Dick Taverne: Brexit '“ and why Britain might get a second chance to think again

Will we still be in the single market? If so, we will not be free to reject immigrants from the EU because the free movement of labour is a condition of membership. Will we choose full control of our own borders to stop free EU immigration? If so, we cannot be members of the single market.

Will we be full members of the World Trade Organisation and what are the prospects of free trade agreements with the rest of the world? We don’t yet know.

What Theresa May means by “Brexit means Brexit” is that she thinks the leave vote is final and cannot be reversed. But why should a referendum vote be sacrosanct any more than the result of a General Election, which can always be reversed?

The opponents of the UK’s membership of the European Community, as it then was, challenged the verdict of the 1975 referendum from the day after the vote. In the 1983 election, it was part of Labour’s manifesto to reverse that referendum and withdraw from Europe.

Because the Tories won, we stayed. Of course you cannot call for a second referendum now because you do not like the result of the last one, any more than you can force a new election tomorrow because you don’t support the party that won.

However suppose circumstances change. Suppose there is a massive switch of public opinion in favour of Remain by the time a settlement is reached, some two or three years from now? It would be inconceivable that Britain could then be forced to leave without consulting the people again. After all, the majority for Leave in the last referendum was not massive, but only four per cent. A second referendum would be fully justified.

Whether public opinion actually changes will depend on the effects of the Brexit vote, which are still uncertain. Most economists predict a recession but, as we all know, economists are often wrong.

However they have good grounds for pessimism.

To start with, exclusion from the single market will have damaging consequences. Even eurosceptics always accepted that the single market was one of one of the benefits of EU membership. It was one of Mrs Thatcher’s proudest achievements.

Could we negotiate a Norwegian solution? Norway is not in the EU, but is a member of the single market. However, the Norwegian model is not viable. We would have to continue payments into the EU budget, would not regain control of our own borders and would still be bound by EU regulations and directives, without any say in their formulation. Our sovereignty would be diminished, not restored.

An alternative advocated by Brexiteers is a free trade arrangement with the EU similar to one recently signed by Canada. But that deal took seven years to negotiate and still has to be ratified by all 27 EU national parliaments.

Moreover it provides only limited access for financial services, on which our prosperity is heavily dependent. Indeed financial firms would almost certainly lose the “passporting” rights which currently enable them to do business in the EU while regulated in the UK. And once again we would still have to comply with EU environmental, social and health and safety rules.

Exclusion from the single market can only discourage foreign investment and increase the chances of recession. There are also early signs of postponement of investment by British firms because of uncertainties. And how many foreign (and British) firms will follow the example of those who have already said they will move their headquarters to the continent if Britain is excluded?

Brexiteers talk about exciting new possibilities of trade deals with the rest of the world once we have left the EU. But the omens are not favourable. When the new Trade Minister, Liam Fox, announced he would begin trade negotiations with the US immediately, his opposite number in the US, Mr Froman, promptly told him the US would not negotiate until our new relationship with the EU was settled.

China, India, Canada and Australia have all poured cold water on talk of easy bilateral trade agreements with the UK. They prefer dealing with the EU en bloc.

Perhaps most serious of all is the danger to Britain of a flight of capital abroad. Our huge trade deficit is financed by foreign money. If a Brexit recession looms and we are no longer in the single market or have access to it, and if the pound’s fall continues, not only is it likely that inward foreign investment would dry up, but that a substantial body of existing foreign capital in Britain would flow out. We would be in a serious crisis.

During the referendum campaign, the Leave camp promised us a future in the sunny uplands with loads of extra money for the NHS. What will be the effect on public opinion if, instead, a Brexit recession, coupled with a ban on EU immigration, brought more severe austerity, staff shortages and less money for the NHS, a sterling crisis, higher unemployment and perhaps even a resurgence of inflation? This cannot be ruled out.

At present Leavers are ringing their bells. Within two years or so they may well be wringing their hands.

Dick Taverne was Labour MP for Lincoln from 1962-74. Financial Secretary to the Treasury from 1969-70, he is now a Lib Dem peer.