Solving the UK’s economic malaise

Ford moves van operations to Turkey

Ford moves van operations to Turkey

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.

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4 Responses to Solving the UK’s economic malaise

  1. mt Helmer. With regard to UK energy policy. Very much in the news at the moment. You still haven’t (to my mind) resolved the issue of financing nuclear energy. The last thoughts I’ve heard you express on the subject gave support to the idea of nationalising the industry….Which is unlikely to be the cheapest option. I’ve not heard your thoughts on small nuclear installations? The UK can, it seems, build reactors to provide nuclear energy for submarines, but not, it seems to provide energy for towns. What is the argument against building a lot of small installations (which the UK could build itself) instead of large power stations which require other nations to build for us?….. Has this small installation idea been considered and costed?

  2. neilfutureboy says:

    The extent to which leaders of large industries, as an attempt to stay in government’s good graces, is greatly underestimated by those who think government ever dances to industry’s tune. An example, which reflects on Nissan and its boss’s apparent Europhilia, is that it “donated” £200,000 to a government sock puppet promoting a fraudulent scare against salt. The cheque being written to CASH (Consensus Action on Salt & Health)(really).

    As regards nuclear – European built reactors in China are costing 1/3rd of what these same European built reactors do in Europe. That supports my belief that, with nuclear already under 40% of the cost of our average, 90%, perhaps more, of the cost of power is state parasitism. In which case the solution is obvious.

  3. Roger

    With regards to energy policy and decarbonisation, I was looking at the official EU figures for GHG, and was amazed that, while the UK and Germany have reduced CO2 by about 28% since 1990, the rest of the EU has been lagging way behind.

    e.g. France has only cut by 13% and Italy 6%. Spain has actually increased by 23%.

    Perhaps UKIP might start banging the drum on this.


  4. Mike Stallard says:

    I saw that in yesterday’s Telegraph, the electricity companies are, for heaven’s sake, investing in large “trailer parks” full of diesel generators to cope when the wind does not blow. Is that true? And will the generators actually be able to cope?
    A friend of mine has already bought her generator…

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