Tag Archives: trade

Europe

8 May

In, out, shake it all about?  (Britain is definitely choosing the 3rd option at the moment…) 

The former Chancellor Nigel Lawson’s speech encouraging a British exit from Europe makes it clear the “Europe” debate has certainly not subsided…. it is alive and well. Perhaps then, the public should actually consider what it would mean if Britain were to leave the European Union.

What worries me is the influence of those with irrational political agendas on what is essentially an economic argument. (Nigel Farage springing to mind hmm…). UKIP has risen from a marginal party on the fringes of the right to a mainstream political party (increasingly seen as the “new Lib dems” as their by-election results have shown) whose populist image is already having a noticeable impact on voters.

Unlike both Nigels, I would have to say I’m in the Pro-Europe camp. Here’s why:

The benefits of free trade within the single market. We save a ridiculous amount on the cost of mobility of the factors of production simply by being members of the EU. Considering over 50% of our trade is with Europe, the CET that would be imposed upon us should we leave the EU is likely to be very damaging indeed. In addition, we are also seen as a “gateway” to Europe for many companies wishing to avoid the tariff by setting up factories and generating employment in the UK.

Despite the right’s ongoing rage towards immigrants exploiting the welfare state, EU immigration is actually pretty beneficial to the UK. Immigrants help to fill gaps in the labour market and actually pay more tax and receive less benefits than the average British citizen. If you’re a fan of the multiplier effect (as I am) then this is all good news! Also, sceptics may  not have realised that forced repatriation of many UK citizens living abroad isn’t likely to have positive effects – it is a 2 way-street after all. Although I said this was going to be an economic argument, I do believe there are many positive cultural benefits of immigration and for Britons to claim immigration is eroding their culture, I find absurd.

Evaluating the Costs of membership

Most of the “cumbersome regulations” that come with EU membership are actually there for our benefit. For example, ethical trade shouldn’t be seen as a burden but a necessary cost that helps to define a humane and developed labour market and the practices within it whilst retaining a degree of essential labour market flexibility that the UK has been noted for. We can cut costs yet I doubt any of us want labour practices mirroring those of developing countries.

I would have to agree with Ken Clarke in that a “Brexit” will be extremely damaging to the UK. The annual (approximate) cost of £8 billion is outweighed by the benefits of membership or rather the greater costs that would greet us upon exit. Although we could regain control of the North Sea, stop subsidising the agriculture of poorer countries/regions and get rid of those pesky regulations, we would also lose regional development funds which have helped to revive poor regions, we would  likely be seen as less attractive for investment and most significantly we would lose our elevated trading position.

A looser relationship with the EU, similar to countries within the EEA, has been suggested however this perspective fails to realise the UK will consequently be reduced to a bystander with no VETO power or input yet still be largely bound by these infamous regulations. Surely we might as well exploit our current position of power? There is also no guarantee that the EU would even agree to such a relationship with the moody child of Europe.

Britain should realise that not all of its domestic problems are a consequence of the EU and that when the trend is increasing integration, opting for isolation may not be the best idea.