Oral evidence: The economic and financial costs and benefits of UK membership of the EU, HC 499Wednesday 23 March 2016

Oral evidence, 23 March 2016.

Witness

Boris Johnson MP, gave evidence.

Chair

Thank you very much for coming to give evidence this morning. I do not know whether to call you Boris or Mr Johnson.

Boris Johnson

Boris is fine, Mr Tyrie.

Chair

I generally call the Chancellor Chancellor; I suppose I could call you Mayor. We used to have almost adjacent offices and I suppose I should declare that we know each other extremely well

Boris Johnson

We do.

Chair

We used to be in and out of each other’s offices quite a lot, years ago. You represent London. What are London’s views on Brexit?

Boris Johnson

I cannot give you any particular polling detail from Londoners. I have heard that Londoners tend to be more supportive of remaining in the EU than other parts of the country. I do not consider that necessarily to be an impediment to my position, which is to favour a change in Britain’s relationship with the European Union in favour of Brexit.

Chair

But you are not keeping an eye on the opinion polls,

Boris Johnson

No, we have a Burkean duty, Mr Tyrie.

Chair

Are you not aware of the very recent YouGov poll showing relatively strong support for remaining in the EU?

Boris Johnson

As I say, I am aware generally of that phenomenon, but I contrast it with a national position that is showing some quite interesting data in favour of leaving. That is the right balance of the argument.

Chair

In your professional capacity, you are looking also at the financial sector. Are you aware of what they say in surveys and in survey data?

Boris Johnson

It is very interesting. It is certainly the case that if you look at the survey data you will find people like the CBI and the British Bankers’ Association will generally tend to be quite strongly supportive of remain. A couple of points need to be entered there. They have been supportive also of going into the euro and regard it as essential, for instance, to completing the single market. It turned out to be a disastrous idea. They were wrong then and they are wrong now. It is also quite interesting when you dig into these people’s opinions. They are much less strongly held than you might suppose. Indeed, there are some very distinguished bankers who are in favour of Brexit and in favour of us getting out. I would mention Norman Blackwell of Lloyds, who made a very good speech the other day in the House of Lords, Sheila Noakes of RBS and Henry Angest, of Arbuthnot, who have all come out and said that they are in favour of us leaving. What has struck me in private conversations, as obviously I occasionally have with leading bankers about this, is how finely balanced they see it to be. Most of them will candidly say that they do not believe it will do any damage to London’s position as the world’s leading financial centre. That is the overwhelming picture I get.

Chair

Rather than the anecdotal evidence of your meetings, are you aware of the more thorough work that has been done to try to assess the views of the very people you are talking about—the leading bankers with whom you have been conversing?

Boris Johnson

As I say, I have given some examples of at least three leading bankers who are willing to stick their heads above the parapet.

Chair

I am asking you whether you are aware of any of the surveys that have been done.

Boris Johnson

I am aware of the gist of the surveys, Mr Tyrie, which, as I say, do show a majority in favour of remaining, but I would point out that they said that before.

Chair

I have got the two leading surveys in front of me, one is by City UK and one is by the Centre for the Study of Financial Innovation. City UK has taken the leading people in the legal profession, the banking profession and accountancy, and they split about 84% in favour, 16% against. Of course you may be right that their views are all lightly held and that could all suddenly trigger like a herd of antelope in the other direction. The Centre for the Study of Financial Innovation has polled the 400 professionals on their contact list, and they are getting slightly weaker support but still very strongly in favour. What you are getting in your anecdotal meetings does not seem consistent. The fact that you are not even aware of these does strike me as surprising.

Boris Johnson

I have said I am aware of the general thrust, Mr Tyrie. If I may say so, the same balance of opinion was heard about whether it was right for Britain to join the euro. That turned out to be a completely disastrous course of action. They were wrong then; they are wrong now. You are hearing very much the same sort of theme from the same constituency of people. I am very struck—

Chair

You have made that point, Boris, and we have got that firmly on the record. Have you got a point that you have not made—the one that you are very struck by?

Boris Johnson

I am struck by how shallow the enthusiasm for the European Union seems to be, even among its supposed advocates.

Chair

Yes, you have made that point as well. In your Dartford speech you quote some Open Europe analysis. I do not know whether you know you quoted some Open Europe analysis, but I did give you a warning before this meeting that we were going to take a close look at what you had said recently about Europe and that we would go through this in some detail. You say, “EU regulation costs British business £600 million a week”. Have you taken a look at the methodology of that figure?

Boris Johnson

Yes, this relates to an Open Europe report that looks at the 100 most expensive EU regulations. The actual cost of EU regulation may be even higher than the Open Europe report states. £600 million a week comes to about £33 billion a year. Clearly, when you talk about costs like that, I imagine the point you are driving at is what the saving would be if you were to get rid of all of those regulations. Would you even contemplate getting rid of all those regulations, many of which might be beneficial and are after all incorporated into UK law, and some of which may be very helpful? The point I would make is that there is always scope if we get out to amend and change those regulations in the interests of this country. As long as we remain in and as long as we have the 1972 European Communities Act in the way that it is currently formulated, there is absolutely no way that we can change any of that corpus of EU law. The point about EU regulation is that it flows irresistibly onwards and forwards: 2,500 more every year. Every time the EU touches some area of law, and it continually adds to the area of law that it affects and that it regards as part of its competence, that area of law and law making becomes subject to the judicial authority of the European Court of Justice. That is the fundamental problem.

Chair

We will be coming back to the point about the 2,500 pieces of legislation later in the hearing, I expect. I just want to probe a little more on this £600‑million-a-week figure. You have described it as the costs of regulation.

Boris Johnson

This is an Open Europe report, as you say yourself.

Chair

Have you taken a look at Open Europe’s own quite reasonable description of the methodology that they are using? It is quite short.

Boris Johnson

As I understand it, they have looked at the Government’s own impact assessments in order to make their estimates. They are quite conservative estimates of the cost by Open Europe’s account. One of the interesting things about Open Europe is that they have been banging away for a long time in quite a Eurosceptic way but remaining, as far as I know, neutral in this debate.

Chair

I am just asking whether you have read their own qualifications to this work.

Boris Johnson

I have a digest of the point that they make, which is that they have done it according to the Government’s own impact assessments.

Chair

Are you aware that what they have done is add up the costs in the cost-benefit analysis from the impact assessment but ignored the benefits?

Boris Johnson

Yes, I made that clear in my earlier answer.

Chair

You are aware of that. Of course, if you add up the costs of a proposal without taking account of the benefits, you will always get a very high figure. If you were building a bridge—

Boris Johnson

As I intend to and have done—many.

Chair

—you would not want to ignore the fact that the bridge might confer some benefits, would you?

Boris Johnson

No, of course not. Can I complete the point?

Chair

Have you had a look at the costs?

Boris Johnson

Open Europe has something quite interesting to say about the benefits, since you mention the benefits.

Chair

Order, order. Have you had a look, Boris, at the full list of costs and benefits of the measures that they are using to arrive at this number?

Boris Johnson

I did look down the list. You talk of the benefits, Mr Tyrie; it is quite interesting that Open Europe themselves say that 95% of these benefits have not in fact materialised. This seems to me to be a consideration you might take into account.

Chair

They have not said that. They have said that the full benefits are very difficult to quantify, which is not quite the same thing. They are making the perfectly reasonable point that a regulation may confer a heavy cost on a small group but a much broader and much more difficult to quantify benefit on a larger group, for example a regulation that might reduce consumer detriment.

Boris Johnson

Yes, this is a very important point.

Chair

Would you accept that, in order to give the electorate a fair balance of the costs and benefits, at the very least it is important to take a close look at the benefits side, and also, always, when quoting a figure, ensure that the public are aware that all you have done here is add up the costs? Open Europe have quite reasonably said, “It is important to note that these rules can bring benefits, including facilitating trade across the single market”, which is a pretty fair-minded and balanced qualification.

Boris Johnson

They say that they can bring benefits. However, they also say, Mr Tyrie, that these rules have not brought benefits in the way that was advertised and expected. If I may make a general point about the so-called single market, it was promised when the whole thing was launched in 1986. There was something called the Cecchini report. You will be familiar with the whole drumroll of excitement about the birth of the single market. It was going to lead to a great period of European growth and dynamism. In fact, that did not take place. We did not get the huge expansion in employment in the EU. We did not get growth in the European Union economies.

Chair

These are all very reasonable points, Boris.

Boris Johnson

I am glad.

Chair

I am trying to elicit from you a much narrower response to a narrower question.

Boris Johnson

I have given you the answer. The £600 million figure is very fair considering that Open Europe themselves say that 95% of the benefits have not materialised.

Chair

Do you think we can ignore the fact that the benefits are considerable in the list of measures they themselves provide?

Boris Johnson

Since you yourself have attached great significance to this Open Europe report, as I do, you should also attach significance to the fact that they say 95% of the benefits have not materialised.

Chair

We have already discussed that. That is not only what they say, Boris. They make clear that there are benefits that may not be quantifiable, which is not the same thing.

Boris Johnson

The important point, if I may say so, is what you can do about these regulations. It is the view of Open Europe that they are costly, they are burdensome, and there are a great number of them, which I think you would concede fall too heavily on some sectors of our businesses. The advantage of a Brexit would be that we could amend those regulations. Without Brexit you can do nothing. If you look at some of the stuff such as the working time directive, the water framework directive, the Data Protection Act, GM regulations and the solvency II directive, many directives and regulations emanating from Brussels have, either through gold-plating in this country or simply because of poor drafting or whatever, been far too expensive. That is the point that Open Europe are making. They are not ideally tailored to the needs of this economy.

Chair

Are you aware of the exercise to try to find examples of gold-plating undertaken by the Government?

Boris Johnson

I am.

Chair

Did you know that they struggled to find very many examples? There are some, but they struggled.

Boris Johnson

There are indeed some examples. I will give you an example of gold plating.

Chair

Perhaps rather than giving me an example now, you might send us a list of the areas of gold-plating after this meeting—only to speed things up.

Boris Johnson

I would be happy to give you an example now, if you want.

Chair

I would like to turn to your article in the Telegraph on 22 February, where you say that there are these ludicrous rules emanating from the EU and that this is a reason for your decision to leave. One of the ludicrous rules that you cite is: “An EU rule that says you can’t recycle a teabag and that children under eight can’t blow up balloons”.

Boris Johnson

May I say, Mr Tyrie—

Chair

Can you tell me which EU regulation or directive says that children under eight cannot blow up balloons?

Boris Johnson

Yes, the European Commission’s own website. I would be happy to give you the number of the press release in a moment. The European Commission’s own website says, “Adult supervision is required in the case of the use of uninflated balloons by children under eight”. In my household, more or less only children under eight are allowed to blow up balloons, My Tyrie. It is absolutely ludicrous to have this kind of prescription set out at a European level. I think it is absolutely bonkers and I think you do too.

Chair

What it actually says, Boris—I have the toy safety directive requirements in front of me—is, “Warning: children under eight can choke or suffocate”, and it is asking that this warning be placed on the packaging. It is not requiring or forbidding—

Boris Johnson

It is requiring it to be placed on the packaging.

Chair

It is requiring a warning to be placed on the packaging. It is not prohibiting children under eight from blowing up balloons.

Boris Johnson

Even the European Union would be hard put to invigilate households in such a way as to prohibit people under eight from blowing up balloons. On your point about recycling teabags, which you mentioned, it is a classic example of gold-plating. The EU animal by-products regulation of 2002 stated that stuff that had come into contact with milk or with meat could not be recycled. Cardiff Council decided to interpret the animal by-products regulation 2002 in such a way as to forbid people from recycling teabags. That is a classic example of the confluence of EU legislation with overzealous British implementation, which we might call gold-plating.

Chair

Okay, but that is an action that we can perfectly well decide whether or not we want to implement. It is not true, though, is it, to say that there is an EU regulation or directive that prohibits people from recycling teabags?

Boris Johnson

Yes, there is.

Chair

It would be true to say that some countries or some councils or some regional authorities or centres might have decided to gold-plate recycling teabags.

Boris Johnson

You will readily appreciate, Mr Tyrie, that without the animal by-products regulation of 2002 there would be no scope for the council to institute that prohibition. They are relying on EU regulation, namely the animal by-products regulation of 2002, and there is a separate regulation that forbids you from burying your own sheep on your own ground. That is the animal hygiene regulation of 2001.

Chair

We have not got into sheep yet.

Boris Johnson

There myriad of these things. They are taken and used by UK officials, however well meaning, in such a way as to add greatly to the burden of bureaucracy.

Chair

This is taken and used or misused by British officials on the back of something from the EU that does not prohibit people from recycling teabags. It is a misrepresentation to say that people are prevented from recycling teabags.

Boris Johnson

They are by Cardiff Council as a result of EU legislation.

Chair

That is a much better description, which was unfortunately, somehow, omitted from your Telegraph article.

Boris Johnson

To be fair, there was plenty in that Telegraph article about the Stockholm syndrome of UK officials who feel obliged to take the opportunity to implement overzealously legislation emanating from the EU. That is the whole point. One of the interesting things about this country is that we are far more enthusiastic about implementing these regulations than others. We take it far more seriously. One of the problems I have in London, in among the series of uninterrupted joys that is my job in London, is getting more housing built fast. There is no doubt at all that EU regulations/legislation of one kind or another, such as environmental impact assessments or whatever, slow down the planning process. You have to wonder whether those processes would be quite so cumbersome and quite so slow in other European countries. We do relish bureaucracy in this country and we do tend to implement it in a very zealous way.

Chair

That has rather changed your line of fire in the speech and the article, which are attacking EU regulation, to the actions of UK officials who have caused the problem, which the EU regulation did not itself bring.

Boris Johnson

It did. I am afraid I must respectfully disagree with you, Mr Tyrie. Without the animal by-products regulation of 2002 there would be no scope for the officials in question to enact this provision.

Chair

Other people can form their own view about the composting of teabags.

Boris Johnson

They will.

Chair

I have got you book here, Lend me Your Ears. In that you say, “There really is European legislation on the weight, dimensions and composition of a coffin”.

Boris Johnson

Yes, there is

Chair

Can you tell me where that is?

Boris Johnson

That was to do with the shipment of corpses across frontiers. I seem to remember that there were various British funeral operators, such as Kenyon in particular, which is a very successful funeral operator in this country, keen to have some sort of European provision on this. The result was a euro-coffin, as far as I can remember, or regulations on the maxima and minima of euro-coffins. I do not believe it was remotely necessary for the safe and successful operation of the single market. The whole term “single market” is widely misunderstood. Free trade across Europe would have continued unimpeded without legislation on the size and shape of a euro-coffin. They probably, by the way, had to change those dimensions radically since everybody in this country started getting fatter and fatter.

Chair

It is not EU regulation at all, is it?

Boris Johnson

It is a long time since I studied this matter, Mr Tyrie, and you will have to forgive me. It is more than 20 years ago. This is something that I seem to remember arose from some Brussels institution.

Chair

You wrote it in your book a decade ago. It is not 20 years ago, and you are defending it now. In fact it is a Council of Europe convention on the transfer or corpses. In there, there is no reference to coffin weight or dimensions, nor is there any EU legislation, nor is the UK a signatory. The story is a figment of your imagination.

Boris Johnson

I am afraid, sir, I think you are in error there, but obviously it is a long time since I looked at it. There was a question about the maxima and minima of coffin sizes. My memory is that it was to do with the EU.

Chair

There was legislation and it was EU. Okay. If you could provide us with that after the meeting, we would be interested to take a look. I have been through quite a list there either of things that require quite a bit of qualification to understand and for which a reasonable person would say that you had either exaggerated or misrepresented the extent—

Boris Johnson

I do not think so at all. You have failed utterly in your experiment, if I may say so.

Chair

That is a judgment that others listening to this can make. Do you think on reflection—perhaps you do not, having just made that remark—it might be prudent, in the interests of generating a strong case, that you add qualifications in at the time that you make these remarks?

Boris Johnson

May I just say how strongly I feel about this? There is a great deal of effort being made at the moment to deprecate the views of those who think we should leave, to undermine their point of view and to say that everything we say about the EU is somehow mythical. I will give you an example.

Chair

What has that got to do with the question I have just asked?

Boris Johnson

I will tell you. You have asked me whether I want to recant some of the things I have said.

Chair

I have not asked you to do that. I have asked you to make sure that you qualify and provide the full and balanced view, in your own interest, of points that may indeed, in one way or another, to an extent, support your case, but which, because of the language you have used and your one-sided description of them, many might feel is an exaggeration to the point of a misrepresentation.

Boris Johnson

I do not agree with that. Let me explain why I feel so strongly about this. There was an instance that I mentioned on The Andrew Marr Show of the cab dimensions that we wanted to have in London in order to minimise deaths of cyclists. An organisation called InFacts wrote an article on their website, which I think has been widely read, suggesting that this was untrue, that there was no such problem, and that the EU had agreed unanimously a provision that would protect cyclists with new types of cabs. Having studied the directive closely, as I am sure you have too, Mr Tyrie, it is completely untrue. The directive in question, 2013/0195 from memory, did indeed attempt to modify the dimensions of cabs, mainly from an aerodynamic point of view. That was what they were trying to achieve principally. There was some change to visibility, but it got nowhere near what we needed in terms of lowering the driver and getting the windows big enough so as to be able to see vulnerable road users in the way that we wanted. There were representations made to amend this directive, which was the weights and dimensions directive, when it was going through, and we tried to do that. But the truck industries in France and, indeed, Sweden fought the thing off. We cannot get it through. Type approval for truck dimensions for lorry cabs have been passed from this country to the European Union. It only happened a few years ago. It happened in 2011‑12. So, I cannot do it; the Department for Transport cannot do it. We cannot make essential changes to the dimensions of truck cabs in our country that would save the lives of cyclists. Reading some of the stuff from the remain camp shows that they should get their facts straight. This is something that I have tried very hard to make a difference on in London. We have campaigned very hard to make cycling safer. We have an opportunity to have a new regime for truck cabs in our city. It would save the lives particularly of female cyclists. It is a great shame that, in the interests of propaganda, what we have tried to do has been misrepresented by the remain campaign. The fact is we have lost the power to do it. It has been handed over to Brussels. That is a shame. It should come back.

Chair

We are trying here to get beyond the misrepresentation on both sides. You will have seen what we have been trying to do with respect to claims made by the remain side.

Boris Johnson

Ah, I see. Well, that is good.

Chair

You sound surprised, Boris.

Boris Johnson

No—I am delighted.

Chair

I would have thought that every question that is being asked of you is in that spirit. You would acknowledge, though, that with respect to the very regulation that you are just referring to, the UK would have no say on UK truck safety standards in the rest of the EU if we left, and that therefore your ability to influence what EU trucks looked like when they came to the UK, unless you banned them completely, would be very severely limited.

Boris Johnson

Yes, of course.

Chair

Would you consider that to be a restraint to trade?

Boris Johnson

No, it would be a very sensible measure.

Chair

You would ban lorries or trucks that did not conform to your standards. Is that right?

Boris Johnson

Perhaps for the benefit of the Committee, we are already pioneering the world’s first safer lorry zone within an urban area. We are already instituting various requirements for mirrors, blinds spots—all sorts of ways in which we can minimise the risk to vulnerable road users. This is a further step that it is technologically possible thanks to the evolution of cab design. Basically you get a bus-like cab and you put it on a truck. They look fantastic. They are fantastic. They save lives. You cannot do it at the moment because it is blocked in Brussels.

Chair

It is blocked by one country, in fact, is it not?

Boris Johnson

It is either France or Sweden—I do not know.

Chair

It is France.

Boris Johnson

I am told the Swedes also.

Chair

The principle, though, that you seem to be arguing for is for some form of standardised regulation. Have I not got that right?

Boris Johnson

Respectfully, Mr Tyrie, you do not have that right, because I am arguing for the ability of Londoners and the—

Chair

You are asking for unilateral regulation.

Boris Johnson

That is in the nature of a safer lorry zone. It would be a good thing.

Chair

You are arguing for that even if it may be deleterious to trade?

Boris Johnson

I do not believe it would be deleterious to trade. In fact, it would stimulate the market for better and safer cabs. It would be a great thing. It would save lives.

Chair

At this point, I hand you over to the tender hands of Jacob Rees-Mogg.

Mr Rees-Mogg

I am, of course, on your side. I am a supporter of Vote Leave. If I can just follow on from what the Chairman has been saying, we can assume that your design might even appeal ultimately to the French, because I assume they do not wish to go around murdering cyclists, particularly, so it could be very innovative and successful across Europe. If we had our scheme in place first, others would follow.

Boris Johnson

Yes, of course. The problem, if I can be absolutely frank about it, is that Renault and Scania have been reluctant to move as fast as they might because basically they have not got their truck cabs in the state of evolution that they would want in order to be able to take advantage of this market. Other firms have. This can, I think, only be passed in unanimity. The French have been using their position to block it. It is a great shame. If we took back control, we would be able to make our streets safer.

Mr Rees-Mogg

Thank you very much. If I can move on to the laws that are made in the UK but emanate from the EU, you were making the important point about Cardiff and teabags, because if they do not implement EU law correctly, of course we can be taken to the European Court and it can be imposed on us. There is inevitably, because of the EU, not because of foolishness among councils, a need to implement accurately. If a teabag has gone in milk, it must meet the animal by-products directive. That is the issue then of percentage: various figures have come up as a percentage of UK law that comes from EU law. You have quoted on occasions the House of Commons figure—the 15% to 50% figure—and you have also quoted a two-thirds figure. The German Parliament came up with an even higher figure.

Boris Johnson

80%.

Mr Rees-Mogg

85%. Could you give us some guide as to how you would like to calculate this figure and where you would get it from?

Boris Johnson

I have hot news, Mr Rees-Mogg. The House of Commons Library has just produced another series of calculations. We have heard various authorities—Nick Clegg, Chuka Umunna—who have said it was about 50%, a claim Mr Umunna now denies he ever made. The House of Commons previously said it was 50%. They now say in what has come out either yesterday or today that it is about 59% or 60%. That is because you have got to think about not just the directives but also the regulations, the secondary instruments of one kind or another. They are very numerous. As you rightly say, as soon as EU law touches anything it becomes justiciable by the ECJ.

Mr Rees-Mogg

Thank you. Michael Dougan, an EU public law expert, gave us evidence saying that trying to quantify this could never be anything more than an inaccurate guess. Within the bounds of inaccurate guessing, do you agree with him or do you think that he is arguing his own point of view?

Boris Johnson

I am sorry; I am not familiar with the authority.

Mr Rees-Mogg

Michael Dougan. He is an EU public law expert. You do not know who he is? I do not think I do either.

Boris Johnson

You must forgive me. I was not familiar with his work before today. There are varying figures. What cannot be denied is that the volume has increased, is increasing, and ought to be eliminated.

Mr Rees-Mogg

It is along the lines of a very good 18th century debate in the House of Commons indeed. You are very happy with the figure. It is very good that we have got a new figure. Dougan again worries that when we compare EU laws and our laws we compare non-legislative measures with legislative measures. He feels it is inaccurate, comparing apples with pears, and that you would have to include all sorts of regulations that come out of local councils and so on and so forth. I wonder if you agree with that or whether you think that, once again, he is arguing his own book.

Boris Johnson

I do not know what point of view Mr Dougan has or what his perspective is. Just as Mayor of London, I am amazed at the amount of stuff I come across every day that seems to have an EU origin, whether it is, as I say, public procurement rules, which we obey very punctiliously, unlike some other European countries, or whether it is rules about the interoperability of trans-European networks that affect the dimensions of Crossrail tunnels or whatever it happens to be. There is an awful lot of this stuff, and it seems uninterruptable at the moment.

Mr Rees-Mogg

Rules inevitably come with a court of some kind, and the court we have is the European Court of Justice. It is said that is essential to the proper working of the single market, because otherwise people would do what they like and ignore the rulebook. Is it possible to have a free trade area without the European Court of Justice?

Boris Johnson

Yes, I do. I am very grateful that you raised that point, because people do not understand 70% of our trade outside the EU is with countries with which we do not have any free trade agreements at all. Of the free trade areas that there are around the world—NAFTA, ASEAN, Mercosur—not a single one tries to imitate this anachronistic, old-fashioned system, devised by idealistic French bureaucrats after the war, of a single judicial approach. Nobody else does that. It is very striking that unemployment in the EU is roughly double that of the other free trade zones that I mentioned. Growth is much lower. I invite the Committee to speculate as to whether or not that is associated with the volume and the rigidity and the irreversibility of EU law. The ECJ is a system that reminds me rather of HAL, the computer in 2001: A Space Odyssey. It has basically slipped its human moorings and become autonomous. If you look at the recent rulings of the ECJ, they are bizarre.

Mr Rees-Mogg

Though occasionally they go in our interest, particularly the location policy in relation to clearing of euros, where it was ruled that the ECB did not have the authority to make the regulation. It was not a single market issue; it was on the powers of the ECB to make the regulation, but it did go in our favour.

Boris Johnson

I agree with that. On the other hand it has never been my view that a single currency was necessary for the completion of the single market.

Mr Rees-Mogg

No, but in terms of the clearing possibilities for the City of London, the European Court allowed the City of London to carry on with the clearing, whereas the ECB was trying to stop it. We do occasionally win. Do you think that the wins that we get are sufficiently important to outweigh the losses that we suffer and the undermining of democracy that is implicit in having a supranational court overrule us?

Boris Johnson

That is the fundamental question. My answer to that is that the balance has now switched against. 20 years ago many of us would have said that the balance was in favour of remaining. Let me give you a couple of examples of thinking today, particularly about how to combat terrorism and the threat that poses to our society. I have seen various people quoted as saying that remaining in the EU is essential for our security. It is important to put a countervailing point, which is that there are some ways now in which the European Court of Justice is militating against our ability to control our borders in a way that we would want to and, indeed, to maintain proper surveillance. Look at the case of Abu Hamza’s niece, who tried to smuggle a SIM card to him in prison. We could not deport her, not because of the Strasburg Court of Human Rights but because of the European Court in Luxembourg, which is now able to adjudicate on the entire caucus of the Charter of Fundamental Rights. You have also seen the European Court of Justice in Luxembourg saying that states’ security services cannot retain mobile phone data that is very often essential for monitoring potential terrorists. What does that have to do with completing the internal market? What does that have to do with free trade? The answer is absolutely nothing. It is morphing into a political union of a kind that is no longer, on balance, in our interests. Mr Rees-Mogg, on your point about the protections of the City, the City would continue to flourish outside the EU, and flourish mightily. I remember that the threat to euro clearing was mentioned at the time of the creation of the euro, and that everybody said that that would be migrated away from us. That did not happen, simply because of the concentration of talent, the critical mass, is here in London, for all sorts of reasons that have nothing to do with the EU.

Mr Rees-Mogg

The point you make about the Abu Hamza family case is very important, because not only were we promised that the Charter of Fundamental Rights would not apply in the United Kingdom—there is a protocol attached to the treaties that it was pretended achieved that—but the court tried to keep it secret to save themselves from the shame of having interfered so directly in UK criminal law rather than in a matter of the single market. You are absolutely right on that. It is no longer a sacrifice worth making, and even outside the single market is it not true that the WTO has arbitration systems that are almost invariably followed by member states of the WTO when there are breaches of free trade rules?

Boris Johnson

Of course, and tariffs generally have been coming down across the world. You are seeing more and more free trade deals done that involve virtually zero tariffs. You look at the US-Australia deal recently: tariffs were removed in 99% of goods of all kinds. Even then, before the deal was done, their tariffs were only running at 4.3%. There is a huge opportunity now for us to get out from under an incredibly prescriptive, over-bureaucratic system that is trying to create a single polity out of many, and strike a new future.

Mr Rees-Mogg

Thank you, Mr Johnson, for your very compelling evidence.

Chair

You mentioned the figure of 59%; could you describe how that number is composed?

Boris Johnson

Certainly, Andrew.

Chair

First of all, you say it is hot from the press. What is in fact the document you are reading from?

Boris Johnson

It is the amount of legislation from Europe. It is an update by the House of Commons Library of the figures that they give.

Chair

And the date?

Boris Johnson

8 March, so it is not quite as recent as I thought.

Chair

No. It is in fact a 2014 figure, but not to worry. You probably did not know that, but do keep going.

Boris Johnson

I am so sorry, Mr Tyrie. I was informed by my enthusiastic colleagues. However, 2014 does not seem to me to be that long ago.

Chair

What is this 59% composed of?

Boris Johnson

This is composed of the number of EU regulations and EU-related statutory instruments, I believe.

Chair

You have really done exactly, and you are illustrating exactly, what I began the session with, which is you have come out with a figure, which you claim to be hot form the press, that, in fact, you do not know the composition of. In fact it consists of regulations, directives and decisions. Decisions may relate to an individual firm decision. There are thousands of those relating to individual firms.

Boris Johnson

Are you disputing the veracity of the House of Commons Library, Mr Tyrie?

Chair

Fortunately I do the asking at these meetings. The conclusion of the note on this reads, “All measurements have their problems. It is possible to justify between 15% and 55% or thereabouts”—

Boris Johnson

59%, isn’t it?

Chair

I am reading the note on which what you have in front of you is based—“depending on what is included or excluded from the calculation”.

Boris Johnson

Whether it is 59% or 55%, it is an awful lot.

Chair

15% is the range offered by the House of Commons Library. I am repeatedly trying to point out to you that, while it might be possible to put together a case for 55% or 59%, it is extremely important also, if you want to try to acquire credibility in this debate, to say there is a vast range depending how you measure this, and that may be as low, as the House of Commons Library has said, as 15%.

Boris Johnson

That is if you look solely at directives and decisions. If you add in statutory instruments, the figure rapidly expands. Since statutory instruments have effect in this country and since they form part of the caucus of European law and since they are justiciable by the European Court of Justice, it seems to me entirely right that we should look at that figure. It is a huge figure. Most people listening to this debate will conclude that there is too much legislation emanating from the EU that we can neither control nor repeal. That is the critical point. Once it is promulgated, it cannot be reversed.

Chair

We have had the key exchange we need to have on the extent to which we should attach veracity to figures like 55% or 59% or, for that matter, 15%.

Helen Goodman

Good morning, Mr Johnson. On the 7 February you said, “Leaving would cause at least some business uncertainty while embroiling the Government for several years in a fiddly process of negotiating new arrangements, so diverting energy from the real problems of this country”. How long do you think this period of uncertainty would last?

Boris Johnson

The first point to make there is that it is important in this whole debate not to blame every problem in this country on the EU, and I do not.

Helen Goodman

That is not what I asked you. I asked you how long the period of uncertainty would last.

Boris Johnson

It need not last very long at all. In fact, there need not be a period of uncertainty at all. The best analogy that I can come up with for this whole debate is the millennium bug, the Y2K alarmism. People said that planes would fall from the sky and computers would crash and the economy would tank by 5%. Nothing of the kind took place. There is a great deal of scaremongering and alarmism. That piece, as I recall, set out two sets of arguments: pro and con. It concluded, I remember, by saying that we had absolutely nothing to fear from leaving the EU. That is the truth.

Helen Goodman

Mr Johnson, those were your words. We have taken evidence from a number of people, including John Cunliffe, who used to be our Ambassador in Brussels. He says that the negotiations would basically have three parts. After we have triggered Article 50 we would have a negotiation, which might last for two years, on arrangements for leaving. We would then have a negotiation about our future relationship with the EU. In addition to that, we have 50 free trade negotiations to undertake. You have also said, “The people of Europe do not vote as one, think as one, or speak as one”. How long do you think it would take the other 27 member states to establish what their negotiating position is going to be under Article 50?

Boris Johnson

One of the most interesting things about this debate is the sheer negativity about our potential to do these deals. We have become infantilised by the fact that the whole responsibility for this is now conferred upon the Commission. They do not have, in my view, sufficient UK representatives to do it properly. Bear in mind, Ms Goodman, we already have extensive trading relationships; we have been in the thing for 44 years. Our relationship with the EU is already very well developed. It does not seem to me that it would be very hard to do a free trade deal very rapidly indeed. I do not think it would not be necessary to invoke Article 50 immediately. I do not see why that would be the case. The US-Australia deal that I just mentioned, for instance, took only two years. George Osborne is right when he says that what we want is a British deal, and a British deal that represents an opportunity to get free trade with our European partners based very largely on existing arrangements. I do not see why that should be beyond the wit of man.

Helen Goodman

It is certainly not beyond the wit of man. Nobody is suggesting that we would not be able to negotiate a deal at any time. That would be patently absurd.

Boris Johnson

That is terrific.

Helen Goodman

The question I am asking you about now is the period of uncertainty. You have said a number of different things about what you think Brexit should look like. Do you think the other 27 member states have an agreed picture about what the relationship they want would be with the UK?

Boris Johnson

I do. We are not having this debate in isolation in this country. Everybody can see across the EU what is happening. People are already thinking about this and preparing for how they, our friends and partners, would want to take things forward. It would be overwhelmingly in their interests to do free trade deals as rapidly as possible. Many of them, as you know, Ms Goodman, have quite substantial trade balances in their favour with us. They would want to protect their businesses, their industries. The UK is 16% of exports from the rest of the EU.

Helen Goodman

It is not; it is 10%.

Boris Johnson

I defer to your knowledge.

Helen Goodman

6% of trade is quite a lot.

Boris Johnson

My information is that it is 16%.

Mark Garnier

It is 16% of GDP.

Boris Johnson

Forgive me—16% of the GDP. I am happy to look at the figures for exports. If you look, for instance, at the German balance of trade with us, it is £27 billion net. That is a very substantial incentive for the largest and most political influential economy in Europe to strike a deal very fast that is advantageous to their businesses.

Helen Goodman

Do you think the interests of the German economy and what they would want from the deal are the same as what, for example, the Greeks would want from the deal?

Boris Johnson

There would be a variety of interests that people would have. Obviously at the moment we have free trade across the EU, and people would want to protect that as far as they possibly could.

Helen Goodman

Of course people would want to protect that as far as they possibly could but. in striking a deal, do you think that the interests of the German economy and the interests of the Greek economy are the same and that they could say immediately that they would have the same negotiating position and there would be no period of uncertainty?

Boris Johnson

You would have to take a view about whether or not you were going to strike an agreement with the EU as a whole. Do not forget that the EU retains competence for international trade negotiations. Even on a Brexit, it would do that. I imagine the Commission would be negotiating on behalf of both the Greeks and the Germans at the same time. It would be possible to do a deal very rapidly indeed based on the existing patterns of trade. That is what the people would want to protect.

Helen Goodman

Mr Johnson, that is not how the process works. The Council of Ministers give the Commission the negotiating mandate. The Council of Ministers initially have to have a discussion to agree the negotiating mandate for the Commission to do the practical negotiations. I am asking you whether the EU member states on the Council might take some time to agree the negotiating mandate.

Boris Johnson

I do not think so, because the overwhelming interest of European economies, and indeed several of the most powerful European economies, is to get such a deal done as fast as possible. The EU has already, because of the euro crisis, had problems there. They would want above all to minimise uncertainty and delay, and they would want to get on with it as fast as possible.

Helen Goodman

The EU crisis is obviously caused by the fact that the structures and interests of the German and the Greek economies are quite different, so you are being far too optimistic. Can I ask you another question about the UK’s negotiating position? Do you want to have access to the single market?

Boris Johnson

The single market is a term that is increasingly misunderstood. What we mean by the single market, it seems to me, is the whole corpus of European law adjudicated by the European Court of Justice. In that sense it comprises everything from animal hygiene by-products regulations to the weight and size of lorry cabs—

Helen Goodman

We do not need to have every single example of the whole of the single market.

Boris Johnson

—to the rights of prisoners in UK prisons and whether or not we should be able to deport them. All these things are now justiciable by Luxembourg. We should get out from under that system.

Helen Goodman

That is not the question I asked you.

Boris Johnson

We should have a free trade arrangement that continued to give access to UK goods and services on the European continent. That is what it is all about.

Helen Goodman

That is very helpful, because on 6 March you gave the impression that you wanted a deal like the deal the Swiss have.

Boris Johnson

I do not know who took that impression.

Helen Goodman

That is what you said on 6 March, and on 11 March you said you wanted a deal like the Canadians. Those deals are rather different.

Boris Johnson

As I said earlier, Ms Goodman, I want a deal for Britain. I think that is what we will get.

Helen Goodman

If we are to end the period of uncertainty, it is not terribly helpful for those people who are for Brexit not to give a clear view of what—

Boris Johnson

I have given you a very clear view.

Helen Goodman

You have not given us a very clear view at all.

Boris Johnson

I have given you a very clear view.

Helen Goodman

No, you have not.

Boris Johnson

I have. We have 1,700 officials in this country who are capable of negotiating trade deals. There is absolutely no reason why it should not be done very expeditiously indeed. One of the interesting features of the Canadian deal and indeed the US-Australia deal that I just mentioned is that they were able to remove huge numbers of tariff barriers. We could do that. We could go ahead and, indeed, we would be able to strike other free trade deals around the world, which we are currently prevented from doing.

Helen Goodman

Mr Johnson, the Canadian deal does not include financial services.

Boris Johnson

I do not want to imitate the Canadian deal; I want a British deal.

Helen Goodman

You do not want to negotiate like the Canadians; you do not want to negotiate like the Swiss.

Boris Johnson

No, I want us to do a British deal.

Helen Goodman

What does that mean?

Boris Johnson

There are aspects of the Canadian deal—the tariff-free approach without free movement—that are right. There are aspects of the Swiss deal that are less attractive. They have just voted against the provisions for free movement, as you know. Free movement would be wrong for us. I see absolutely no reason at all, given the huge balances of trade they have with us, favourable to them, why they would not want rapidly to do a free trade deal with what is—whether 10% or 16%—one of the biggest export markets that the remainder of the EU has.

Helen Goodman

Mr Johnson, on the day that you came out for Brexit the pound fell, supposedly because you are a very effective communicator and that made it more likely that Brexit would happen. When the Governor of the Bank of England came and gave evidence to us on Europe, he described Brexit as the biggest domestic risk to financial stability. He said there would be volatility in the foreign exchange markets and downward pressure on foreign direct investment, on investment particularly in tradeable goods and on household consumption. Are you not concerned that a period of uncertainty in the British economy would have those effects?

Boris Johnson

First of all, I have looked at FDI into London at the moment, what is going on, confidence in the City, what is happening with our economy. There is no sign whatsoever of people being discouraged from investing, coming to London. That remains massively strong. I am not quite certain what this period of uncertainty is that you speak of. I seem to remember that when we were considering whether or not to go into the euro—and thankfully made the right decision not to do so—people were saying very much the same sort of thing, and it did not transpire. On the contrary, London flourished and prospered as never before. If you ask me about the pound, the pound will be as strong and as robust as the UK economy. My view is that the risks are in remaining in the EU. Why should we remain tethered to this anti-democratic system?

Helen Goodman

Sorry, I am not now asking you questions about the long term. I am asking you questions about the short term: the period before we have agreed our new relationship with the EU; the period before we have negotiated 50 new free trade agreements. The Governor of the Bank of England is telling us that there would be volatility in the foreign exchange markets. This would have a detrimental impact on foreign direct investment, on investment in the British economy, particularly in the tradeable goods sector, and on household consumption. If you could just look beyond the city of London, in the North East we have 140,000 manufacturing jobs dependent on exports to the EU. Nissan and Hitachi, the two biggest foreign direct investors, have both said they would not invest more in the event of Brexit. Is it responsible to dismiss as “airy fairy” these concerns about uncertainty and the impact on investment?

Boris Johnson

You are wrong about Nissan, certainly, because they have changed their tune since the euro controversy.

Helen Goodman

I am not wrong about Nissan.

Boris Johnson

As far as I can remember, Nissan have said they would continue to invest irrespective.

Helen Goodman

No, Nissan have not said that. Nissan have said that they would not close the current factory, they would not move it, but they would not put any new investment in. We get £27 billion of foreign direct investment into this country every year. A period of uncertainty while you were deciding what a British deal meant would undoubtedly mean that we lost investment for a period of perhaps two years. Is that not a worry for those people who have jobs in the North East in manufacturing?

Boris Johnson

It should not be a worry, and I hope very much that people will do their best to persuade those who are anxious that there is no need for them to worry. As far as I can remember, Nissan did take a strong line in favour of the UK joining the euro, and said they would close the Sunderland plant if we did not join the euro. That obviously did not happen. Neither of those two things happened, and that was the right decision. I think the UK will be more competitive if we leave the EU. We will be able to set our own course and do our own trade deals, and legislate it in a way that is in the interests of British manufacturing.

Helen Goodman

A minute ago you were complaining that Renault wanted to structure the rules on truck design. Nissan are obviously completely happy with the European rules on car design. Surely you can see that what is sauce for the goose is sauce for the gander, and we have 140,000 jobs dependent on this.

Boris Johnson

No, because of course when selling into the European markets where there will continue to be a standard set at a European level, obviously it will be in the interests of Nissan to make vehicles that are acceptable for those markets, just as they make them acceptable for the United States, where they also have many detailed provisions for what they want in their markets. There is such a deal of negativity about our ability to do this, and we would be missing a massive opportunity to make this country more competitive, to be able to set our own economic course, and to restore democracy in this country.

Chair

You have made those points quite thoroughly. Quite early on in those exchanges you were, I felt, trying to distance yourself from the view that we would want a deal akin to that of Switzerland. Just over three years ago you said, “We could construct a relationship with the EU that more closely resembled that of Norway or Switzerland—except that we would be inside the single market council”, which makes it sound like you are very supportive of the idea of the single market, which you have cast some doubts about.

Boris Johnson

I do.

Chair

Boris, order. I am about to ask you a question. What is the single market council?

Boris Johnson

There used to be something called the Internal Market Council, and that has now, as far as I can remember, been scrapped in favour of the Competitiveness Council.

Chair

What is this single market?

Boris Johnson

I do not think it is possible to do that. I was speculating there about a possible relationship you could have. It does not really make sense, because in the end you are either part of the single judicial system or you are not. This comes back to the whole two referendums idea that some people floated a while back. Could you, as it were, vote to get rid of a lot of the stuff that is not necessary and then re-accede into the single market? In the end, I am giving you a very clear position.

Chair

Are you for or against the two referendums approach?

Boris Johnson

I think we have one referendum and we get on with it.

Chair

Is that then the end of our relationship within the EU? We do not try to engage in another referendum. I want to be clear whether that is your view or not.

Boris Johnson

That is my view.

Chair

Okay, that is all I need to know. It appeared that it was your view for a while, some months ago, and it is very helpful now that we have had that clarification.

Boris Johnson

I think I have been pretty clear about that.

Chair

You have, just now, been very clear.

Boris Johnson

I think I have been pretty clear about that before this august Committee.

Chair

Could I just clarify one more point? Do you agree that a large proportion of the trading goods that would come in—as you know, the EU has a surplus with us—would be covered under WTO rules?

Boris Johnson

Yes, certainly.

Chair

Therefore Germany, for example, is more likely to be able to get access than we would to their market for our services, which are dependent on much more detailed single market negotiations?

Boris Johnson

It is certainly the case that the Germans have, in my view, a massive interest in making better use of UK services, and when people say they will discriminate, for instance, against the City of London, that has never happened in the past and it would be utterly foolish of European economies not to make use of what is a massive resource for the whole of this area. The City of London, financial services—all the service industries in which we excel—are vital for any big European company that wants to raise capital. This is the place to come. It always will be, and I think you are being excessively negative.

Mark Garnier

Good morning. I am very keen to carry on with the City of London and financial services specifically, but can I just follow up on Helen Goodman’s line of questioning about the negotiation and the relationship that we have in total trade with Europe? Just to go through some of these figures, the UK represents about 15% of Europe’s total GDP. 45% of our exports go to Europe but, depending on how we count it, either 7% or 10% of Europe’s exports go to the UK; it is quite small. It is 7% in GDP terms and 10% in total.

Boris Johnson

I am not certain of that, but anyway.

Mark Garnier

The point I am trying to make—and it may be more, and I do not want to get too stuck on that point—is that 45% of our exports being with Europe is a very significant proportion of our total trade, but for Europe 10%, roughly, is not vanishingly small but is far less significant. Does that put us at a very poor negotiating disadvantage when we start trying to negotiate trade deals?

Boris Johnson

No, I do not think so at all. As I said earlier on, Mr Garnier, it is massively in the interests of our friends and partners to continue to trade freely, and even more freely than ever. The Germans, as I say, have a £27 billion net surplus with us. They are the most influential in the European Council. Even the French have a considerable net balance of trade with us. It would be very curious, bizarre and totally self-destructive of them not to, and the great thing is that this conversation is not happening in a vacuum. Everybody is thinking about this. The time is now. People can prepare for what will be a very exciting moment.

Mark Garnier

It will be exciting; I definitely agree with that. Can I just pick up on that? You talk about Germany and France. It is absolutely right to talk about two specific countries, but you can talk about other countries where they have trade deficits with the UK, and they would presumably turn around and argue that they do not want to have such a—

Boris Johnson

With great respect, I think we cleared that point up a moment or two ago.

Mark Garnier

But an FTA with Europe is an FTA with all 27.

Boris Johnson

The competence for negotiating trade deals resides exclusively with the European Commission. If I may just elaborate that point for a second, one of the problems we have as a country in trying to do free trade deals around the world is that the EU Commission does not, in my view, well represent us in international trade. For instance, the audio-visual sector in this city is doing brilliantly—probably producing more TV and film than New York, and more than Los Angeles. Because of French objections, we can never do a free trade deal that involves the audio-visual sector. That is totally hopeless for the UK economy. We need to have the ability to strike our own deals.

Mark Garnier

Let me talk about financial services in particular. You mentioned three senior bankers: Norman Blackwell at Lloyds, Henry Angest of Arbuthnot, and Shelia Noakes—I cannot remember where she is.

Boris Johnson

RBS, I believe.

Mark Garnier

RBS—okay. All three of those banks are UK domiciled, and would be in the UK anyway. Can you think of any international banker, specifically somebody who is a senior member of an international bank like Goldman, Nomura or Deutsche Bank—or any number of these international banks that have sought to come to London—who agrees that the UK would be better off outside Europe?

Boris Johnson

I would not want to give away private conversations, but I can certainly say that there have been plenty of people I have spoken to from those types of institutions who have felt—to get back to where we really began this conversation—that the balance of the argument is much more equivocal than is commonly supposed. They really do think that London would flourish whatever happened. London has the right time zone and the right language.

Mark Garnier

These are the international bankers?

Boris Johnson

Yes.

Mark Garnier

That does not concur with what I am finding when I am talking to these international bankers privately.

Boris Johnson

I have to say I am getting a different message.

Mark Garnier

Maybe they are speaking to you as a Eurosceptic and me as a Europhile.

Boris Johnson

Perhaps that is true, but I respectfully direct you back to what some of them were saying at the time of the euro debate.

Mark Garnier

I completely agree with that.

Boris Johnson

Goldman Sachs was very clear that it was a terrible mistake for Britain not to go in. We heard the same from the CBI, from Lord Mandelson, from all sorts of people—indeed, from notable colleagues of ours, Mr Garnier, and friends of ours.

Mark Garnier

I am not an enthusiast myself.

Boris Johnson

No, of course not, and I did not for one minute mean to suggest that you were, though Mr Tyrie, back in 1991, wrote an interesting pamphlet suggesting that the single market could not be complete without a single currency.

Chair

No, it did not say that either. You have also misrepresented it quite badly. If you go a bit further on in the document, you will find some very interesting passages explaining why the project of the euro is being formed at a single and rather dangerous moment in the cycle.

Boris Johnson

There was another very interesting document called Never Say Never. Has anybody ever found a document called Never Say Never by Andrew Tyrie? It is very common sense on the euro.

Chair

Order. It is very kind of you, Boris, to read all my material.

Boris Johnson

I just thought I would bring it up: Never Say Never: Time for British Common Sense on the Euro.

Chair

If I may say so, however, you are illustrating exactly what I began the session with, again, which is a very partial and busking, humoresque approach to a very serious question for the UK, and what we really need is a much more balanced exchange—

Boris Johnson

I am not going to deny that. We need a balanced exchange.

Chair

—in which people make an effort to qualify and represent the points that they make, and represent each other’s views with some accuracy. You are at it again, I am afraid.

Boris Johnson

I am glad you said that, because some of my views have been, as I say, traduced. I am grateful to you, Mr Tyrie, for the opportunity earlier in this hearing to set straight some of the gross misrepresentations that have been made.

Chair

That is enough of that, Boris. Mr Garnier has got a question for you.

Mark Garnier

I was just going to carry on the line of questioning about the City of London. We heard earlier on from Andrew that the City of London Corporation has got an official position. Many, many institutions have official positions. According to the City UK survey, 84% of respondents want the UK to stay in, and it is perfectly reasonable to accept that these City institutions are looking at it from their own interests, but why should they not? The Governor of the Bank of England has also said that if the UK came out of Europe and failed to negotiate a proper agreement on financial services with Europe, it would be detrimental to the City of London. Do you disagree with these institutions, which are pretty unequivocal about this?

Boris Johnson

As I say, Mr Garnier, they are not unanimous on this point.

Mark Garnier

84% is admittedly not unanimous, but it is pretty close.

Boris Johnson

There are plenty who take an opposing view, and my impression is that the balance of opinion is very moderate about this.

Mark Garnier

I am sorry; I just find that really difficult to believe.

Boris Johnson

Most people think the stakes are much lower than they were. Even in the last 10 years, exports of financial services to the EU have gone down from about 39% of our financial services exports to about 32%, possibly even lower. As a proportion of our exports, they are already going down. The opportunities are around the world. This is the moment to go global.

Mark Garnier

Some of the opportunities around the world.

Boris Johnson

I fear that by staying locked in to the EU system, where we consecrate the right to set trading arrangements to the Commission, we are missing a huge opportunity. A Brexit would be massively beneficial to Europe as well.

Mark Garnier

You have been talking about the rest of the world. We go out to the rest of the world and we ask them why they want to trade in London. Why does the Chinese government want to have offshore renminbi trading in London? Why do US banks want to come to London? Every single one of them talks about the cluster effect, the support that goes with it, but they also talk about the fact that it gives you access to the 550 million people in the single market, and that is incredibly important to them. All of them are saying we would be off our trolley to come out of Europe. Respond.

Boris Johnson

The access to 550 million people is going to remain, in my view.

Mark Garnier

But how can you be sure—especially when you said in 2012 that France is “always trying to get one over on London”?

Boris Johnson

Countries do not trade with countries. People trade with each other. Businesses trade with each other. Businesses need a great city. Businesses need to find places to raise capital. They need banks. They need support. They need services of all kinds. They are going to continue to find them in London, and if you look at the story of this city since the decision not to go into the euro, it is a story of unbelievable growth and dynamism, which all the euro gloomadon poppers completely failed to spot. They were wrong then, and they are wrong now. One thing I have been wrestling with is this problem you raised: why is it that there is a certain type of person, very often in the big corporations or the big banks, who takes this line? There is an enormous industry of lobbyists, of people involved in negotiations at conferences and all of this kind of thing, who are basically one way or the other turning left on the plane as a result of our membership of the European Union. That is the reality, and those companies would not be remotely disadvantaged, but the people who would benefit massively are the 95% of UK businesses that do not export to the EU but have to comply with 100% of EU regulation—100%.

Mark Garnier

That is a wider debate for other parts of this hearing, but I just wanted to finish off in one area. Nobody can deny that the European Union as a single market is the biggest single economy in the world and the biggest single trading bloc the planet has ever seen. It is incredibly important. Financial services are also very important for this, and the rest of the world wants to trade with Europe through Britain. Now, what is key to a great deal of this is the regulation that comes on financial services as a result of British lead but also Europe’s—notwithstanding the American influence with the Dodd-Frank Act and all the rest of it—and the fact these financial regulations tend to lead the world in the terms of the direction of travel, because they are very good regulations. Were we to come out of Europe, we would have no influence on those regulations. We would be subservient to an architecture of regulation being driven forward by Europe, which frankly I do not think is as good at it as we are. Why would we want to give up our position to be able to influence the world’s financial services regulation?

Boris Johnson

Obviously I defer to your knowledge of this sector, Mr Garnier, but with respect I do not think that is entirely accurate about what would happen. Many of these standards and regulations are now set not in the single market, the internal market, or the Competitiveness Council or whatever we want to call it these days. They are not set at an EU level but are international regulations based on, for instance, bodies and acronyms I am sure I do not need to spell out to you: the FSB, the CPMI, IOSCO, and the IMF and the WTO. The paradox is that Britain by Brexit would gain influence in some of these multinational institutions. Let me explain why. If you look at the WTO or at the IMF, or the G7 or G20—bodies that try to set standards for financial services of one kind or another, or try to have a role in this—the EU as an institution is now trying to interpose itself and to speak for all 28 in those debates. By Brexit, you would find that the UK would regain strength and influence in those conversations.

Mark Garnier

Overall financial regulation is a fantastically—fantastically—complex area, with huge amounts of overlap and huge amounts of underlap. It is the underlap that, of course, causes a problem, where you start seeing financial crises going on. There have been an awful lot of institutions around the world. We have had America, we have had our Financial Services (Banking Reform) Act 2013, which I was involved in with the Chairman, and the Financial Services Act 2012. These have been led by us and Europe is still catching up, but Europe is looking to us. You cannot deny that the biggest single economy in the world would have a less influential part to play in these international agreements than Britain would, with a relatively important financial services centre but not the same level of influence because it is not the same sized banking market.

Boris Johnson

If you abstract Britain.

Mark Garnier

If you extract Britain, yes. No, sorry, if you extract—

Boris Johnson

Paradoxically what you might get is an intensification of European influence in global conversations about these matters, because you would have not just the EU speaking in its own voice but the UK, with all its influence in financial affairs, around the table as well. As I am sure you can envisage, there would be a lot of co-ordination between us and our friends.

Mark Garnier

We are at the tables as well.

Boris Johnson

One of the difficulties is that we as a country, now, are more and more often outvoted in the European Council of Ministers, and it is hard sometimes to maintain that we are effectively influencing proceedings in the way we would like. There are alternative ways of getting international influence, particularly on financial services.

Mark Garnier

I would not disagree with you that, as you get more member states, your relative influence gets smaller, and I would completely agree with you that there are many things wrong with the European Union in terms of its architecture. But would you not agree that it is better—you probably would not, to pre-empt you—to be inside negotiating and trying to change that organisation? We are better off by being in.

Boris Johnson

Mr Garnier, yes, that was the position I was in for a long time, and I was sure that is a position that many of us have been in before, but several things have really curdled my belief that was possible. First of all, there is Lisbon and the annihilation of the opt-out over human rights. We were told that this had no more significance than the Beano, remember? The Charter of Fundamental Rights is now in the ECJ and it is being used by the Court of Justice. It was perfectly obvious. A lot of people were very encouraged by David Cameron’s Bloomberg speech of 2013 and the talk of wholesale reform, fundamental repatriation of powers and so on. I do not think anybody in their right mind can pretend that has happened. It is a balance, and I accept that there are two sides to this argument. Nobody is going to deny that, but in the end when you look at the massive concentration of power that is now taking place in the EU, and you couple it with the loss of control over borders and immigration, which has been so damaging to public confidence in politics, the argument only goes one way.

Mark Garnier

We are not part of the Schengen zone.

Boris Johnson

You have not asked me as Mayor of London about the impact on our city of immigration, but I would be perfectly happy to answer that.

Chair

You will get more questions in a minute.

Rachel Reeves

Mr Johnson, on 11 March you said, “What I think we should do is strike a new free trade deal along the lines of what Canada has just achieved”. When did Canada start negotiating its trade deal, and what is so good about it?

Boris Johnson

Ms Reeves, as I have said before several times, we want a British deal.

Rachel Reeves

You said “along the lines of what Canada has just achieved”.

Boris Johnson

We would not be in the same position as Canada, because we have been members of the EU for 44 years, and we would be able to do a deal very rapidly. One of the attractions of the Canadian deal is that it involves wholesale or very large removal of tariffs, but there is a lot more we could do.

Rachel Reeves

My question was when the negotiations started. They started in 2009, and at the moment they are not yet in force. The EU-Canada agreement took seven years to negotiate, and it is still not in force.

Boris Johnson

Yes.

Rachel Reeves

It takes quite a long time. I expect the Canadian trade negotiators are pretty good, and it has taken them seven years to negotiate a deal, and it is still not in force. The former Canadian trade minister who had some part in these negotiations wrote a piece in the Times today, and he says, “It is fatuous to think there is a real comparison between Canada’s relationship with the EU and the UK’s with the bloc. Indeed, were Canada to trade as much with the EU as we do with the US we would want a much deeper relationship” than the Canadian deal.

Boris Johnson

Yes, that is right. The point about the Canadian deal is, obviously, you have two very different systems and two very different trading relationships. The EU deal with Canada took a while to negotiate. I do not see why on earth that should be the case with the UK, which has been a member of the EU for 44 years, as I said. I point you to the US-Australia deal, which was completed in less than two years.

Rachel Reeves

The difference, Mr Johnson, with respect, between the US-Australia deal and a deal with the EU, and this is what Pierre Pettigrew in The Times says today, “Any ambitious deal has to be ratified, in the case of the EU, in 27 legislatures”. That is not the same as a deal between the US and Australia. That is why it takes time. Pettigrew goes on to say, “That means years of uncertainty, barriers to trade for UK firms, and a likely drop in inward investment”.

Boris Johnson

I am not seeing—

Rachel Reeves

Sorry, I have not finished Mr Johnson. In your response to Mr Garnier, you said that there are, of course, arguments on both sides. Are these not pretty compelling arguments for staying in the European Union?

Boris Johnson

No, I do not think those are good arguments at all. No. There are no good economic arguments. There are good political arguments, but I do not think there are any good economic arguments.

Rachel Reeves

The Governor of the Bank of England is not making good economic arguments for staying in the European Union. The Chancellor and the CBI are not making good economic arguments for staying in the European Union. They are all making political arguments and not economic ones. Is that what you are suggesting, Mr Johnson?

Boris Johnson

Yes. Yes, I am, and quite seriously the economic impact of Brexit would be positive. In fact, my economic adviser, Gerard Lyons, I think said it would be overwhelmingly positive, it was the right thing to do, and I would have to say I agree with him. It would unshackle us from a great deal of excessive regulation, and it would be a huge boost for British democracy. We would take back control of very considerable sums of money.

Rachel Reeves

Do you think that part of the success of the UK economy is being an outward-looking trading nation?

Boris Johnson

Yes, I do.