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IEA launches series of ‘no-deal’ Fear-Checkers

IEA launches a series of ‘no deal’ Brexit Fear-Checkers to help separate Project Fear from Project Fact

Yesterday the Institute of Economic Affairs launched a series of ‘no deal’ Brexit Fear-Checkers to help separate theoretical risks from reality; Project Fear from Project Fact.

These short briefings will each look at a particular warning about the impact of leaving the EU without a deal, assess the problem, and outline what can be done to fix it.

The opening two Fear-Checkers cover aviation and data roaming, focusing on the claims that after Brexit planes won’t fly and mobile phone bills will soar for those visiting the EU.

The first briefing explains that the UK and the EU would still be able to make arrangements which are already extended to non-EU members, such as an ‘air services agreement’ to keep planes flying. This would require flexibility on both sides, but the mutual interests in protecting aviation would be overwhelming.

Solutions include:

  • UK retaining access to the EU’s Single Aviation Market on current terms by immediately re-joining the European Common Aviation Area as an independent member state, and remaining part of the European Aviation Safety Agency
  • Negotiating a bespoke arrangement, effectively a new free trade agreement (FTA) for aviation only

The second briefing on roaming charges argues that this problem is hugely exaggerated. But it also sets out two options for the Government to prevent consumers facing higher phone bills in a no-deal scenario

Solutions include:

  • Replicate the existing arrangements by retaining restrictions on retail roaming charges in UK law unilaterally. This could be overseen by Ofcom.
  • Alternatively, and preferably, they could let market forces do their job. There is now a much weaker case for state intervention in capping mobile phone tariffs. Consumers have alternative options with increased access to wi-fi and they can compare prices of different providers more easily putting those who introduce retail roaming charges at a competitive disadvantage. Given these developments, roaming charges have tumbled worldwide.

There is a real chance that the UK will leave the EU in March 2019 without the ‘withdrawal agreement’ anticipated in Article 50. Membership of the Single Market and Customs Union would then be replaced with trading on World Trade Organisation terms. Many other arrangements that currently govern relations between the UK, the EU, and the rest of the world could also come to an abrupt end.

The prospect of this has prompted another surge of warnings about potentially devastating impacts on the economy, security and welfare of the UK. Some of these warnings contain elements of truth and need to be taken seriously. But almost all describe scenarios that are very unlikely to happen in practice, because steps can still be taken to avoid them.

The Fear-Checker briefings are written to give a sensible assessment of the dangers involved in a ‘no deal’ scenario, and the preparations that should be made to minimise them.

Commenting on the launch of the no-deal briefings, Julian Jessop, Chief Economist and Head of the Brexit Unit at the Institute of Economic Affairs said:

“It is essential that the UK government keeps its Brexit options open and prepares seriously for the possibility of ‘no deal’.

“People also deserve better information on the costs and benefits and the steps that can be taken to minimise the risks.”

Notes to editors:

For media enquiries please contact Nerissa Chesterfield, Communications Officer: 07791 390 268

The IEA’s no-deal Fear-Checkers will be released throughout August and September, written by various authors who had different stances on the 2016 European Union Referendum.

The IEA does not have a single corporate view on Brexit and these briefings are not intended to promote one model over another.

Download the IEA’s Fear-Checker briefing ‘Planes won’t fly’, written by Julian Jessop, IEA Chief Economist and Head of the Brexit Unit.

Download the IEA’s Fear-Checker briefing ‘Mobile phone bills will soar, written by Julian Jessop, Chief Economist and Head of the Brexit Unit.

Already published is the IEA’s Fear-Checker briefing ‘We will run out of medicines’ written by Victoria Hewson, Senior Council for the IEA’s International Trade and Competition Unit.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.

The IEA is a registered educational charity and independent of all political parties.

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