I recently had a constituent write to me pointing out the dire state of the British deficit, the British National Debt and the British Balance of Trade. What would UKIP do about it, he asked? And he was also worried about the decision of Ford to move van operations out of the UK to Turkey. Bear in mind that Turkey is not an EU member, though it does have a free trade agreement. This move by Ford is surely a reproach to Mr. Toshiyuki Shiga, Nissan’s Chief Operating Officer, who was reported yesterday as saying that it was vital for the UK to remain part of Europe. He refers to “the threat of import tariffs”. But there is no threat of import tariffs. As Europe’s largest global customer, we in Britain should certainly trade with the rump-EU on terms at least as favourable as Turkey. If Ford are happy importing vans to the EU from Turkey, Nissan should have no problem in shipping cars from the UK to Europe.
My correspondent asked what UKIP would do to resolve the economic problems he outlined (he was also writing to the three old parties – I wonder what sort of answer he’ll get).
I replied as follows:
Thank you for your very interesting letter. The UK financial position is indeed dire, and it’s little consolation that in many European countries it’s worse.
However I am at a loss to follow your argument that any UK growth would cause a deterioration in our balance of trade. Additional manufacturing would either result in goods sold in the UK (import substitution) or sold abroad (exports).
The primary action UKIP would propose to take to resolve these matters would be to leave the EU (and your story about Ford’s move to Turkey underlines the fact that we could continue to trade on favourable terms with the rump-EU after we’d left). Tim Congdon estimates that the total cost of EU membership, including regulatory costs, is 11% of UK GDP. Patrick Minford, in an independent study, reaches a similar conclusion. It would take a few years and extensive de-regulation to eliminate all of those costs and to achieve those benefits in full, but there would be an immediate benefit as we cut our direct EU budget contributions. We should also prune the Foreign Aid budget.
We should immediately repeal the EU’s lunatic energy policies, ensuring affordable energy for British households and manufacturers. As the savings from leaving the EU kicked in, we should want to move to lower and flatter taxes.
It seems to me that lower taxes, cheaper energy and more flexible labour markets would have a powerfully positive effect on British households and the British economy, as well as being a big attraction to inward investment.