Why did we join the EU in the first place? We didn’t; we joined the Common Market, which evolved into the EU. But this disguises a more fundamental truth. In the first couple of decades after the Second World War, the UK was in sharp relative decline. Meanwhile, from a state of devastation, the countries of continental Europe advanced rapidly. By contrast, the non–European world, in which we had played out so much of our history, seemed like a backwater. Add in a dose of Britain’s imagined cultural inferiority and a smidgeon of Vorsprung Durch Technik and you have the explanation.
Whatever was true then, the economic reality now is very different. Many of those backwater countries, including several members of the Commonwealth, are booming. Meanwhile, the countries of the EU have been growing relatively slowly – which looks set to continue.
Yet the UK policy establishment is still in the grip of three serious economic delusions which appear to dictate continued membership of the EU: top table syndrome, sizism, and proximity fetishism. The first I have discussed before but the other two need attention.
On size, it is striking that so many of the world’s richest countries are small. The reason, I suspect, is that in a large country the state can be incompetent and yet the country can get by – and still large resources can be available for governments to spend. By contrast, the government of a small country must ensure that the economy remains competitive or its own resources will soon be curtailed.
Singapore is an interesting example. At independence, the view of the British Government was that she should throw in her lot with the much larger Malaysian federation – which she did. Accordingly, when she was expelled in 1965 it must have seemed that her future was bleak. Now look at her. Never mind Malaysia, she has a higher income per head than the UK. Why? The essential answer is good government – by Singapore for Singapore.
On proximity, admittedly the EU gives us tariff-free access to its market, which may help to boost foreign direct investment into the UK. But the cost is high. It starts with our budget contribution, which amounts to about £7bn net per annum. In addition, there is the cost of the Common Agricultural Policy, which may be only about £3bn net, but is probably much more. Then there is the cost of complying with EU regulations, which some estimates suggest could be about £30bn.
Other costs are virtually impossible to quantify – the costs of having our democracy undermined and key national decisions effectively made by the kleptocracy in Brussels.
Admittedly, trade with the EU is very important – about 50pc of our exports go there – but that means that more than 80pc of our GDP does not consist of exports to the EU. Yet this overwhelming part is still governed by the EU’s panoply of ridiculous regulations.
In any case, being outside the EU would not imply being unable to export into it. The tariffs that non-EU goods pay to enter the European market are minor, being governed by world trade agreements. Moreover, there is every prospect of being able to negotiate favoured access, not least because we are their largest export market.
More fundamentally, over centuries this country has made her living (and endured much of her dying) around the world. It is extraordinary that in the age of the internet she should believe that she must do the economic and political equivalent of marrying her next door neighbour. If ever there was a time when matters of language, culture, shared history, law and fellow feeling should trump geography surely this is it.
The European crisis will play out in one of two ways. One is that the euro collapses and the integrationist tendency suffers a huge loss of prestige. In that event, the UK should be ready to advance her vision of a new Europe.
The second is that some sort of fiscal and political union is cobbled together to save the currency union, leaving us marginalised. This union would tax, harmonise and regulate until the (much subsided) cows come home. In that case, we should be prepared to withdraw from the EU. Far from being an economic catastrophe, this could be the making of us. And, most importantly, there would still be us for it to be the making of.
The Telegraph
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