At the end of the day the European Union is now just that, there is a clear and definite action plan by the European Commission to move towards “Ever Closer Union” – the creation of a European Master State. The European Economic Community, or Common Market which the UK joined in 1973 has slowly transmogrified through the Maastricht Treaty of 1993, then the Treaty of Amsterdam in 1999 and more recently and scandalously the treaty of Lisbon of 2001. Attempts to persuade the British People into believing that we are still just talking about a single market the benefits of which would be lost if we were to leave or threaten to leave is to hijack or pervert the argument. At the end of the day it’s all about Sovereignty. In simple English, who runs our country our Parliament in Westminster or the European Commission acting through the European Parliament?
Of late, this cunning plan to mislead the British people can be attributed to Mr. or should I say Sr. Clegg. After all, he admitted that his children would fail the Tebbit Test, that is to say they would support Real Madrid in any match with a British Club, so we know where he’s coming from!
This approach has now been adopted by all the Europhiles including of course the BBC and recently by the Confederation of British Industry (CBI), who, in a rather grandly titled document “Our Global Future“, concluded that that the benefit to the British economy of our membership of the EU is equivalent to 4.5 % of our Gross National Product or £1225 per person per annum. It implies we would lose this if we were to depart from the EU. The CBI arrives at this remarkable conclusion by summing up our exports to the EU, and deducting the costs of membership which interestingly it calculates to be £20 Billion Sterling per annum.
Well, if you first decide a conclusion and then write a report to justify it, the content becomes somewhat predictable; the paper indeed uses statistics like a drunk uses a lamp post: for support rather than illumination!
To imply that if we were to leave the EU our trade would suddenly cease is of course nonsense. Would Parisians stop driving Minis, would the Spanish stop drinking Scotch whisky, would the Germans stop buying English sweaters, would the Airbus fly without wings or engines or landing gear or navigation equipment? I doubt it. Actually, exports such as these are tariff proof, since virtually all airbuses and similar products are exported to customers outside the EU and any sales from the UK would come under the internationally agreed Drawback scheme whereby any import duties paid are credited back on final export to countries outside the EU.
The CBI points out that the EU population is 445 million, we are only 63 million and that whilst our exports to the EU represent nearly 50 % of our total trade their exports to us only represent 8% of their trade, the implication being that the trade is vital to us but not to them. So that on our departure we would probably face revenge tariffs or other difficulties in maintaining our exports.
The plain facts of the matter are that our exports to the EU are more or less flat-lined, neither increasing or decreasing, and are running at under £13 billion a month. Our imports, similarly flat-lined, are running at over £17 billion a month. Every month we import from the EU about £5 billion more than we export.
Given these figures we are in net terms the customers, they are the suppliers; so that even without considering the dire state of the EURO economies, no EU politician is likely to contemplate a course of action which would threaten that trade.
If you now considered for a moment the position of the Euro (€), most thinking economists recognize that to impose a single currency upon a variety of separate countries, each with their own economic agenda is a recipe for disaster. Economic profligacy in Greece for example cannot be corrected as in the past by an external devaluation, the only solution to a balance of payments problem, or a large government deficit is by internal devaluation; that is to say by radically cutting government expenditure say by 20 or 30 % not 3-5% as we are doing, as they struggle to justify having the same currency as Germany. Unemployment has reached critical levels, youth unemployment has reached nearly 50 % in Spain Greece and Italy.
The head of the European Central Bank Mario Draghi has repeatedly said he will do whatever it takes to protect the Euro… clearly he would not do anything, anything at all which would make matters worse by restricting foreign trade with all its repercussion on employment.
So it is against this background that we should contemplate the effect of a decision to withdraw from the EU
Once the British Government announced its intention after a referendum to withdraw from the EU, that during the notice period which itself would probably be a year or more (nothing would happen overnight) that there would be ample time to negotiate a free trade agreement. Whilst we would only of course seek parity in any such negotiation, we would, or should if we could find a robust negotiator, be aware that the advantage lies with us.
It was of course the head of Global Sales of Nissan the other day who remarked that they would reconsider their future investment in the UK if we were to withdraw from the EU. Leaving aside that he might have been advised that even now it is hardly appropriate for a Japanese company to threaten the British Government he can however lie easy in his bed: his fears are unfounded.
We have only looked so far at visible trade, trade in things you can feel and touch. If we look at invisibles the picture is quite different, we have a substantial surplus especially on financial services, and here you could argue that the shoe is on the other foot. That other foot, however, is a particularly strong one. In Global terms, we earn £30 billion a year net in Banking, £10 Bn in Insurance, £10 Bn in services and another £25 Bn net a year in investment income.
Recently, Gerard Lyons (Chief Economic Advisor to the mayor of London Boris Johnson) supported by Jim O’Neil (former chairman of Goldman Sachs) suggested that whilst it would not be the optimum choice on economic grounds for the UK to leave the EU, and that whilst a number of foreign governments had warned Britain of the consequences to investment if Britain were to leave the EU, such warnings were overblown and that London enjoyed a virtually unassailable position as a top financial centre. Mr O’Neil, in giving evidence to a treasury select committee, said “my advice to the British Government in any negotiation with the EU would be: be bold, be global and don’t worry so much!”
I would draw comfort in Winston Churchill’s famous speech made on receiving an honorary degree from Zurich University on the 19th September 1946. Churchill astonished his audience by suggesting at that time so soon after the end of hostilities that the peace and prosperity of Europe depended upon a future partnership between France and Germany, that they should as a first step establish a Council of Europe then as a second step a regional structure, a United States of Europe and that in this connection Great Britain, the British Commonwealth of nations and what he called mighty America must be the friends and sponsors of such an alliance. Our global interest and history precluded anything further, surely a better destiny than to be submerged in an alien nomenklatura so championed by Sr. Clegg and his acolytes.