Whatever the UK’s problems are, leaving the EU won’t solve them

The question of Britain’s EU membership is causing chaos in our governing party again. So much so that our Prime Minister was forced to answer trivial questions about it when he was trying to look statesmanlike. However much you might have enjoyed David Cameron’s discomfort, this did Britain’s image no good at all. Our media banging on about the EU while our Prime Minister is standing next to the US President makes us look parochial and irrelevant.

Those who want out tend to shout very loudly and tell us how horrid the EU is. But let’s take a closer look at the things they don’t like. Does the EU really make that much difference?

Regulation seems to be top of the list of horrid things the EU makes us do. However, all countries have some form of business regulation. Is it any tougher in the EU?

Not according to the OECD. Its market regulation index shows that, compared to other advanced economies, some EU countries have high regulation, while others, including the UK, don’t. Likewise, regulation is high in some non-EU countries and low in others. EU membership, then, doesn’t seem be a factor in how much regulation a country has.

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The World Economic Forum recently published its Global Competitiveness Index for 2013. Here are the top 20 countries:

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Again, a mix of EU and non-EU countries. The UK doesn’t come out too badly but the fact that Germany, the Netherlands, Sweden and Finland are ahead of us shows that EU membership is no barrier to improving our competitiveness.

EU membership, then, seems at most a minor determinant of economic competitiveness.

So much for the economy. What about immigration? According to pollsters, the UKIP vote is as much anti-immigration as anti-EU. Apparently ‘everybody knows’ that the EU is forcing us to take lots of immigrants we don’t want.

Of course, there is very little evidence that immigration does any long-term harm to the country’s economy and quite a lot to suggest it doesn’t but it’s still something a lot of people complain about so let’s run with it for argument’s sake. Even if we decide that immigration is a Bad Thing, how much of it can be blamed on the EU?

According to Migration Observatory and the ONS, most of our immigrants don’t come from the EU. There was an increase after 2004, and then a drop off when the economy crashed, but EU immigrants are still only around a third of the total.

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According to the OECD, levels of immigration vary widely from country to country. Relative to population size, some non-EU countries have high levels of migration while that in some EU states is much lower.

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Rich countries tend to act as sponges, sucking in the poor from the surrounding lands. They always have and they probably always will. This is the main reason why European countries and other advanced economies have experienced high levels of immigration. The US, Canada and Australia are attractive destinations for migrants for the same reason. With its new-found wealth, China, too, is attracting immigrants from its poor neighbours to the south. Immigration has nothing to do with EU membership. It’s just what happens when countries get rich.

Enough about immigration then. What about those dreaded agricultural subsidies?

Again, for a number of reasons, most of the world has farm subsidies. Britain was giving state support to farmers long before becoming a member of the EU. As The Economist notes, agricultural subsidies are a feature of all OECD economies, though they have been falling in recent years. The subsidy in the EU is perhaps a little on the high side but it is by no means unique to Europe.

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Many of the UK’s problems with agricultural subsidies arose from the scheme adopted and the way it was implemented. The EU gave member states a lot of discretion so our government chose one of the most complex in Europe. It is true, there have been horrendous problems with farm subsidies, but most of them were made in England.

At the end of last year, The Economist concluded that, even outside the EU, a lot of the things that Eurosceptics complain about would still exist. We export so much to Europe we would still have to abide by many of the EU’s regulations.

Product regulations would be harder to junk than labour laws. The British suppliers to Airbus, the Franco-German aircraft manufacturer, have to comply with exacting standards. But these exist not because of meddling by Brussels, but to ensure aircraft are safe. Similarly, a minimum standard of food safety stops a race to the bottom by competing firms. British ones would still have to observe Europe’s product regulations in order to export there. A separate set of regulations tailored for the home market would only add to red tape.

That goes for the City, too. Global finance favours common standards, such as the Basel accords on bank capital. And, far from racing to the bottom, countries with large financial sectors are now as likely to create even tougher rules. The Bank of England has hinted that Basel is not strong enough.

If Britain left the EU, it would still have some business regulation and, given its already low level, the scrapping of a few more laws would make little difference to the country’s economy and level of competitiveness. It would probably still have farm subsidies too and there would certainly still be lots of people wanting to come and live here. OK, perhaps immigration might fall slightly but only because the UK would probably be poorer and therefore less attractive.

Even Boris Johnson, hardly a Europhile liberal, doesn’t think leaving the EU would achieve much. There’s an old saying, beloved of coaches and motivational speakers, “Wherever you go, you take yourself with you.” The point being that many of your problems are of your own making and running away to a new employer or a new country won’t make them go away. The same is true for Britain. If we left the EU, most of the things that UKIP voters and others moan about would still be there. Our economy would still be sluggish, our public debt would still be rising and our public services would still be facing collapse.

It’s like walking out on any relationship. Too often, you find you have lost all the good things that came with it but, somehow, all the stuff you blamed on someone else is still there.

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2 Responses to Whatever the UK’s problems are, leaving the EU won’t solve them

  1. Pingback: Whatever the UK’s problems are, leaving the EU won’t solve them - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. keith says:

    excellent article. like the Economist, only better. Not that i think it is a complete slam dunk against the out option, but a rare and useful look at some pretty authoritative evidence. Thank you
    Keith

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