One Fact: Two Interpretations

I picked up an incoming Tweet this morning from my good friend and colleague Dan Hannan MEP.  It reads: “Denis MacShane told me, didactically, that we sell more to Belgium than Brazil. That, Denis, is precisely our problem.

Dan makes an important point.  The fact is that between 40 and 50% of Britain’s international trade is with the EU’s 26 (EU less UK).  The exact figure is debatable, because of the Rotterdam effect and other technical problems with analysing the trade statistics.

There is the standard, familiar Europhile interpretation of this simple fact.  “50% of our trade” (they say) “is with the EU.  This, by itself, justifies our membership, and means that the costs are worth it”.  You will have spotted the errors in this statement.  There is the implicit assumption that trade depends on membership (Not true: ask Norway or Switzerland).  There is the nice round 50%, which is almost certainly exaggerated.  And there is the failure to address the European Commission’s own estimates that the trade benefits of membership amount to around 1.8% of GDP, while regulatory costs amount to about 5.5% — three times higher.

But let it stand for the moment, and contrast it with the alternative interpretation.  The EU is (in very round terms) about 20% of global trade and GDP.  But because we have been too focussed on the EU, because we have failed to look outwards and engage sufficiently with the global economy, our trade with the EU is 40%+, while our trade with the rest of the world is shamefully stunted — and indirectly, that is part of the price we pay for EU membership.  Dan is right.  It’s not so much that we’re doing well in Belgium.  More that we’re failing to do well in Brazil.

And remember that although we do a great deal of our trade with the EU, we also have a massive trade deficit with the EU, whereas we’re (more or less) in balance elsewhere.

It gets worse.  Estimates from a number of major international organisations predict that the EU’s 20% share of global trade will have shrunk to around 10% by 2050.  The growth is — well — everywhere else.  We should be moving our focus outside the EU, not only because we’re relatively undeveloped in the rest of the world, but because that’s where all the growth will come in the next few decades.  China, India, Brazil.  The new Indian owners of Jaguar, Tata, deserve our congratulations for their aggressive moves into Asia and the rest of the world.  But they’re a standing reproach to British companies that fail to emulate them.

So when they tell you that half our international trade is with the EU, that’s not a good reason to focus more on the EU.  It’s a good reason to redress the balance with the rest of the world.

All this was true before the €uro crisis came along to deliver the coup de grace to the eurozone.  In this context, I was struck by a recent piece in Money Week by Matthew Lynn, who takes a counter-intuitive view of the likely impact on the UK of a €uro melt-down.  Well worth a read.  (Hat-tip to my brother-in-law Roger Price for pointing me to the article).  Noting that many of the UK’s major exports are less susceptible to recession (e.g. services, pharmaceuticals), and that a eurozone melt-down would enhance the UK’s surprising new status as a (relatively) safe haven, he believes that the €uro débâcle may do us less damage than most pundits predict, and might even have a positive effect.

And since a €uro melt-down in 2012 seems to be a racing certainty, that’s a rare piece of good news to treasure for the New Year.

This blog post first appeared on ConservativeHome.

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20 Responses to One Fact: Two Interpretations

  1. Gary Rudd says:

    I understand that you are two days away from retirement from the EU.
    You will be missed like a dental abscess.

    Good riddance to you and your bigotry.

    • Mike says:

      I regularly read Labour List myself. I really hope that, however much I disagree with the people on there, I am never this rude.
      Argument – yes. Personal attack – not unless absolutely proven and necessary – and that is very very rarely indeed.
      People who provide a free intelligence service, however wrong you may feel it to be, ought to be congratulated.

      • Gary Rudd says:

        A man who has not only demonstrated his misogyny, homophobia and who has consistently misrepresented his own party – not to mention his constituents – and who has acted as a mouthpiece for the nuclear industry is hardly deserving of greater consideration to his feelings than those he has consistently offended over many years.
        If you find this rude or offensive then consider his views on rape, which I will assume you are familiar with given your presence on here.

      • Mike says:

        I really do want to come back on this. OK so (as a Catholic) I am supposed to love women – I agree that makes sense. I also am supposed, (as a Catholic), to love everyone which includes all sorts and conditions of men. I am also against rape of any kind because it occurs usually outside marriage and, of course, I condemn it inside marriage too! I reckon I can understand all that. We agree – all these ideals are well worth fighting for.

        But to link these with the nuclear industry! Why? Aren’t you green?

      • Gary Rudd says:

        As a Catholic, are you also ‘supposed’ to blithely accept the Pope’s protecting child-abusing priests?
        I’m afraid your use of the word ‘supposed’ and reference to ‘conditions’ of men (homosexuality is NOT unique to the male gender) rather betrays your own misogyny and homophobia.
        Being ‘Catholic’ has many different interpretations and does not, in itself, confer upon those who submit to this toxic cult any wisdom or piety. I’d be careful with that particular piece of theological snobbery if I were you.
        I did not ‘link’ the nuclear industry with the other remarks, that reference is specific to Helmer’s championing of this industry which could hardly be considered ‘green’ when Fukushima is still uncontained and which, until it is, may well be rendering children of both this and future generations very green indeed.
        I take it that you are green, but in a very different sense to the ecological pretensions I am sure you would have me believe of you.
        A new year approaches and the opportunity for you to resolve your own prejudices should not be missed. Step away from your own thinly disguised bigotries and join the human race, or at least Big Society Mike.

      • Gary Rudd says:

        Dear Mike,

        You may wish to review your Catholic support of Mr Helmer when you read the following:
        ‘On 19 September 2010, on his blog, Helmer stated of the Catholic Church that: “it would be perfectly fair to describe it as systemically paedophile.”[17] Writing in the Daily Telegraph, the religious affairs correspondent Damian Thompson stated that: “I’d vaguely heard of Helmer as a leading Eurosceptic. Clearly he’s also a bigot. His Catholic constituents are deeply offended by his vile comments, and rightly so.[18] Local outrage within the Catholic community was confirmed by an article in the Nottingham Post on 21 September 2010.[19]’

    • Dear Gary, Many thanks for this. Where would we politicians be without our fan-mail? But I have some bad news for you. My resignation date is in doubt, and subject to on-going discussions with Central Office. So you’ll have the toothache for a while yet. Keep taking the tablets.

    • merry xmas says:

      So now it becomes clear.

      1) You looked a fool by not understanding the system put in place for the elections to the European Parliament does not make provision for by-elections.

      2) You clearly are not even from the East Midlands – so who that region elects is of no concern to you.

      3) You push your narrative of an elected representative not being to your liking yet it is you who is the nasty one with your disgusting “inbreeding’ comments.

      Isn’t there a rock missing someone who crawled out from under it.

      Your mum must be so proud of you! LOL

      • Gary Rudd says:

        You cannot surmise any of the above from anything I have said, but one can certainly surmise that you are a supporter of misogyny, homophobia (yes, in spite of Roger’s comments to the contrary it does exist), and an apparent unwillingness on his part to quit a job which he himself describes as ‘banging my head against a wall for 14 years’.
        Let the poor man go and perhaps you can join him in anonymous oblivion, assuming that is not your current address.
        I do wonder who exactly, other than yourself, does find his representation to their liking given his current inscrit status?
        And what is so awful about inbreeding? You’re clearly a product of it. Don’t be so harsh on yourself. Being out from under your rock may yet bring positive experiences if you open your eyes and broaden your DNA pool. I wish you luck but should also advise you that the abbreviation LOL is not widely used other than by schoolchildren and those who have yet to master social networking conventions and age-appropriate communication.
        As for mum, I don’t know whether she will be content with my communicating with the likes of you. She’s a descendant of Nye Bevan and would probably disapprove of my wasting my education on the hard of thinking.

  2. Mike says:

    Thank you for this very instructive article which I enjoyed reading.
    When will the Powers that Be recognise the truth?
    I shan’t be holding my breath…..

  3. Gary Rudd says:

    Oh dear Roger. How utterly depressing for everyone. Is it because of the connection your successor has with an alleged racist publication? I’d have thought he would have slotted very neatly into your shoes – though of course this raises yet more issues about the so-called ‘democratic’ nature of government.
    Do the decent thing and resign anyway; that way we could have an election and appoint someone who actually represents the views of the electorate/party and works with, rather than against the body to which they belong.

    • merry xmas says:

      Oh dear Garry. I would have thought you would know resigning does not cause an election, as MEPs are elected on a list system. If I was as churlish and abusive as you I may have called you rather stupid for not knowing that, so as its the season of good will I won’t.

      • Gary Rudd says:

        Precious little to celebrate there then. The only ‘stupid’ thing about this is that the apparent shoo-in for Roger’s successor has been delayed due to his involvement with a publishing company which allegedly has a hand in racist publications. That isn’t going to cause me any inconvenience but I should think Central Office are a bit miffed to be getting rid of one loose cannon only to be wheeling another into the vacant space which may well be between your ears).

    • merry xmas says:

      Ah.. So is that an admission your pathetic comment about resigning to offer an election is not possible? Where in the East Midlands are you from given you seem to speak for the electorate?

      • Gary Rudd says:

        No, it is a jibe about a system – which presumably you both support AND oppose, hence your trolling -which appoints a succession of bigots without reference either to the people it supposedly represents or the party to which they are aligned.
        As to my whereabouts I am hardly going to reveal anything to someone who hasn’t the courage to reveal their name and hides behind a moniker which reveals their cowardice and lack of imagination.
        I’m sure that it is possible, why otherwise is Roger baulking about leaving the seat vacant. Give your ‘golly’ a cuddle and get back to your inbreeding, fox-hunting or whatever else you choose for your recreation other than defending the indefensible or pursuing the uneatable.

    • merry xmas says:

      Who caress who your ancestors are? Stil laughing about you thinking there could be a by-election.

      Cheerio trot.

      • Gary Rudd says:

        Yes, another pyrrhic victory you can chalk up to your gaustering support of a fellow nitwit.

        Your adieu speaks volumes.

  4. Gary: This was a blog about international trade and the EU. If you want to comment on that point, you’re welcome. If you’re only interested in repetitive ad hominem abuse, please do it somewhere else.

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