Britain Stronger in Europe Letter

I received a campaign letter from Britain Stronger in Europe today headed

RE: THE FACTS YOU NEED TO KNOW ABOUT EUROPE AND THE EU REFERENDUM

Putting the “RE:” in front is a bit presumptuous. It is not a reply to my request. However, I believe in looking at both sides of the argument, so here is my analysis. First the main points in the body of the letter:-

  1. JOBS – Over 3 million UK jobs are linked to our exports to the EU.
  2. BUSINESSES – Over 200,000 UK Businesses trade with the EU, helping them create jobs in the UK.
  3. FAMILY FINANCES – Leaving the EU will cost the average UK household at least £850 a year, and potentially as much as £1,700, according to research released by the London School of Economics.
  4. PRICES – Being in Europe means lower prices in UK shops, saving the average UK household over £350 a year. If we left Europe, your weekly shop would cost more.
  5. BENEFITS vs COSTS – For every £1 we put into the EU, we get almost £10 back through increased trade, investment, jobs, growth and lower prices.
  6. INVESTMENT – The UK gets £66 million of investment every day from EU countries – that’s more than we pay to be a member of the EU.

The first two points are facts, but only show part of the picture. The UK not only exports to the EU, but also imports. Indeed there is a net deficit with the EU, and a large deficit in goods. It is only due to a net surplus in services – mostly in financial services based in the City of London – that the trade deficit is not larger. The ONS provides a useful graphic illustrating both the declining share of exports to the EU, and the increasing deficit, reproduced below.

No one in the UK is suggesting that Brexit would mean a decline in trade, and it would be counter-productive for the EU not to reach a trade agreement with an independent UK when the EU has this large surplus.

The impact on FAMILY FINANCES is based upon the Centre for Economic Performance, an LSE affiliated organisation. There is both a general paper and a technical paper to back up the claims. They are modelled estimates of the future, not facts. The modelled costs assume Britain exits the European Union without any trade agreements, despite this being in the economic interests of both the UK and the EU. The report also does a slight of hand in estimating the contributions the UK will make post Brexit. From page 18 the technical paper

We assume that the UK would keep contributing 83% of the current per capita contribution as Norway does in order to remain in the single market (House of Commons, 2013). This leads to a fiscal saving of about 0.09%.

The table at the foot of report page 22 (pdf page 28) gives the breakdown of the estimate from 2011 figures. The Norway figures are gross and have a fixed cost element. The UK economy is about six times that of Norway, so would not end up spending nearly as much per capita even on the same basis. The UK figures are also a net figure. The UK pays into the EU twice as much as it gets out. Ever since joining the Common Market in 1973 Britain has been the biggest loser in terms of net contributions, despite the rebates that Mrs Thatcher secured with much effort in the 1980s.

The source of the PRICES information is again from the Centre for Economic Performance, but again with no direct reference. I assume it is from the same report, and forms part of the modelled forecast costs.

The BENEFITS vs COSTS statement is not comparing like with like. The alleged benefits to the UK are not all due to being a member of a club, but as a consequence of being an open economy trading with its neighbours. A true BENEFITS vs COSTS comparison would be future scenarios of Brexit vs Remain. Leading economist Patrick Minford has published a paper for the Institute of Economic Affairs, who finds there is a net benefit in leaving, particularly when likely future economic growth is taken into account.

The INVESTMENT issue is just part of the BENEFITS vs COSTS statement. So, like with the PRICES statement it is making one point into two.

 In summary, Britain Stronger in Europe claims I need to know six facts relevant to the referendum decision, but actually fails to provide a one. The actual facts are not solely due to the UK being a member of the European Union, whilst the relevant statements are opinions on modelled future scenarios that are unlikely to happen. The choice is between a various possible future scenarios in the European Union and possible future scenarios outside. The case for remain should be proclaiming the achievements of the European Union in making a positive difference to the lives of the 500 million people in the 28 States, along with future pathways where it will build on these achievements. The utter lack of these arguments, in my opinion, is the strongest argument for voting to leave.

Kevin Marshall

 

Copy of letter from Britain Stronger in Europe

Leave a comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: