Britain doesn't need Brussels
Britain is now exporting more to countries outside the EU than to countries in it. This should give us food for thought
The very uneasy truth is that the rest of the world powers ahead without us, largely due to our bizarre decision to maintain an investment and policy status quo. In order for the UK to catch up and ensure a comparable future to our often brilliant past, we need to re-strategise and knuckle down to some hard work. I see three main pillars for a pro-growth strategy which we now need more than ever.
First of all, the second quarter of this year marked a true milestone in our trade relations. Namely, for the first time since our joining the European Common Market in the 1970s, we exported more to countries outside of the EU than to the EU itself. Of course, with the collapse of the Eurozone, and growth in the so called BRIC countries -- Brazil, Russia, India, China -- such a development was only a matter of time.
Nevertheless, this change needs some serious attention. The Commonwealth, for example, contains one of the BRICs (India) as well as some of the other powers of the developing world (e.g. Nigeria, South Africa, Malaysia), developed countries in sought after markets (Canada, Australia) and rivals (Singapore - which rivals London as a financial hub). It could be turned into a “common market” platform to compensate for the EU slump.
It is after all quite bizarre that it is currently more difficult to trade with, work in, or travel to countries which often have a lot more in common with the UK then the majority of European countries we are tied to via the EU. As rightly identified by the current government, we need to do more business with the BRICs, but that will not happen by just talking about it. We need immediate action on infrastructure, trade agreements and visas to facilitate these developments.
Boris Johnson is absolutely right to push for a new hub airport -- we need a new airport which can be up-scaled over and over so that we do not need to build new airports every few years in various parts of the South East. But why is that idea taking so long to even get approved, especially when its originator belongs to the ruling party?
High speed railway infrastructure, another no-brainer, took years to get approved even though we are clearly decades behind mainland Europe and have to catch up and get connected to the growing continental network, which offers a viable transport alternative to ever more costly continental flights. Aside from that we need new ports and docks, which will allow us to trade with the BRICs without relying on intermediaries (i.e. European ports such as Rotterdam or Hamburg), hence making us a strategic trade partner. It is almost criminal that a nation which used to pride itself on “ruling the waves” has to import goods which now land in European ports.
Secondly, due to the changes in our international trading patterns, we should also ask ourselves what it is that we want from the European Union. At the beginning of this summer David Cameron said that Britain risked becoming “a sort of greater Switzerland” by leaving the EU. Due to our pro-active foreign policies, as well as the brand that the UK has developed over centuries all over the world (be it in culture, academia, innovation, sport, business... you name it), I very much doubt that such a scenario would materialise.
But even if that were to happen, maybe it would not be such a bad thing. After all, a series of bilateral agreements with the EU ensures that Switzerland still benefits from similar trade and movement of people arrangements as EU members, but without all the nonsense of external (i.e. Brussels’) interference into how Switzerland goes about keeping its house in order.
Switzerland is not alone in mixing-and-matching the various pros and cons of EU membership: Norway and Iceland also benefit from being in the European Economic Area. They take all the good stuff from the EU and ignore the rest. These countries are not exactly regarded as the "lepers" of Europe.
It is of course imperative that the UK maintains the free trade and free movement of people arrangements with the EU, in order to ensure the competitiveness of our exports on the continent as well as to secure the best continental talent for our key industries, such as financial services.
However, the on-going increase in the damaging policies invading us from Brussels, such as the recent example of a Eurozone-wide bank regulator which will most certainly undermine the strength of the City, means that our membership needs immediate renegotiation in order to protect our vital national interests. Taking a closer look at how Switzerland or Norway have managed things should be an urgent priority.
Thirdly, it is imperative that more attention is paid to developing energy self-sufficiency, which should also help answer the inevitable questions on how we could set about the financing of the infrastructural projects described above. As suggested in my previous article for The Commentator, Building Bridges on Shale Gas, it makes sense that the UK should aim to forge a pro-shale gas lobby within the EU, pulling in Poland, whose government just approved a law to extract shale gas which it believes to be vital to its energy security, gaining independence from Russia's Gazprom.
Given the high probability that the UK has large gas deposits, Britain could turn itself into a gas exporter, again taking Norway's example, and use the gas sale proceeds to repair the state of our budget and allow for the creation of pension funds for the current and future generations, which could in turn finance the infrastructure investments we desperately need.
That would also address the worries of generations X, Y and so on with regards to what they will live off once they are eventually allowed to retire at the age of approximately 80! Regrettably, the "core" EU nations currently do their best to block shale gas exploration in the EU, which raises further questions as to how much we really benefit from our current relationship with it.
The UK should also make the most of American expertise in shale gas exploration to ensure that only the safest technologies are employed in exploration and that that exploration reaches a high capacity as soon as possible.
It seems that at last we are coming to the conclusion that our destiny is in our own hands, as opposed to it being decided in Brussels. But now we need some decisive action to put us on the right path for sustainable long-term, growth.
Przemek Skwirczynski is a an economist, banker and Conservative. He writes in a personal capacity
Read more on: exports to the EU, British economy, It's the economy stupid, black economy, 1% growth in UK economy, Brazilian economy, Chinese economy, What does the EU mean for the British economy?, american economy, GDP growth, growth strategy, UK economic growth, growth, and Przemek Skwirczynski
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