time if you asked a Brit what was the biggest problem with the EU the chances are they would say it was excessive regulation and red-tape.  It has a kind of mythic status. People love to complain about stupid regulations – it makes a good story  – to the extent that they sometimes make up regulations that don’t exist e.g. Boris’s teabags and balloons (The Sun of all papers has a rather nice expose of Boris’s statements about regulation). Perhaps most famously the completely false myth that EU regulations on the sale of cabbage run to 26,911 words. In fact the EU has no regulations on the sale of cabbage but there is a UK government regulation of some 23,510 words. Recently the regulation argument has taken a back-seat to the economy, immigration and sovereignty, but it still comes up a lot. It relies on two crucial assumptions. 

Assumption 1: Regulations are a bad thing. 

Most of us recognise that regulations have a role in safety and protecting the environment. What is less obvious is that  good regulations speed things up and increase efficiency (bad regulations, of course, do the opposite). For example,

a. Financial regulations reduce uncertainty and provide the confidence that savers and borrowers need to sustain a modern economy (remember 2008?).

b. Common safety regulations for cars mean manufacturers need only concern themselves with meeting one set of standards

c. Labelling regulations mean consumers can compare products consistently and more quickly

d. Regulations on parts of goods – even something as simple as a screw size – makes it quicker and easier to repair, modify, and combine different products and increases competition

Assumption 2: There would be less regulation if we left the EU.

The trouble with this is that we have very little idea what would happen if we vote to leave. However, it is hard to think of a route that would dramatically reduce regulation. Most options that are economically acceptable such as joining the EEA require us to accept a large proportion of EU regulations. A lot of the most restrictive  UK regulations such as planning laws are nothing to with the UK. Many EU regulations are standardisation or implementation of regulations that would exist anyway. For example, the data protection directive which standardises data protection laws which already exist in most EU countries. Other EU regulations do not apply to us because we have opt-outs or they are just irrelevant e.g. standards for olive oil production. The OECD has compared our current level of labour and product market regulation to other rich nations. Not only is the UK  among the least regulated of all countries in Western Europe, we “compare favourably” (which presumably means less regulated) with non-EU countries such as America, Australia and Canada.