Daniel Hannan: Throw off the tyranny of the status quo

If we were already out, no sane person would vote to go in. It’s time for Brexit. Merryn Somerset Webb talks to author Daniel Hannan.


Daniel Hannan: If Norway can prosper outside the EU, surely Britain can too

If we were already out, no sane person would vote to go in. It's time for Brexit, says Daniel Hannan.

What will the European Union look like in 20 or 30 years' time? That's not an easy question to answer. Look at the economics of the place and you will know there is an entirely reasonable chance that it won't exist in ten, let alone 20 years. A better question then might be: what do its leaders want it to look like in 20 years' time?

On that, this week's interviewee, Member of the European Parliament (MEP), author (How We Invented Freedom and Why it Matters) and eurosceptic Daniel Hannan is pretty clear. He is on his way to the Eurostar when he stops by the MoneyWeek offices and he's in a bit of a hurry.

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So we get straight to the point (something I have a feeling Hannan might do whether he has a train to catch or not). They "aren't being coy about this", he says. They "want more integration, they want common taxes, they want a common foreign policy, a common army, a common police force they're spelling it out in the clearest possible terms".

That means that the UK can't stay in the EU while remaining in the same position it is in now: as the president of France said, "either you leave the EU or you accept a political union" a United States of Europe. So if we want to pull back from the EU (making our legal system sovereign, for example), or even if we just want things to stay the same, we can't stay on the EU bus. We have to get off it and we have to find a new way to create "a good, amicable relationship based on open markets and a military alliance" with our "friends and allies" in Europe one that doesn't mean we "have to surrender our own legal supremacy... or our democracy".

I could be happy in the EU if

We have exported all over the world "this sublime idea that laws shouldn't be passed, taxes shouldn't be raised, except by our own elected representatives", the ones we can hire and fire, says Hannan. "Our parents defended that right with force of arms. It says little good about us if we toss it away in peace time without a shot being fired in anger." Clearly Hannan isn't that keen on the UK staying in the EU. I wonder what would have to change for his view to change.

There are, he says, three key reforms that would make him happy inside the EU. The first would make UK law "supreme on our own territory". This is something that would mean a change in the 1972 European Communities Act (which provided for the incorporation of European law into domestic law).

The second would give us freedom to trade outside the EU on our own terms. "The EU is collapsing as a share of the world economy and our exports to the EU are collapsing as a share of our total exports. But we gave away 100% of our trade policy to the European Commission on 1 January 1973 when we joined." That means we can't sign a free-trade agreement with, say, China, or anywhere in Africa. That matters. "We don't sit on great natural resources in this damp, green, beautiful island home of ours.We have to make our way by what we buy and sell and that means we have to be where the customers are" and that's outside Europe.

The third reform would allow us to opt out of "the non-economic, non-market bits of membership". You won't find anyone, eurosceptic or not, says Hannan, who is "against the common market". If we could cut back to that with no need for common policies on agriculture, fisheries, foreign affairs, defence, immigration, justice and home affairs, employment, social policy, the environment you would find thatpretty much all sceptics would be happy. "I would gladly support it."I can see that, I say but wouldn't that make us just part of a free-trade area, rather than a union of any kind?

It would. But in a good way. We'd end up with "something along the lines of what the Swiss are doing now and, you know what, I can't help noticing that they're managing pretty well. Richest country in the world the UN says it's one of the best places in the world to be born, second only to Norway... I think some miserable half-life is plainly possible in the shadows out there outside the EU."

Right. So is negotiating a deal like this even remotely possible? Hannan thinks that in fact it might actually be "on offer". But it isn't the deal that British officials are pushing for. So we will only get it if we vote to leave: after that a free-trade zone should be relatively easy to end up with.

Can the bloc survive?

We move on to the EU as a whole. Regardless of what the UK decides to do, is it sustainable, given that its structure is clearly flawed? "We all said that the Soviet system couldn't work," says Hannan, "and we were right... but it took quite a long time for it not to work." The EU can survive for a long time too if it is "prepared to pay a high enough price". That said, it is supposed to have "two great pillars of integration: one was the monetary union, and the other was the border-free zone, the Schengen deal Both of them have turned out to be fair-weather schemes.

Both of them collapsed the moment that the bad weather came." Monetary union has been a clear failure one-size-fits-all interest rates just haven't worked. As for the Schengen zone, it was supposed to make us all get on together much better, but "it is hard to dispute that it is stoking, rather than soothing, national antagonisms in Europe".People aren't more unified and richer:they are "more quarrelsome and poorer".

The question to ask yourself if you are wondering which way to vote in a referendum on Europe, says Hannan, is this: "if we were not now in the EU if our parents had had the sense to negotiate what the Swiss did, or the Norwegians would any mainstream party in Britain now seriously be arguing that we should join it? No... So what's holding us in?

It's what Nelson Friedman called the tyranny of the status quo'. A corpus of interests has grown up around the established dispensation. There are all sorts of people who are benefiting personally from the EU, not just as Eurocrats, but as non-governmental organisations, charities, big corporations that have lobbied to get the rules that suit them and hurt their rivals. That's where the real strength of the pro-EU campaign is. It's the people who have direct vested interests in it."

But what of the pain of transition, I wonder. However persuasive the arguments for leaving the EU might be, leaving will surely cause some chaos, won't it? Not necessarily, says Hannan.In fact, there may be less change thanpeople think. "When Ireland, or thebulk of Ireland, broke away from theUK, that was not an amicable process,far from it" and yet "it didn't suiteither party to unpick" the arrangements for free movement and the like: "itwas much easier to leave the bulk of things in place bilaterally". So it's silly to think that "the day after we leave we're going to start chasing every Polish barmaid out of London or that the Brits will all leave Spain no one actually thinks that".

Also, it is worth remembering that theEU sells more to the UK than it buys from the UK and "it's not normal in any commercial transaction for the salesman to bully the customer", particularly when that customer also has "the most widely spoken language in the world, the fifth-largest economy, the fourth-largest military budget and is one of five permanent seat holders in theUN Security Council".

The consequences of Brexit

The reality is that if we leave Europe, we will "lose our minority voice in the framing of future regulations" and these are regulations that we would, of course, still have to stick to when selling goods and services to Europe. But that's pretty much it. If Switzerland and Norway can provide their people with some of the highest living standards in the world while remaining outside the EU, it seems unlikely that the UK, a maritime trading nation of 64 million people, can't do it too and do it while "living under its own laws".

His case made, Hannan is off to catch his train to Brussels. After he has gone, I take a look at the European Parliament agenda. As far as I can see, Hannan's week involves a fair amount of preparing for next week's plenary sessions in Strasbourg, where he will have to vote on draft legislation on "novel food, net neutrality, roaming charges, national emission ceilings (air quality directive), and package travel arrangements and resolutions on the 2016 EU budget, car emission measurements and the civil use of drones". I can't imagine him enjoying any of that much.

Who is Daniel Hannan?

Daniel Hannan, 44, was born in Lima, Peru, where his parentshad a farm. He spent his childhood in the country, beforemoving to England to attend Winchester House School.He went on to study modern history at Oxford, where hechaired the student Conservative Association. He alsoestablished the Oxford Campaign for an Independent Britainand in 1992 led a protest at a European financial summitshortly before the UK was ejected from the EuropeanExchange Rate Mechanism.

After graduation he becamedirector of the European Research Group, a eurosceptic thinktank, then in 1996 went to work for The Daily Telegraph as aleader writer. In 1997 he became an adviser to the then shadow foreign secretary,Michael Howard, followed by a brief stint as speechwriter to Conservative leaderWilliam Hague. In 1999 he was elected as a Conservative MEP for South EastEngland, a position he has held ever since.

His outspoken speeches attacking the European Commission and its officials havemade him one of the most high-profile British MEPs, while an attack on GordonBrown in 2009 in which he described Brown (who had just given a speech to theEuropean Parliament) as "the devalued prime minister of a devalued government"achieved cult status on YouTube and won The Spectator "speech of the year" award.

While Hannan's main focus is on Europe, he has also ventured into domesticpolitics, writing several books promoting his libertarian views, most notably 2013'sHow We Invented Freedom and Why It Matters. He also backs "localism" and smallergovernment. In 2012 his suggestion that the Conservatives and Ukip should cometo an accommodation led to speculation he was about to join Ukip. Despite this, heremains a Conservative. He still blogs regularly for The Daily Telegraph.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.