UK exit costly... for the EU
The price of leaving the European Union will be high, argues Simon Miller. But not necessarily for the UK
Yesterday saw the German chancellor Angela Merkel take dinner with David Cameron with a plea for continued co-operation and membership of the European Union. With the latest trade figures it is easy to see why.
The one thing that always puzzles me about the debate surrounding continued membership of the EU is that it is always couched in terms of cost to us in the UK.
Amid the doom and gloom, fire and damnation, we always hear that the EU is a major trading partner and that it would be disastrous for us to leave.
Indeed, some of the language seems carry the threat of retaliation against the impudent Anglo-Saxons if we had the temerity to leave Le Grand Project.
Yes EU trade is of value to the UK but as I and many others have argued, the UK’s history has always been one of looking abroad, to new territories, not be tied down to one particular place.
Indeed, it could be argued that the British Empire was an accident that occurred because of trade, expansion, and the appetite for commerce that let Napoleon describe us as a nation of shopkeepers in a misguided belief that we would be insulted by this epithet.
Au contraire mon petit général, it is an epithet that most would be proud of. Commerce, after all, is in our blood.
So we see Merkel popping over for dinner, the threat of retaliatory action hanging over the feast like Banquo’s ghost.
But hang on, of course EU trade is valuable to us, it is still a major market for us - although this is changing. But say we did leave, say the trade barriers were put up, how much exactly could this cost our European partners?
First things first, our EU contributions would be gone. That’s around £7.4bn for next year according to Treasury estimates.
Although small compared with our GDP, I am pretty sure the bean-counters over in Brussels - you know the ones that think that they should be the only institution in the world not to have their accounts signed-off, and they have a go at bankers? - would not particularly appreciate having to go to Germany and the Netherlands with a sheepish grin and a mild suggestion about an increase in their contributions.
And if you break down where some of that money comes from you see £9m in sugar levies and agricultural levies, £2.3bn in custom duties, £2bn in VAT and £10.6bn in fourth resource payments.
Oh and then there’s agriculture. That glorious unreformed Common Agricultural Policy - remember that deal Mr Blair?
Well, by 2013, the UK will have given a net contribution of £7.1bn to EU farmers over five years. Let’s see France explain that loss of cash to their farmers come election time.
And then there’s our poor, blighted, waters.
According to the only figures available, former UK territorial waters are worth around £3.259bn, with the Spain and Denmark making the most of our overfished waters.
So far, so pricey for the EU.
And then you have imports.
Again, the argument always appears to be about how much this would cost the UK, but turn that round on its head and look at the figures - look how valuable we are to them.
Granted, today’s trade figures showed a small £0.6bn drop in our trade deficit with the EU in September but what would happen if the barriers were suddenly put up in a fit of pique.
Presuming we responded in kind, again, this would be very costly for the EU.
Our buying of goods from EU countries was worth £4.4bn to them in net value with £16.7bn of imports coming to these shores while Q3 figures saw that the UK market was worth £50.9bn to Eu members - £13.6bn in net value.
And if you break that down into our main EU trading partners, you may begin to get the gist of why Merkel is quite determined to keep us on board.
If you take a look at which EU countries are major trading partners with us, Germany heads the list of importers into the UK with a value of £4.4bn with the Netherlands next at £2.6bn, France at £1.7bn for September.
For Q3 of this year, Germany again is tops at £13.3bn (actually an increase over the previous quarter) while the Netherlands at £7.6bn and France at £5.6bn.
You see I am a firm believe in free trade, but I mean free trade. I do not mean this single market where everything must conform, everything and everyone must kowtow to the mandarins in Brussels, this market where democracy is a dirty word and that we must conform whether it is in our interest or not.
I believe in a UK that is free to trade with anyone and everyone without restrictions. The debate has always been about what it would do to the UK if we leave, but the strangest thing about the whole in-out debate is that no-one really looks at what it would cost the EU.
These are figures that should be shouted from the rooftops. Contrary to what some might have you believe, we have an economic power that should be utilised for the benefit of our country and, if we are really lucky, benefit the citizens of EU member states by finally nailing the lie that
is the European Union.
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