This morning, the BBC announced with their usual sycophantic enthusiasm that the CBI had determined that “membership of the EU was worth £3000 per year to each British household”, and that the UK should stay in the EU and work to reform it, not leave it and “lose influence”.
Of course governments of all stripes have been “working to reform it” for forty years, without success. The triumph of hope over experience. The EU is beyond reform, and deserves to be put out of its misery. It is surely self-evident that the UK, as an independent nation, would have more global influence than it has as an off-shore province in a country called Europe. All too often we add the weight of our numbers to EU positions that we fundamentally disagree with. As a country broadly favouring an “Anglo-Saxon”, free-market approach, we find ourselves in a permanent structural minority.
The only way the CBI could have reached its bizarre figure of £3000 per household is by making the implicit – and absurd – assumption that when we leave the EU, we will cease to trade with it. But at the UKIP conference in October, former CBI Chief Digby Jones (John Cridland’s predecessor) highlighted the fact that if we left the EU, then within 24 hours we would have an FTA. We run a trade deficit with the EU, so it is strongly in their interests to continue to trade with the UK. Does anyone imagine that those smart guys in Munich are going to say “OK, Britain, if you’ve left the EU, we won’t sell you any more BMWs”? No. I don’t think so. And if they’re going to sell us their BMWs and Mercedes and Audis and Peugeots and Fiats, they’re going to have to keep their markets open for our Jaguars and Land Rovers and Nissans and Hondas and Toyotas.
So the EU won’t try to deny us a free trade deal. And existing trade deals between the EU and third countries, like Korea, would be grandfathered to the UK as we became independent.
In terms of influence, no doubt the CBI will tell us that “We’d be like Norway – obliged to keep to EU rules but with no influence in making the rules”. As an MEP, I can tell them that we have precious little influence on making the EU’s rules as it is. And Norway is the wrong comparison. Of course on our exports to the EU we’d still have to conform to EU product specs – just as we do with exports to the USA, or anywhere else. That’s a common-place of international trade (in which I spend much of my career). But the 90%+ of our economy that isn’t exported to the EU would be free of the stultifying weight of EU regulation, which costs us tens of billions of pounds a year.
Instead of comparing the UK to a small peripheral country like Norway, we need to recognise that in terms of GDP, the UK comes somewhere between Canada and the USA. Those countries don’t accept “regulation by fax” from Brussels, and nor should we. China seems perfectly capable of exporting to the EU without being a member.
In a way the CBI position is surprising. There’s a lot of research showing that UK businesses understand the damage that EU membership is doing. The recent Business for Britain poll (Matthew Elliott) of more than 1,000 bosses, from companies of all sizes, showed 66 per cent in favour of in/out referendum. 46% of business leaders think that the costs of EU red tape outweigh the benefits of membership. 56% believe we should repatriate employment law, environmental rules and health & safety legislation.
Far from offering economic benefits, two distinguished economists, Patrick Minford and Tim Congdon, have independently estimated that EU membership costs the UK economy over 10% of GDP. Which if you work it out, Mr. Cridland, is about £6000 per household per year. A cost, not a benefit. The CBI estimate is out by about £9000.
Let’s remember that the CBI used to be one of the “authoritative voices” calling for Britain to join the €uro. They were wrong then. They’re wrong now.