Early this week, an impressive gaggle of leading multinational business voices asserted that the economic case to stay in the EU is ‘overwhelming’, and ventured that to suggest otherwise is to put politics ahead of economics. Can they really be serious?
Their published letter glosses over the issue of the costs of our EU membership – and with good reason: every serious economic appraisal, including those conducted by the Commission itself, demonstrates that the benefits of the Single Market are small in comparison with the costs (typically of a magnitude of around two-and-a-half to one). Their argument that we should push to strengthen and deepen the Single Market is to deny the essential character of the construct, and to ignore the political realities in the eurozone – most critically in France, which seems set to get yet worse.
The Single Market is not a free trade area – and our key focus should be trade. Were we to enjoy a free trade relationship with the EU, we would not be bound to adopt their regulations to trade – any more than the USA or China has felt compelled to adopt the social legislation so embedded within the Single Market. Membership of the Single Market is unduly costly and restrictive: the Commission has conceded that the bureaucratic costs of business compliance with European legislation could be equivalent of 5.5 per cent of EU GDP – equivalent to the size of the entire Dutch economy. As only around fifteen per cent of our domestic product is attributable to our trade with Europe, though the entire economy is subject to the totality of the Single Market regulations hitting our economy, those costs seem an even higher price to pay.
Can these distinguished souls really be arguing that we need to be in the European Union to trade with member states there? Have they looked at their own businesses? Is it their contention that we could not survive as an economic trading nation apart from the EU? The reality – of which they, as leaders of highly-successful multinational corporations, should be most aware – is that it is companies who trade: not nations. Given the magnitude of our trade deficit with European Union member states, it is inconceivable that they would not want to sustain and enhance our trade relationships irrespective of our membership status with the EU: it is in their best interests so to do.
And the relative importance of the EU to the global economy is shrinking, and we should be ambitious in reaching out to those new opportunities with growing consumer markets and favourable demographics. We should be proud of being one of the leading world economies and trading nations, and our international links are envied in many foreign capitals. It seems patently absurd to argue that we could not reach perfectly advantageous free trade agreements with other countries and regions – and we would be able to tailor those agreements more closely to suit our individual commercial needs, opportunities and prospects, without the cumbersome, time-consuming expense of an introspective, self-serving bureaucratic machine hamstrung by the need to achieve satisfactory resolution amongst twenty-seven individual partners on one side of the table to any discussion advanced. Let us not forget that two of the wealthiest and most successful European economies – Switzerland and Norway – are not in the EU, and the flexible ‘City States’ of Hong Kong and Singapore are triumphantly successful.
These grand magnates also argue about maintaining the City of London as the major financial centre in Europe. I agree. But the solutions to the global banking crisis must be just that – global. The European Union’s zeal for regulation could be to the detriment of all financial centres in our continent, and we need an international consensus when acting. Some of the more enthusiastic disciples of ‘ever-closer union’ fail to hide their resentment at the compelling potency of the City of London, and are ambitious to usurp one of our economy’s greatest assets. When these multinational grandees assert that we should ‘promote the cause of EU membership as well as defend our position’, they risk placing themselves in the centre of a terrifying contradiction: how can these positions be mutually compatible given the content of measures such as the European financial transactions tax, recently attacked by the Governor of the Bank of England, Sir Mervyn King?
Most fundamentally, however, these emissaries seem to be in a state of denial about the changes which are inevitable in Europe. The path out of the eurozone crisis will require increased levels of integration towards the vision of ‘ever-closer union’. That is a vision which is harmful to our interests, and to which the British people do not wish to be enlisted. Our correspondents may choose to disparage those who do not agree with them with the charge of putting politics before economics: but isn’t it high time that the entire issue of our relationship with the EU was put before the British people for adjudication?
I agree with the Prime Minister’s strategy that making sure that the changes within the European Union best reflect our national interests should be the first priority; and putting that settlement before the people to decide. Though, frankly, I am staggered that such eminent businessmen seem to lack the ambition for our country which, in their individual cases, served to make them so successful in their own business lives.