:00:09. > :00:17.The mirage of the market miracle. Better economic prospects inside
:00:18. > :00:23.Europe. Half a million jobs lost. The balance on jobs will be strongly
:00:24. > :00:29.positive. It is bad for our economy. The uncertainty and risk. A global
:00:30. > :00:35.trading nation. Permanently poorer if we left. They were wrong then and
:00:36. > :00:37.they are wrong now, and we have a great future ahead of us.
:00:38. > :00:42.It's a referendum special tonight, on the EU and our economy.
:00:43. > :00:47.Politicians on both sides will make their case,
:00:48. > :00:49.and we'll have expert commentary to help our panel of undecided
:00:50. > :01:00.We'll sketch out possible paths the economy could take if we leave.
:01:01. > :01:07.It's 2030 and the Queen is 104. The Chilcot report is due to be
:01:08. > :01:13.published any day now. And in the business news, plans to turn Canary
:01:14. > :01:17.Wharf into a banking theme park. It is empty offices right now, since
:01:18. > :01:19.the banks closed when we left of the EU.
:01:20. > :01:21.We'll ask if Britain could open itself up to more trade
:01:22. > :01:24.with the rest of the world, or whether it'll simply
:01:25. > :01:36.Welcome to our special programme on the EU and the British economy.
:01:37. > :01:39.Broadly speaking we're asking if leaving would bring economic
:01:40. > :01:44.Short answer: something in-between, but we'll be debating precisely
:01:45. > :01:45.what, with our experts and politicians on each
:01:46. > :01:56.We also have in the studio here our panel of undecided voters -
:01:57. > :01:59.Back then we were discussing sovereignty, and back then most
:02:00. > :02:02.of them said they thought the economy was more important.
:02:03. > :02:06.Nobody knows what the effect of Brexit would be on the economy.
:02:07. > :02:11.It's all speculation of a more or less informed kind.
:02:12. > :02:14.But today the Treasury gave us its view of the effects of leaving.
:02:15. > :02:20.It's inside the zone of sanity, it's not mad, it is defensible,
:02:21. > :02:24.but it is at the pessimistic end of expectations.
:02:25. > :02:26.By 2030, under any scenario, our national income is projected
:02:27. > :02:34.But the Treasury says we won't be as much better off,
:02:35. > :02:44.There is a huge range of uncertainty.
:02:45. > :02:47.Their best Brexit case is that we'll be 3.4 per cent worse off
:02:48. > :02:51.That is, our national income will be 3.4 per cent smaller.
:02:52. > :02:58.The worst case, we'll be 9.5 per cent worse off.
:02:59. > :03:01.Their central case has our national income about 6.2 per cent poorer
:03:02. > :03:05.It's not always helpful to put that into pounds and pence
:03:06. > :03:09.because all households are different, but the Treasury has
:03:10. > :03:11.chosen to turn percentages into pounds, giving a figure
:03:12. > :03:13.of thousands of pounds per household, lost each year
:03:14. > :03:29.Last week we introduced you to our audience. Let's get some initial
:03:30. > :03:33.feelings on our economy. A show of hands, how many of you trust to the
:03:34. > :03:40.Treasury to give us the best figures at their disposal, the right kind of
:03:41. > :03:45.data? And is up. OK. Who do you believe, do you know who you would
:03:46. > :03:51.believe or turn to for economic advice? I think the government has
:03:52. > :03:55.got a point in evaluating and giving information. However, I feel like
:03:56. > :04:02.there is a scare tactic and it worries me that you come out with
:04:03. > :04:11.the figures like this, that a household will lose ?3400 perhaps
:04:12. > :04:15.all the, ... -- her household. You can make up the figures, I think,
:04:16. > :04:24.because it is all an assumption. And that worries me. Who should I
:04:25. > :04:27.believe and what should I do? Does anyone have a different opinion?
:04:28. > :04:34.There is a fear factor about import duty. They say that it will become
:04:35. > :04:38.more difficult for us to export if we leave but really, I think we need
:04:39. > :04:43.to know the facts. Can we also put import levies on goods coming in?
:04:44. > :04:51.That is a question that will come up. Any other questions? Jenny? I am
:04:52. > :04:55.a first-time buyer, and my big is interest rates and what the effect
:04:56. > :05:00.will be. At the moment, I do not know who to trust on that and I need
:05:01. > :05:03.a voice to trust. Let's see if any of you get closer to making a
:05:04. > :05:09.decision by the end of the programme.
:05:10. > :05:11.We're live blogging the programme at bbc.co.uk/newsnight.
:05:12. > :05:13.There's lots of extra background, analysis, and fact checking
:05:14. > :05:22.Not to imply the experts are, that my team are not experts.
:05:23. > :05:26.Before we go to our other guests, lets first take a few minutes to not
:05:27. > :05:28.think about the precise numbers but the things that will be
:05:29. > :05:40.There are different scenarios, inevitably, but what underpins them?
:05:41. > :05:46.Britain, a big interesting economy on the edge of Europe, marked by two
:05:47. > :05:52.distinctive characteristics that shape our relationship with the
:05:53. > :05:57.continent. Services is our specialty, or at least London's.
:05:58. > :06:01.Britain is the world's second-biggest exporter of services.
:06:02. > :06:06.Much as banking but accountancy, law, all sorts of business activity.
:06:07. > :06:10.Secondly, global connections, particularly in manufacturing.
:06:11. > :06:15.Foreign companies invest, own and run more of our families than in
:06:16. > :06:20.most other large countries. Britain has a relatively globalised economy.
:06:21. > :06:24.Connected to the world through history and commerce. Britain, you
:06:25. > :06:29.might say, is something of a hub. It is attached to continental Europe,
:06:30. > :06:33.it is close to the United States. So how does this role that we have
:06:34. > :06:40.there on potential decisions to leave the EU? First thing, we're not
:06:41. > :06:48.going to leave Europe. France will still be 21 miles from Dover, but
:06:49. > :06:55.let's try to imagine what life will be like if we do leave. It's 2030.
:06:56. > :07:01.The Queen is 104. The Chilcot report is due to be published any day now.
:07:02. > :07:06.And in the business news, plans to turn Canary Wharf into a banking
:07:07. > :07:11.theme park. It is empty offices right now since the banks closed
:07:12. > :07:14.when we left the EU. A community devastated as unemployed bankers
:07:15. > :07:20.have been unable to find any other work. A square mile of the old city
:07:21. > :07:23.of London is where the remaining banks have retreated two. The EU
:07:24. > :07:29.never liked the city and got revenge on it when we left. They refused a
:07:30. > :07:33.trade deal in financial services. Meanwhile, manufacturing is
:07:34. > :07:37.struggling. The effect fell on some golf courses. Japanese businessman
:07:38. > :07:42.love to play on British greens, but there are not as many of them now as
:07:43. > :07:47.they invest less. Spain has picked up much of the direct investment in
:07:48. > :07:52.Britain used to attract. For economists who want to remain in the
:07:53. > :07:57.EU, those nightmare vignettes are far from impossible. Take the fate
:07:58. > :08:01.of the city of London, a fast service export. Access to the single
:08:02. > :08:05.market is really important for a lot of firms within the service sector,
:08:06. > :08:11.because it allows you to passport your services into other countries.
:08:12. > :08:17.For example, currently if you are a bank based in London, you have a
:08:18. > :08:21.client in Singapore who wants to do business in Portugal and you can do
:08:22. > :08:28.that from London. But you cannot do that if you are not part of the
:08:29. > :08:32.single market. And for example, Switzerland. Zurich is a big banking
:08:33. > :08:38.sector and Switzerland has lots of trade with the EU. But Swiss banks
:08:39. > :08:42.are not in the single market. If you think about the number of Swiss
:08:43. > :08:46.banks that are based in London, for example, one of the reasons that
:08:47. > :08:54.they are there other than the UK's deep capital market is that it
:08:55. > :09:01.grants them access to the EU, which they do not have from Switzerland,
:09:02. > :09:04.which is not that far away. And for manufacturing, the issue is the
:09:05. > :09:07.potential loss of foreign investment, deterred by possible
:09:08. > :09:14.hassles over Britain outside the single market. At the moment, the
:09:15. > :09:17.car industry, as with a lot of industries, is very integrated
:09:18. > :09:21.across Europe. You have quite complex supply chains which means
:09:22. > :09:25.that car manufacturers in one country are using parts from other
:09:26. > :09:32.countries within Europe. And what happens, on what will potentially
:09:33. > :09:36.happen if the UK were to leave the EU, is that those relationships
:09:37. > :09:40.start to break down, because they are harder to maintain and there are
:09:41. > :09:44.worries as to whether or not the UK is complying with the right
:09:45. > :09:49.regulations. It makes organisation more costly. Now don't have
:09:50. > :09:52.nightmares. That is the worst Brexit case that we could muster. It is
:09:53. > :10:03.possible to turn the argument upside down. To describe a best case.
:10:04. > :10:06.It is 2030. The Queen is 104. Excitement is mounting for the 14th
:10:07. > :10:12.in the series of Star Wars trilogy is. And in the business news,
:10:13. > :10:16.written's production of driverless cars has reached a new peak. Britain
:10:17. > :10:20.has been a European leader in the industry ever since the UK
:10:21. > :10:24.established its helpful regulatory regime. The rest of Europe was
:10:25. > :10:30.slowing to the market, debating regulation incessantly. French taxi
:10:31. > :10:33.drivers protested against the technology. Meanwhile, the new
:10:34. > :10:39.banking district in Birmingham is ready to open, with a services
:10:40. > :10:43.sector expanding, and Canary Wharf spilling out further to the north of
:10:44. > :10:48.England. That is the more optimistic take, but can we justify it? One
:10:49. > :10:55.argument is about our ability to shape our own decisions on things
:10:56. > :10:59.like driverless cars, to do so to promote business and trade. I think
:11:00. > :11:02.it is absolutely credible that if there is Brexit, the government
:11:03. > :11:07.could move quicker than the European union does at the moment, where you
:11:08. > :11:09.have to keep 28 countries on side and there are all sorts of
:11:10. > :11:14.individual country interests, and you have to go through all the
:11:15. > :11:17.negotiations in Brussels itself, which can be irksome. I think
:11:18. > :11:23.Britain would be more nimble. When you think about a fast changing
:11:24. > :11:28.21st-century economy, the nimble will inherit the earth. Fortune
:11:29. > :11:32.favours the flexible. And we would be more flexible. And the danger to
:11:33. > :11:39.the city? To services, to our specialty? Personally, I do not
:11:40. > :11:42.believe that. I believe that the investment banks like Deutsche bank,
:11:43. > :11:47.they are there not because they like the weather, they are there because
:11:48. > :11:55.they appreciate the cluster of talent that surrounds the financial
:11:56. > :11:58.services industry, including legal services and accountancy, unique to
:11:59. > :12:02.London. And you need a premier financial sector within the time
:12:03. > :12:07.zone of Europe, and none compares with London. And be clear, the
:12:08. > :12:12.Brexit side starts the debate with a ?10 billion advantage. We at least
:12:13. > :12:17.do not have to pay a net contribution each year to the EU.
:12:18. > :12:21.Nice money to have. There will be a boost on the public finances because
:12:22. > :12:24.at the moment our net contribution is about ?10 billion and that could
:12:25. > :12:29.be used for other public expenditure, or it could be used to
:12:30. > :12:34.cut the deficit. Now, what you want to know is which scenario, best case
:12:35. > :12:38.or a worst case, is more likely. But there is, I'm afraid, is one of
:12:39. > :12:41.those situations where you just have to decide which risk you are more
:12:42. > :12:45.comfortable taking. The hope with Brexit is that we get a better
:12:46. > :12:49.trading relationship with the rest of the world. The fear is that we
:12:50. > :12:56.damage the best trading relationship that we have got, which is the one
:12:57. > :13:01.with the EU. I have to say both the published economic analysis suggests
:13:02. > :13:10.that the effect of leaving would be negative but not catastrophic. The
:13:11. > :13:15.argument is mostly bingeing on trade and economic models suggest that
:13:16. > :13:19.free trade is a good thing. They also hinge on immigration.
:13:20. > :13:23.Economists tend to think that it boosts growth, so to get the best
:13:24. > :13:27.deal leaving the EU, ironically, we need to stay open to more people.
:13:28. > :13:32.The Treasury analysis shied away from assuming immigration would fall
:13:33. > :13:36.if we left. But one group, Oxford Economics, have looked at detail in
:13:37. > :13:43.nine overall scenarios, making different assumptions. Leaving the
:13:44. > :13:47.EU needn't necessarily be a massive economic disaster. Of all our
:13:48. > :13:53.scenarios that we modelled, there was a negative impact on the size of
:13:54. > :13:57.the EU if the UK economy leaves. It is about how we use the economic
:13:58. > :14:01.levers we get back from Brussels. The best case scenario is that we
:14:02. > :14:05.retain a trade deal with the EU but we broke new deals with the rest of
:14:06. > :14:10.the world. That would mean we maximise our trade and limit any
:14:11. > :14:13.impact of leaving. Conceivably, you could have a positive benefit from
:14:14. > :14:19.that. The problem with that is that those two things are, to a large
:14:20. > :14:23.degree, intentional. The more you are in the EU block, the harder it
:14:24. > :14:28.is to make deals outside. Leaving the EU is a big decision but do
:14:29. > :14:32.remember, remain on leave, the economy is expected to grow over the
:14:33. > :14:36.next few decades, and it is expected to trade and remain global. But
:14:37. > :14:39.which is the route that best exploits our national potential?
:14:40. > :14:42.Sorry it's all so "one hand, other hand".
:14:43. > :14:46.Economics is a bit that way at the best of times,
:14:47. > :14:48.and in this case there are many uncertainties about the out option,
:14:49. > :14:52.Let's talk risks first with Liz Truss, Secretary of State
:14:53. > :14:56.for Environment, Food and Rural Affairs, who supports
:14:57. > :14:59.remaining in the EU, and Daniel Hannan, who is a member
:15:00. > :15:01.of the European Parliament, but a well known eurosceptic,
:15:02. > :15:11.Can we agree on one thing? That it is not a catastrophe if we choose to
:15:12. > :15:26.leave, not an economic catastrophe? The paper we have launched is they
:15:27. > :15:34.begin -- is a rigorous analysis. We would see a 6% gap in GDP. We would
:15:35. > :15:38.see households across the UK worse off by ?4300 per year. I think that
:15:39. > :15:43.is bad economically. We are talking about real people's jobs, incomes,
:15:44. > :15:47.and lives. I know the league campaign has said it is a small
:15:48. > :15:56.price to pay, but I think it is far too much. -- leave. 6% is the
:15:57. > :15:59.difference between the economy in 2015, between George Osborne's
:16:00. > :16:05.forecast of what it would be, and what actually occurred. That was the
:16:06. > :16:08.error over five years in the forecast in the 2010 Budget. You
:16:09. > :16:15.saying that Parliament was a catastrophe? I am saying during the
:16:16. > :16:23.economic crash households lost ?3000. It is a serious amount of
:16:24. > :16:28.money. It isn't helpful... I think it is, because the reason we do
:16:29. > :16:35.it... The average household income is a disposable income. Correct. You
:16:36. > :16:41.are taking something which is a GDB income. That is unhelpful. If you
:16:42. > :16:48.share it over households, it is a share of the impact. -- GDP. It
:16:49. > :16:55.could be from services, a school place, from the NHS. It reflects our
:16:56. > :17:01.national wealth. National income, yes. As you said, all economists
:17:02. > :17:05.have said if we see reducing levels of trade we will see reducing
:17:06. > :17:08.income. That will hit people's pockets and wallets. There is
:17:09. > :17:13.virtually no economist who thinks there will not be an impact. In the
:17:14. > :17:21.document, which runs up to 200 pages... It is robust and rigorous.
:17:22. > :17:26.It is big. Have you modelled the potential upside of the kind we
:17:27. > :17:30.described in that scenario of driverless cars, being a more
:17:31. > :17:37.nimble, flexible economy, with the ability to make decisions where we
:17:38. > :17:44.will not be hamstrung by the EU? For example, the money we pay in... I
:17:45. > :17:50.don't think you have modelled that. That is one of the active
:17:51. > :17:56.ingredients the out campaign say will... There is all of this
:17:57. > :17:59.evidence that extra trade makes more, because you are exposing
:18:00. > :18:03.yourself to extra competition from around the world. It is increased by
:18:04. > :18:08.being more open, by being a full member. Is it not fair to say that
:18:09. > :18:13.you've left out some of the things the other side of the argument would
:18:14. > :18:18.say are the active ingredient? The reason you want to leave is to do
:18:19. > :18:22.stuff. You haven't even modelled you argument. It is all about your
:18:23. > :18:28.assumptions. There are lots of spurious claims. On regulation, the
:18:29. > :18:32.fact is we share a lot of regulation across the youth. That helps us
:18:33. > :18:36.trade across the wider market. For example, if you are a food producer
:18:37. > :18:41.you have to slap a single label on your bottle and you can sell your
:18:42. > :18:46.goods in Spain, Germany. -- across the EU. If you are exporting to
:18:47. > :18:49.China or the US you have to create a different system. The shared
:18:50. > :18:57.regulations help us trade and help our companies innovate and grow our
:18:58. > :19:01.national wealth. Central estimate does not model ordered the effects I
:19:02. > :19:06.know you would like to be modelled. The 6% between leaving and not. What
:19:07. > :19:11.is your central estimate? We will be substantially better off. She didn't
:19:12. > :19:16.answer your question, do you think it will be a catastrophe. Ministers
:19:17. > :19:19.know it won't be a disaster. As recent as two months ago they were
:19:20. > :19:31.threatening to walk out over a trivial thing. 6%. It isn't a
:19:32. > :19:37.catastrophe. I don't want to get debated this 6%. Where are your
:19:38. > :19:42.figures published? Then we can scrutinise. Where is it? You know it
:19:43. > :19:47.is ridiculous to put figures on these things. The Treasury's figures
:19:48. > :19:51.are regularly wrong. It is impossible to model that far ahead.
:19:52. > :19:59.To look forward to 2030. Who knows if we will have driverless cars,
:20:00. > :20:02.massive breakthroughs in biotech... You suggesting there is no
:20:03. > :20:10.intelligent analysis -- are you suggesting. You can make some
:20:11. > :20:15.guesses. They have done it and put it in their model. How can you
:20:16. > :20:18.criticise? I will tell you why. I have known George Osborne for 20
:20:19. > :20:22.years. He has always been a strong supporter of the European project.
:20:23. > :20:27.For many years he was a supporter of the euro. I'm not blaming him. I
:20:28. > :20:33.think it is admirably consistent of him. But the idea that this is some
:20:34. > :20:36.disinterested analysis. This is straightforward propaganda. It is
:20:37. > :20:41.results driven. It began with what was a potentially scary figure. They
:20:42. > :20:46.then changed the variables. We don't want it to get to that figure. Not
:20:47. > :20:52.one hand went up when they were asked... We look forward to hearing
:20:53. > :21:01.your assumptions and your figures. A prominent supporter of the league
:21:02. > :21:06.campaign, putting a lot into it. -- leave. He thought ?4300 per
:21:07. > :21:14.household loss is a bargain basement price to pay for restoring security.
:21:15. > :21:17.I don't agree with that. If I did not think we would be better off
:21:18. > :21:25.financially, I wouldn't be sitting here making this case. For me, the
:21:26. > :21:29.central fact is every continent is growing except Antarctica and
:21:30. > :21:36.Europe. Britain is a global country. We are linked by history, our
:21:37. > :21:41.language, our law, to more distant places. We need to reorient away
:21:42. > :21:47.from a declining, tired euro zone towards the bits of the world which
:21:48. > :21:51.are prosperous. Do you acknowledge that there are risks in leaving?
:21:52. > :21:58.There are risks in staying and leaving. A percentage that you could
:21:59. > :22:03.be wrong. Of course. There are risks in whatever we do. I would rather
:22:04. > :22:08.face those risks in command of our own destiny, able to decide our own
:22:09. > :22:11.policies, to chart our own course, so we can mitigate those risks
:22:12. > :22:16.ourselves rather than handing power to people who may not have our best
:22:17. > :22:22.interests at heart. We have our panel of voters here. Anybody on the
:22:23. > :22:26.panel who would be willing to accept an economic loss in order to get our
:22:27. > :22:32.sovereignty or our independence or our borders back? You would? I would
:22:33. > :22:39.because it would be a short-term economic loss. I hear what is being
:22:40. > :22:42.set. If we were in charge of our destiny, and I believe in the people
:22:43. > :22:48.of the UK that we would take the short-term loss and turn it into a
:22:49. > :22:51.positive in a short period of time. Nobody else would? Basically if we
:22:52. > :22:58.lose economically you don't want to leave, is that correct? Did you say
:22:59. > :23:04.you would? I think I would. I am prepared for that if we get our
:23:05. > :23:10.sovereignty back. Why not? And a long-term loss not. We don't know if
:23:11. > :23:14.it would be long-term. Let me introduce you to the panel.
:23:15. > :23:16.On the leave side we have Gerard Lyons, economic
:23:17. > :23:18.adviser to the mayor of London Boris Johnson
:23:19. > :23:21.and Fazana Baduel, who set up and runs a PR company,
:23:22. > :23:23.and on the remain side Juergen Maier, the UK chief
:23:24. > :23:25.executive of Siemens, and investment fund manager,
:23:26. > :23:45.One of the key things we were talking about in the video was
:23:46. > :23:48.foreign direct investment. Particularly engineering,
:23:49. > :23:51.electronics, any of the things your company might have been involved
:23:52. > :23:57.with. What do you think the effect of leaving the EU would be on that
:23:58. > :24:02.investment? We are a significant investor in the UK. We have been for
:24:03. > :24:07.many years. Just going back to the discussion you were having here, you
:24:08. > :24:13.know, I do not see such a thing as a short-term effect on the Brexit.
:24:14. > :24:20.Because what would happen is we would go into at least a two-year
:24:21. > :24:24.period of the glaciations. Actually there is nowhere in the world where
:24:25. > :24:30.there has been a new trade deal done within two years. I think it would
:24:31. > :24:36.be longer. But what is key is that in that two-year period companies
:24:37. > :24:40.like Siemens and many others are making decisions as to whether we
:24:41. > :24:44.are investing here in new factories, in new research and development,
:24:45. > :24:49.technology, and that will actually have an impact on the jobs we are
:24:50. > :24:53.creating ten years down the line. 15 years down the line. Whatever
:24:54. > :24:58.happens this is going to have a long return effect. That is a two-year
:24:59. > :25:02.pause which has a long-term effect. Short-term disruption has a
:25:03. > :25:06.long-term effect. But what about the long-term? What about in ten years,
:25:07. > :25:16.do you think, if Britain gets reasonable relations with Europe,
:25:17. > :25:22.will Siemens look at Britain and think of it differently compared
:25:23. > :25:26.with, for example, Spain. Let's look at your example of driverless cars.
:25:27. > :25:32.One of the reason why Britain could not on its own create a market for
:25:33. > :25:37.driverless cars is because you have to build those cars. And the
:25:38. > :25:42.technology around it. The European standards. Ultimately they will
:25:43. > :25:47.become global standards. What I am saying is if we define cars here,
:25:48. > :25:50.just for Britain, you would have to drive it to Dover and leave it there
:25:51. > :25:57.because it will not work in France. -- design cars. You have just
:25:58. > :26:01.described the argument for remaining. But Europe has the
:26:02. > :26:06.significant influence on those global standards. And actually we
:26:07. > :26:09.significantly underestimate the positive influence we, as Britain
:26:10. > :26:17.have come on European and global standards. -- as Britain have, on
:26:18. > :26:22.European and global standards. There is this idea we will be victims of
:26:23. > :26:32.trade regulations and Harris. There is not one state which is not part
:26:33. > :26:38.of a trade regulation. -- and tariffs. There is a European free
:26:39. > :26:45.trade area. The only country not in it is Belarus. We would not be
:26:46. > :26:51.walking away from that comment... But it is a single market, though.
:26:52. > :26:55.You are mixing things up. We are in a single market which offers huge
:26:56. > :26:59.advantages to a company like Siemens. To build companies from
:27:00. > :27:05.here, have influence from here, into the EU. But how do you answer that?
:27:06. > :27:13.Getting a free trade deal will leave compliance burdens. How do you get
:27:14. > :27:18.over that? It is really important to get this point about the transition.
:27:19. > :27:23.The day after we leave, and it could be a few years after the vote, but
:27:24. > :27:30.the day after we leave all above existing standards are in place. --
:27:31. > :27:34.all our existing. All of our acceptance of EU technical standards
:27:35. > :27:38.are in place. That will be the case until one side or the other changes.
:27:39. > :27:45.There will be a gradual divergences. As Lord roads correctly said at the
:27:46. > :27:51.launch, it will be years before we notice any change, and it will be a
:27:52. > :28:02.gentle process. -- Lord Rhodes. It will not be a sudden change, Brexit.
:28:03. > :28:06.Quick comment. We are able to export over 60% of our cars. We can do it
:28:07. > :28:10.easily in Europe because we share standards. If we start diverging we
:28:11. > :28:14.will just be producing cars for a domestic market which is smaller. It
:28:15. > :28:18.makes much more sense to have a common European standard on things
:28:19. > :28:24.like that so we can export more of our products. One good way of
:28:25. > :28:33.framing the argument is to think about what we stand to lose from
:28:34. > :28:35.leaving, mainly the trade deal, we have with the EU.
:28:36. > :28:38.And what we stand to gain from leaving, in the trade deals
:28:39. > :28:41.we might be able to sign with the rest of the world.
:28:42. > :28:43.The Leave side argue we will lose very little if we leave,
:28:44. > :28:46.because we'll have a great trade deal with the EU.
:28:47. > :28:52.What kind of deal might we get from the European Union? Here is the
:28:53. > :28:56.starting position for the former Swedish Prime Minister. Do you think
:28:57. > :29:03.it is possible we would have full access to the single market without
:29:04. > :29:07.free movement of people? No. The given wisdom is that fewer EU rules
:29:08. > :29:12.we sign up to the worse our access to EU markets will be. So how strong
:29:13. > :29:18.is our negotiating position in terms of trade to change that? We sell to
:29:19. > :29:23.hunt and ?23 billion of goods and services to the EU. That is 12% of
:29:24. > :29:29.our economic activity. We also buy a slightly larger amount from the EU.
:29:30. > :29:33.Our imports are ?291 billion. In terms of the European Supply chain,
:29:34. > :29:38.we are pretty important. A trade partner to the EU of similar scale
:29:39. > :29:41.to America, say. Some Brexit folk think because we buy so much more
:29:42. > :29:47.from the EU then we sell to it, other countries will be keen to cut
:29:48. > :29:54.deals. EU exports to the UK represent about 3% of economic
:29:55. > :29:58.output. Still, remember, the EU would have 27 nations, each with
:29:59. > :30:05.their own agendas. Ireland's exports to Britain are worth between eight
:30:06. > :30:10.to 10% of their annual economic activity. The EU tends to give
:30:11. > :30:13.countries more say on things which affect them disproportionately. The
:30:14. > :30:20.Netherlands, France, Germany, they all do trade with us. For Italy we
:30:21. > :30:23.are not a big partner. Exports to us make just 1.5% of their economic
:30:24. > :30:28.output. Other political factors might be bigger for them. Some of
:30:29. > :30:32.our trading partners might get annoyed at the UK were offered
:30:33. > :30:37.better trading terms than they have. Might Spain want to make sure live
:30:38. > :30:42.outside the EU is grim as part of its strategy to keep a lid on its
:30:43. > :30:50.would-be breakaway regions? The trading instincts of Brussels might
:30:51. > :30:57.mean that they make things tougher. At this stage, we just don't know.
:30:58. > :31:07.We have looked at the trade deal with the EU.
:31:08. > :31:15.Gerard, we will get a deal with the EU, correct? Yes. First and
:31:16. > :31:19.foremost, you do not need to have a trade deal to trade. You can go into
:31:20. > :31:23.any shop in the UK and pick up an item that says made in China. Most
:31:24. > :31:29.people will be confused to discover we do not have a trade deal with
:31:30. > :31:34.China. You do not need that. If we decide to leave, the first two
:31:35. > :31:38.years, nothing changes. Then we can decide to trade on the world trade
:31:39. > :31:44.organisation books. But the organisation focused on
:31:45. > :31:50.manufacturing. The UK economy is a service economy. If you look at the
:31:51. > :31:53.European Union, Open Europe, an independent organisation, believes
:31:54. > :31:57.that three quarters of the European economy is services but only a
:31:58. > :32:01.quarter of the trade is services. The rest of Europe does not like to
:32:02. > :32:05.trade in services. The good thing is because we are so competitive, at
:32:06. > :32:10.the end of the day we will be able to trade. And the financial sector
:32:11. > :32:13.will do particularly well. Do you believe that the financial sector,
:32:14. > :32:17.is not a possibility that the EU will say, we never really liked your
:32:18. > :32:21.banks, and we will not give you a trade deal? 17 years ago, we had a
:32:22. > :32:26.big debate as to whether Britain should get rid of the pound and join
:32:27. > :32:30.the euro. Then it was feared that London would lose out. I understand
:32:31. > :32:37.that, but why give us a deal and not Switzerland? The reality is that
:32:38. > :32:40.then the competition was with Amsterdam, Frankfurt and Paris. Now
:32:41. > :32:44.the competition to London is New York, Singapore and Hong Kong. The
:32:45. > :32:49.reality is that globally, Finance has congregated in a few centres. I
:32:50. > :32:53.want to pin you down on one specific question. A London-based bank with
:32:54. > :32:56.the customer in Singapore who wants to transact something in Portugal,
:32:57. > :33:02.this is not a ludicrously fanciful idea. Would they be able to do that
:33:03. > :33:07.if we left the EU and did not have a deal on financial services? Would a
:33:08. > :33:16.London bank be able to serve a Singapore customer in Portugal? Yes.
:33:17. > :33:22.No, they wouldn't. Technically,... But they wouldn't be able to do it
:33:23. > :33:25.without a deal, would they? There are two things, retail and
:33:26. > :33:28.wholesale. Retail is segregated and you were right about wholesale
:33:29. > :33:35.banking. But we need to take the lesson from New York. People look at
:33:36. > :33:38.New York and North America. America ensures that people need to have a
:33:39. > :33:41.New York presence or New York qualification. You are technically
:33:42. > :33:46.right but there is no reason to think that anywhere else in Europe
:33:47. > :33:49.would be able to do it. If they were tough, as you suggest, then we can
:33:50. > :33:55.learn from the Americans and be quite tough ourselves. Finance
:33:56. > :34:07.congregates in a few centres. Nicola, you have been congregating
:34:08. > :34:13.financially for many years, and you are a Remainer. I do quite confident
:34:14. > :34:20.in what will happen when we leave? It is quite clear to us that... If
:34:21. > :34:25.you look across all industries, 75% of the word investment comes to the
:34:26. > :34:29.UK because we are in the EU. If you ask the companies investing, they
:34:30. > :34:34.will say that is the reason. The same is true in financial services.
:34:35. > :34:37.If we leave the EU, it will cause mayhem for major financial
:34:38. > :34:42.institutions. They will have to move to Frankfurt or Paris. Unless we do
:34:43. > :34:48.get a deal? Gerard says that we might get a deal. Well, the Swiss
:34:49. > :34:52.could not, so why would we? Look at her London is positioned. We are
:34:53. > :34:57.positioned well in the new growth markets. Chinese currency comes to
:34:58. > :35:01.London, Islamic growth markets, the biggest foreign exchange trading
:35:02. > :35:05.room. People trade dollars in London. If it is all going so well,
:35:06. > :35:10.why stop it and move onto something else? That is what I do not get
:35:11. > :35:16.about this film. It seems to me that there is fantastic innovation going
:35:17. > :35:22.on in the city. Why risk it? It is not a risk. The last decade has
:35:23. > :35:26.shown that globalisation, technical change and innovation are moving in
:35:27. > :35:31.one direction. Countries that do well are adaptable and flexible and
:35:32. > :35:36.control their own destiny. As we do. The European Union is going in the
:35:37. > :35:39.opposite direction, controlling, regulating and centralising. Global
:35:40. > :35:43.finance needs to break free from that. One important point is that
:35:44. > :35:48.the single market is not complete. One of the major aspects of it that
:35:49. > :35:52.is not complete his services. 78% of our economy is dependent on services
:35:53. > :35:57.and we have the most to gain if we stay in. There is a major benefit
:35:58. > :36:00.that we will accrue if we manage to stay in. The irony here is that the
:36:01. > :36:05.single market is not complete and that does not prove whether we
:36:06. > :36:11.should stay in and finish it on leave. Everyone else has incomplete
:36:12. > :36:14.access. It is an incomplete market. When you say why change, there was
:36:15. > :36:20.an interesting phrase that you have used twice, once in the film and
:36:21. > :36:23.once in the studio, which is that Brussels does not like the city very
:36:24. > :36:31.much. Everyone recognises that. We had been on the receiving end of
:36:32. > :36:34.malicious regulation. Short selling bands, the financial transactions
:36:35. > :36:41.act. It would be even worse if we were outside. But would it be better
:36:42. > :36:44.if we leave or will it be better if we stay? It makes sense to take back
:36:45. > :36:48.control of our own regulation and have it in the hands of people who
:36:49. > :36:51.do not start with a proposition that a capitalist system is wrong. The
:36:52. > :36:55.idea that Germany and France are going to give us a better deal than
:36:56. > :36:59.they have got, they are going to give us full access to the single
:37:00. > :37:03.market, from which we benefit hugely, I can mention an area like
:37:04. > :37:08.agriculture, countries like Norway and Canada do not have full access
:37:09. > :37:14.to agriculture trade. The point is that the single market does not work
:37:15. > :37:17.in services. But they do not have full access to their financial
:37:18. > :37:21.services passport either, Canada does not. The government produced a
:37:22. > :37:25.report on the financial sector, a competency report, which pointed out
:37:26. > :37:29.that in the last decade the UK has lost the ability to control
:37:30. > :37:32.regulation and finance. The good thing, it said, was that in the
:37:33. > :37:36.future regulation is set at a global level and that is the point that
:37:37. > :37:39.Daniel is making. Many of these key areas, important for the UK
:37:40. > :37:43.financial services, it is globalisation that is the key for
:37:44. > :37:48.the future. The question is, do we want to build on the successes of
:37:49. > :37:51.the single market, why the net, expand it through new trade
:37:52. > :37:59.agreements like TTIP, with a free trade agreement with China, or do we
:38:00. > :38:03.want to spend ten years renegotiating a worse deal? But
:38:04. > :38:07.financial services... Lets leave it there. You have got a flavour of
:38:08. > :38:09.that argument but many who want to leave hope for a better deal with
:38:10. > :38:10.the rest of the world. More trade and all that
:38:11. > :38:12.flows from it. The question is whether the world
:38:13. > :38:21.will want to deal with us. So what kind of deal might a post
:38:22. > :38:26.Brexit Britain get from the rest of the world? The key argument has been
:38:27. > :38:30.that the EU tangles are in the regulation and makes it hard to win
:38:31. > :38:35.business in a faster growing market. If we could get rid of that
:38:36. > :38:39.entanglement, perhaps we could gain outside Europe. The world has lower
:38:40. > :38:42.tariffs than when we joined the EU but believed campaigners say they
:38:43. > :38:46.want to go for trade deals with the rest of the world as well and they
:38:47. > :38:50.argue that ours could be bespoke. Tailored just to us. EU trade deals
:38:51. > :38:55.with the rest of the world have to fit in all 28 states. The EU's
:38:56. > :38:59.advantage is leverage. Britain is a market of 65 million people but the
:39:00. > :39:04.EU is more powerful because it has half a billion. And, remember, we
:39:05. > :39:09.will have to learn how to do trade deals again. It might take a while.
:39:10. > :39:14.The EU Singapore deal took seven years, the Canada deal, five years.
:39:15. > :39:19.Since we already meet EU standards, we could conclude them faster,
:39:20. > :39:23.perhaps, but what if post Brexit Britain breaks from these laws?
:39:24. > :39:26.Switzerland's deal with China includes some financial linkups and
:39:27. > :39:30.took five years. And previous attempts to cut a deal with the US
:39:31. > :39:35.failed. The US government say they want us to stay in Europe, so how do
:39:36. > :39:40.the leaders -- as do the leaders of China and India. They also prefer to
:39:41. > :39:43.deal multilaterally, with blocks of countries rather than one at a time.
:39:44. > :39:48.It also might be impossible to wrestle a deal out of all of them. A
:39:49. > :39:51.US deal might involve taking genetically modified produce. To cut
:39:52. > :39:55.a deal with the EU, we would probably need to restrict it. The
:39:56. > :40:03.choice of which deal to choose would be hours and ours alone to make.
:40:04. > :40:11.Fazana Baduel, you are a business woman, and you have opened offices
:40:12. > :40:17.in other countries outside of Europe. You would like to open in
:40:18. > :40:22.India, or have you managed to open in India? I am in the process of. It
:40:23. > :40:26.would be easier if we had a bilateral trade agreement with
:40:27. > :40:31.India. I believe the EU has been negotiating for nine years, and for
:40:32. > :40:38.China? They are not even talking. And what makes you think, for the
:40:39. > :40:41.audience to get an idea of what a trade deal is, what would a British
:40:42. > :40:46.trade deal with India have in it that would help you? What is the
:40:47. > :40:54.line going to say? Lower tariffs, for instance. There are tariffs on
:40:55. > :40:58.public relations industries? There are on goods and services. I opened
:40:59. > :41:03.up by business six years ago in the UK. My business came from emerging
:41:04. > :41:06.markets. I did not seek out business from emerging markets, I found out
:41:07. > :41:11.that the growth is outside of Europe. Europe is a stagnant
:41:12. > :41:18.economy. I do not understand why we, our taxpayers income is going to
:41:19. > :41:23.spend ?300 million a week, giving to the EU. Just on this specific thing
:41:24. > :41:26.of the trade deal with India, does your business face a tariffs in
:41:27. > :41:36.India, doesn't face other restrictions and operations? We face
:41:37. > :41:38.other restrictions. I want to really have a granular example of something
:41:39. > :41:43.you want the British government to negotiate and I want to find out why
:41:44. > :41:47.the Europeans are not negotiating that. I would love for the UK to
:41:48. > :41:52.have a specific bilateral trade agreements so that both countries
:41:53. > :41:58.would work together. What would be in the? Nahrendra Modi came to the
:41:59. > :42:05.EU and he said he would like the UK and India to come together to work
:42:06. > :42:09.on -- the EU and India to come together to work on Smart cities.
:42:10. > :42:13.Fundamentally, if we have to go via the EU for a larger trade
:42:14. > :42:16.relationship, it is going to never happen. It has been so many years
:42:17. > :42:21.and we have not actually got anything. Liz Truss, it is true, we
:42:22. > :42:26.have never tried a British negotiation with India. It might be
:42:27. > :42:29.easier than negotiating with 28 countries and India. I have
:42:30. > :42:34.considerable direct negotiations with China and the US. On getting
:42:35. > :42:42.our agricultural products into those markets. For example, although the
:42:43. > :42:47.EU is able to sell beef to the US, we cannot as a UK government,
:42:48. > :42:53.because of the BSE issue is that we have had. There are nontariff
:42:54. > :42:58.barriers to getting into the US. It has taken us 20 years of
:42:59. > :43:03.negotiations. I hope to make progress this week. Likewise with
:43:04. > :43:05.China, there are products we cannot negotiate to China, like glamour,
:43:06. > :43:11.because of bilateral discussions. These deals with other countries
:43:12. > :43:19.take years and years and years. If you look at the length of time the
:43:20. > :43:23.Canada trade deal took, 27 years... It took seven years. On our own we
:43:24. > :43:28.would have done a bilateral trade deal right away. We have a bilateral
:43:29. > :43:32.relationship with the US about getting meat products in. It has
:43:33. > :43:36.taken 20 years. None of these things are easy. The idea that we could
:43:37. > :43:40.wave a magic wand and get an instant trade deal... It must be easier when
:43:41. > :43:48.you do not have to worry about French film makers and Italian
:43:49. > :43:54.textile deals. I think the central point here is what was just said
:43:55. > :43:59.about where the growth is. I agree. I do not disagree at all. Our
:44:00. > :44:04.exports have fallen by 55% in the last ten years. Where will they be
:44:05. > :44:09.in 20 years? Hello does it have to go before we drop this bizarre idea
:44:10. > :44:12.that we need to merge our political institutions? That has nothing to do
:44:13. > :44:18.with that. The fact is that EU companies like Germany exported more
:44:19. > :44:22.than we do. It is not the EU holding us back it is that we need to make
:44:23. > :44:28.more effort on exporting, which is what we're doing this is not about
:44:29. > :44:31.restrictions from Europe. This is about our own ability to export,
:44:32. > :44:37.which is important and I think those markets are important. We making
:44:38. > :44:42.this sound like the EU has not negotiated other trade deals. There
:44:43. > :44:47.are 53 trade deals that the EU has negotiated with other countries. And
:44:48. > :44:52.I think it is somewhat naive to think that we are suddenly, within a
:44:53. > :44:56.three-year period, going to negotiate all of these great trade
:44:57. > :45:02.deals and ignore the biggest trade that we do with our local area. The
:45:03. > :45:11.EU's total trade deals are $7.7 trillion. Chile's are $54.3
:45:12. > :45:15.trillion. Singapore, South Korea and Chile have bigger trade deals than
:45:16. > :45:19.the EU. Countries that are able to set trade deals to suit their own
:45:20. > :45:24.interests to do well. Britain is one of 28, we are at the back of the
:45:25. > :45:27.queue of the EU is focused on manufacturing. Services does not
:45:28. > :45:39.figure prominently. Weight at the moment the EU is
:45:40. > :45:44.negotiating with the US, which is controversial, and many people do
:45:45. > :45:48.not want it. With the US, if we left, would they rather now
:45:49. > :45:54.negotiate with Britain? They have said they wouldn't. Would they
:45:55. > :45:58.rather say, frankly, we don't have time for you individually, can we
:45:59. > :46:03.deal with you as a block? The answer is, look at the Major of our
:46:04. > :46:07.economy, our instincts and inclinations. Japan doesn't have a
:46:08. > :46:12.deal with the US. The constraints of a trade deal are the interests, or
:46:13. > :46:20.protectionist interests come of one or another party. You can see this
:46:21. > :46:25.in certain industries, including textiles. We are a much more
:46:26. > :46:30.maritime economy, in that sense we can speak to non-EU economies who
:46:31. > :46:34.have successfully negotiated trade agreement around the world because
:46:35. > :46:37.they don't have to worry about French film-makers, or Polish farm
:46:38. > :46:42.workers, or whatever it is. And that allows them to get a much more
:46:43. > :46:46.liberal and productive deal. How hopeful argue that an EU deal will
:46:47. > :46:51.occur with India and then your business will be opened up?
:46:52. > :46:57.Logically, if the UK negotiates with India it would be in the interests
:46:58. > :47:01.of the UK. Not one of a number of different countries. I also think it
:47:02. > :47:04.is a defeatist mentality that if we look we cannot compete on a global
:47:05. > :47:14.stage without clinging onto the petticoat of a stagnant economy, the
:47:15. > :47:17.EU. It isn't. It is. I did not choose to do business outside of
:47:18. > :47:23.Europe, I was forced because that is where the economic growth is, in
:47:24. > :47:29.India, in Russia, in China. Europe isn't the future. It is better to
:47:30. > :47:34.have a fantastic base of a 500 million person market for your
:47:35. > :47:39.product. We are running out of time. And I do want to finish. I want the
:47:40. > :47:46.audience to have a last word. We have discussed trade deals with the
:47:47. > :47:55.U, the rest of the world, which are perhaps three of the biggest
:47:56. > :48:02.arguments. -- with the EU, with the rest of the world. Anything that
:48:03. > :48:06.makes you excited or fearful? We shouldn't be defeatist. We should be
:48:07. > :48:11.positive. We should get over the complex issues we are talking about.
:48:12. > :48:16.If we do that we can do it together. One way to look at it is to say if
:48:17. > :48:20.you are cautious, you hang on to what you have got. If you are more
:48:21. > :48:27.daring you perhaps think maybe we can do better as this side have
:48:28. > :48:32.argued. How many of you at the moment would think economically we
:48:33. > :48:39.should be a bit cautious? How many of you are feeling daring?
:48:40. > :48:46.Absolutely, we should have more faith in ourselves. Holly, you were
:48:47. > :48:49.saying this earlier... Yeah, we should be daring. Why don't we have
:48:50. > :48:55.the skills to set up these trade agreements? Why can't we do it? The
:48:56. > :48:59.fifth largest economy in the world. One of the members of the Security
:49:00. > :49:04.Council. The Commonwealth, Nato, how much bigger do we have to be before
:49:05. > :49:07.we can run our own affairs? We do, but we work with other countries to
:49:08. > :49:14.do better. That is what we are talking about. The bureaucrats of
:49:15. > :49:21.the you run it. Bottom line is we want to do both. We don't want to
:49:22. > :49:27.carry on trading. And through the EU we can create the better trade
:49:28. > :49:31.deals. But why do we have to pay... Gentlemen, ladies, we have to leave
:49:32. > :49:36.Our live blog page will still be live for another 40 minutes or so.
:49:37. > :49:38.Take a look at that at bbc.co.uk/Newsnight.
:49:39. > :49:41.A lot of people do argue they want facts in this
:49:42. > :49:43.debate, but be clear - it is not facts we need:
:49:44. > :49:47.We need to know the unobservable answer to the question,
:49:48. > :49:52.what happens if we leave, or if we don't?
:49:53. > :50:00.Which is why there's still an argument.
:50:01. > :50:07.I hope you found the discussion tonight helpful.
:50:08. > :50:09.Have a very good night. Thank you for watching.