LONDON (Reuters) - A small group of economists who want Britain to leave the European Union say a historic, 19th-century economic reform showed that finance minister George Osborne is wrong to warn that a so-called Brexit would hurt Britain.
Just as the country’s modern-day establishment want Britain to vote to stay in the EU in next month’s referendum, its land-owning elite of nearly 200 years ago fought to keep the Corn Laws which imposed import tariffs on food, the group, Economists for Brexit, said.
When the laws were finally repealed in 1846, bread prices fell, boosting the spending power of the country’s increasingly urban population and spurring the economy.
The Corn Laws also split the Conservative party in a way similar to today’s Brexit debate.
Patrick Minford, an economics professor at Cardiff University and a member of the group, said there was an exact parallel with the referendum debate and that a post-Brexit Britain needed to be more open to free trade.
Minford, who was an outspoken supporter of former Conservative prime minister Margaret Thatcher’s economic policies, said Britain should simply lower its import tariffs to levels agreed at the World Trade Organization, a move which would bring down prices of goods such as food and cars.
Critics have pointed out that such a unilateral move by Britain would expose its booming automobile sector and its farms to potentially devastating competition.
The eight-strong Economists for Brexit is up against not only Osborne and his finance ministry but also the International Monetary Fund, the Organisation for Economic Co-operation and Development and many private bank economists who say a Brexit would leave Britain worse off than if it stayed in the EU.
Last month, Osborne said analysis by his ministry showed a Brexit would mean British households would be 5,200 pounds worse off a year by 2030 if it fell back on WTO rules.
Economists for Brexit responded to the projections on Tuesday, saying the ministry used models that had “no foundation in economic theory” and failed to take into account the increase in consumer spending power and the shift towards more productive industries that would follow a Brexit.
Writing by William Schomberg Editing by Jeremy Gaunt