Blaming the EU is an easy way out. Leaving it would be bad for Britain

When Europe comes to the fore of politics in Britain, the polls shift in favour of staying, as they did after David Cameron’s speech. When it comes to the crunch, however, the voting public are too clever to turn away from our most valuable relationship.

Phillip Souta is the director of Business for New Europe

Nigel Lawson’s conversion to the UKIP agenda on the pages of the Times must have made Nigel Farage’s day.

It is undeniable that the two Nigels’ message on Europe is getting more of a hearing now than it has in the last ten years. In the same way that UKIP’s rise has caused commentators and the mainstream parties to show their spending plans do not stand up to scrutiny, the better off out camp is facing the same challenge. “Welcome to test cricket,” as John Major said.

For the last 40 years, the British people have always voted for parties in favour of our EU membership. Whilst those who support membership must continue to explain why, there is arguably a much heavier burden of proof on those who would take us out. Where is the evidence it would be good for us, and what are the alternatives.

The impact on British business

The argument is often put forward that the UK is a net contributor to the EU (equivalent to roughly £750 per household each year) and therefore makes us worse-off financially. That contribution gives us access to £11 trillion worth of economic activity and free trade which has generated around £3,300 per British household per year over the last 30 years. If we were to leave, we would no longer have unfettered access to the largest market in the world, and one that is on our doorstep. For the foreseeable future, approximately half of Britain’s trade will be with Europe.

The UK is home to large numbers of foreign companies who choose to locate here to avail of the EU market access that our membership provides. If we left, so would many of those companies.

Departure would also jeopardise the 49 per cent of foreign direct investment stock in the UK that comes from other EU countries, which was worth £465bn in 2009. British goods would incur significant import taxes (55 per cent in the case of dairy produce) to reach the EU market, making them less competitive. Half our corporation tax revenue from financial services would be at risk, and the possibility of the EU erecting non-tariff barriers to the free movement of services would jeopardise London’s place as a global financial centre.

Britain can ‘be like Norway’

A future outside the EU is of course conceivable for the UK, but it is not clear what it would look like. Those advocating withdrawal often mistakenly contend that the Norwegian or Swiss models could be adopted by the UK. Norway has a population of around 4.5 million and a GDP of around £320 billion. It also has a sovereign wealth fund presently worth in the region of £400 billion, set to rise to over £650 billion by 2020. It has this through its vast reserves of oil and gas. This is the equivalent of the UK having a wealth fund 25 per cent greater than our GDP – which we do not.

Only this week it has been announced that the Norwegian government is dipping into this fund in order to prop up its economy – this option would never be available to the UK. Therefore, Britain needs the EU more than Norway does.

Switzerland, for its part, is a unique case, politically and economically. It has taken two decades for Switzerland to sign around 120 bilateral agreements. The UK economy cannot be made to suffer while politicians hash out individual deals. Similarly, the proposition that the UK will leave the EU and then sign a free trade agreement, with no effect on our economy, is misguided in the extreme.

It would be many years before the UK is at a point where it could come to such an arrangement. The EU-US free trade agreement, for example, had subject to discussion for over a decade before both parties even entered formal discussions.

New trading partners can’t replace Europe

Meanwhile, Britain’s trading partnership with other large economies such as China and India will not prevent economic degradation. Both offer great opportunities, and while our current trade with these countries is large, it is much less than that which exists between Germany and China. Our trading potential with these economies is therefore greatly bolstered by coordinating with other EU members, and our negotiating position in any free trade talks is strengthened.

Other EU countries faced with the same EU rules are much better at exporting to emerging markets than we are. Germany’s exports to such economies have roughly doubled over the last ten years. If they can do it, why can’t we? Blaming the UK’s poor export performance on the EU is an easy out; there is no reason to believe it would be cured by leaving the EU.

Many advocates of leaving seem to believe reams of employment, safety and product regulations would evaporate on departure, somehow freeing the UK to push ahead in the global race. This is dangerously misleading. Everything we export into Europe would have to comply with the same rules as they currently do, except we would have no say. No UK government would suddenly abolish health and safety rules and maternity leave.

When Europe comes to the fore of politics in Britain, the polls shift in favour of staying, as they did after David Cameron’s speech. People are frustrated by perceived bureaucratic excesses – which, by the way, exist at local, regional and global levels as well – and often register that as a protest vote. When it comes to the crunch, the voting public are too clever to turn away from our most valuable relationship.

14 Responses to “Blaming the EU is an easy way out. Leaving it would be bad for Britain”

  1. Julian

    “If we were to leave, we would no longer have unfettered access to the largest market in the world, and one that is on our doorstep”

    Most of your argument hangs on this sentence which, many would argue, is not true. The EU sells more to the UK than it buys. Is it likely that Germany would want to lose the UK market for BMWs or France lose the UK market for wine? Of course not. There would need to be a new arrangement with a very similar effect to what we have now as EU members.

    Most pro-EU politicians make the statement that we would lose our trade with Europe. i.e. They make the statement but don’t support it with argument. This blog post has done the same. The debate is unlikely to go very far until issues like this are addressed.

  2. Matt Tysoe

    A left wing rag that supports corporate capitalism, faceless multinational business and the bureaucratic nightmare that George Orwell warned us about. The real intentions of the left have been made so very clear now have they not? Real trading partners cant replace Europe? Oh you mean the Europe that is stuck in terminal decline.

  3. OldLb

    Such twaddle.

    There’s a trade deficit with the EU.

    If the EU says no unfettered access, they lose more than the UK. Shot yourself in the foot? I think not.

    Merkel says the UK would gain an advantage by leaving. Just what is the EU doing that damages the UK? Merkel should tell all.

    We gain. We get rid of the low paid low skilled migrants. We keep the high skilled, high tax paying migrants.

    That frees up housing. That creates vacancies for the unemployed to fill.

    What’s not to like?

    We isolate ourselves from the Eurozone mess.

  4. JPT

    It’s one hell of a double-edged sword. UK is pretty much stuck with the EU as a trading partner, and trying to break away would be pretty damned painful (at least short term). That said, most European markets have eaten a lot of shit, and they’re going to eat a lot more unless they back off the austerity nonsense. Broke people can’t buy things, and that great trade relationship you want to preserve seems to be disappearing either way. Perhaps the UK could use the prospect of departure to smack Germany and the ECB back to their senses. It’s tough to see any way this can end well…

  5. Feneon

    “The EU sells more to the UK than it buys.” That’s hardly surprising since we’re one country and the EU is 27. that’s just not an argument.

    And I’m sure France wouldn’t be too bothered about losing its UK wine market since its sales to China are exploding exponentially.

  6. Kevin Leonard

    For the last 40 years, the British people have always voted for parties in favour of our EU membership…..
    For the last 40 years there has been no alternative as the three mainstream parties are all of the same mind when it comes to Europe. Yes there are one or two who question membership but on the whole they are gagged by their party leadership “For the good of the nation”

    Old Barusso himself confirmed just yesterday that total integration and rule by the none elected elite within Brussels is the aim of the EU and he confidently expects full power over all nations within the EU to be undemocratically handed over within the next 15-20 years.

    The press have not helped either during the past 40 years constantly swaying left and right to get closer to whoever is in power and willing to sell their souls for a few extra copies regardless of the facts.

    A referendum is needed and it is needed before the next elections due in 2015 so that all the cards can be laid on the table for the electorate to decide, unfortunately because the powers that be assume they will lose the argument they are unwilling to make the argument this is just another example of how undemocratic our political system has become.

  7. Julian

    My point is that just stating “we’ll lose our EU market” is not an argument. It seems more plausible that we wouldn’t lose the market as countries that export to us would have more to lose than we would. If there’s an argument that we would lose that market, I’d like to see it debated.

  8. jim Rafferty

    As a businessman, Mr Souta ought to know that if you have goods or services for sale, you will find a buyer as long as you provide quality and a reasonable price that said buyer is willing and able to pay, regardless of which international organisations like the EU your government belongs to or doesn’t belong to. Money talks, [political/bureaucratic] bullshit walks.
    I don’t know how much of our money the British state pays to be in the EU (I lost trust in the political/media classes a long time ago), but I don’t believe anyone who says we need to be in the EU in order to gain access to the other member states’ markets, for the reason stated above.

  9. Oli

    For some people the argument on ‘in or out’ is not a rational one. I know a number of people that have said that they would rather leave the EU and be financially worse off than stay. I am not sure what value they would agree to stay in, but this is one of those issues where rational consideration and decisions based on evidence will play second fiddle to emotion.

  10. Jon Davies

    The debate on EU membership is just starting and hopefully it will be an informed debate.

    I am glad Europe argues over red tape from Brussels rather than going to war as it historically has done. I know that some people will say this was in olden days and we are much smarter and more sophisticated now. I hope they are right so lets hear about how we evolve our relationships with our neighbours and build some common values and understanding.

    Holding the EU to account for what it does (both good and bad) is a starting point in the debate.

  11. Jon Davies

    The debate on EU membership is just starting and hopefully it will be an informed debate.

    I am glad Europe argues over red tape from Brussels rather than going to war as it historically has done. I know that some people will say this was in olden days and we are much smarter and more sophisticated now. I hope they are right so lets hear about how we evolve our relationships with our neighbours and build some common values and understanding.

    Holding the EU to account for what it does (both good and bad) is a starting point in the debate.

  12. Montesano Elena

    It seems that staying in the EU will always be
    more rewarding than leaving. Problem is that it’s not the State making
    bargains with the other EU economic partners, it’s private enterprises.
    That a nation will get wealthier as a result of it
    it’s therefore not that straightforward, for commerce creates economic
    wealth, but politics distributes it. It’s not possible to be one nation
    only when it comes to the European or world football championship. Sport
    has been used sooo wisely, but it won’t last long. Anywhere in Europe, I
    am afraid. If only there was a way to get big companies pay their fair
    amount of taxes, each State could greatly benefit from this belonging to
    a common market and we wouldn’t be forced to question some basic
    services that we took for granted in Europe. Privatization is not a way
    out. If there is no real competition, it only means we switch from a
    State monopoly to a different kind of monopoly. When they started to
    privatize the National Railway in Italy, around 2000, there were great
    expectations. As a result, we have now a more expensive public transport
    and many rides have been wiped off. The mantra of a private company is
    to make a profit (and that’s sensible, of course); the mantra of the
    Sate is to offer a service, that’s why I will always trust the State
    more than the private sector. Europe, as an economic union, could work
    if also the housholds paying taxes to stay in the EU benefited from it.
    Citizens are just asked to pay taxes for a big game they don’t take part
    to. It’s the very idea of what a State should mean that needs to be
    reconsidered: if I ask the British, Italian or German taxpayers to
    support financially the EU, it’s my moral obligation, as a State, to
    keep education, transport, and healthcare as cheap and efficient as
    possible.

  13. Levinski

    The EU is at very best a zero sum game. But lets start with the things not mentioned in the article has driven wages through an oversupply of skilled and semi skilled labour, It has driven wages down generally – this are not my thoughts but those of Bob Crowe.

    Our contribution and our current treaties give us access to the single market but changing these contributions and treaties or leaving in favour of an FTA would, at worse, lead to minor tariffs being put on British goods not trade stopping at all. The reason they would never tariff heavily if at all is our deficit with them and the fact that we are their single largest marketplace too. We buy more than any other country from the Eurozone. Fundamentally political union is no precursor to trade.

    Under current EU legislation we are not allowed to negotiate our own FTA’s. The EU must do this on our behalf. It has also nullified previous trade agreements with the various members of the commonwealth. I dare say we may have had to revisit them anyway but the fact is that our foreign economic policy is effectively out of our hands which is a completely ridiculous situation much like allowing somebody else to control your monetary policy. Look at the devastating effect of the € on ordinary workers whilst the bankers get the bailout money.

    It is very ‘artistic’ to suggest that Norway’s economic woes are because it is not in the € and the only reason they are surviving as a small nation is because of their large cashpot. Norway are surviving much better than most because they are outside the € but they are not immune to the problems caused by the €, the bailouts and EU imposed austerity. The UK outside the EU would undoubtedly be able to negotiate MUCH superior terms at any rate. Even taking Norway and Switzerland’s position around 70%- 80% (depending on the poll) of the populations in both countries want no further integration indeed they to wish to loosen ties. Why would this be the case if being a fully signed up member is so attractive?

    You are right to point out that leaving the EU may not result in a bonfire of their rules & regs but at very least the public and the workers have only to change government at westminster to see change. What we have at the moment is an affront to democracy – the Post Office privatisation is a classic example – the Post Office is being privatised because of EU competition rules whether we vote Labour, COnservative, Lib Dem or Monster raving loony party is irrelevant whatever government we elect they can do nothing other than plead with their ‘european friends’ to change the EU law and even assuming there was some sort of consensus it would take years and it would be too little too late.

    Tony Benn had very much the same out look on the EU. It stamps on local democracy, drives down wages, takes away accountability in key areas of the economic and social fabric of this country to its people.

    The EU is not our friend, a well negotiated FTA would be the ideal outcome. There would little or no economic impact and we would once again be able to negotiate our own trade agreements, our law would be made in this country with greater accountability and ability to change bad law much more quickly and without a protracted and homogenised Euro approach. I’m with Bob & Tony friends – If Farage, Lawson, and Portillo want the same well at least they have one thing right and in common. Don’t forget until new labour came along the labour party had some sensible euro policies like not wanting to get involved because they knew it bad for british workers. We can do little for any of our poorest and most vulnerable all the time we are not really incharge of our country.

  14. RichardMitton

    As the advert about abuse says, “Not all abuse is physical”.

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