ONS deficit: reform the blue of the EU to get out of the red

The latest ONS figures prove that, if nothing else, Britain can ill afford to head into the New Year with the same old narrow attitude towards trade through only the eyes of the EU, says Tim Focas

EU: burning our money
Tim Focas
On 24 December 2014 10:15

The news that the Office of National Statistics (ONS) has revised Britain’s growth down from 3 per cent to 2.6 per cent is sure to leave the champagne tasting a little flat around the Osborne household on Christmas morning.

However, while contracted growth, albeit small, is the perfect political gift for Ed Balls following the chancellor’s boasts about being the fastest growing economy in Europe, it pales into insignificance in comparison to the UK’s wapping £27b account deficit. 

It is staggering to think that our current account deficit now accounts for 6 per cent of GDP. We are simply not exporting enough to get the much needed cash into the coffers to pay for imports. As a result, our debts to the rest of the world are shooting up fast, leaving serious question marks around the chancellor’s claim that Britain is “earning its way in the world.”

The problem, not for the first time, lies in our relationship with the blue flag of Brussels. Many critics of the EU project, rightly, focus on the astronomical cost of our membership, which has risen an extra £200m a year the last ten years.

A stark contrast to the Swiss, who pay £50m less to access the Single Market. Others claim new business regulations are the crippler, with over 1,000 passed this year. But the cold hard truth is that these account deficit figures prove our current trade deal with the EU is deeply flawed, and desperately needs reform. 

This reform needs to take us back to move forward somewhat. Back to the free trade community which we originally agreed to many moons ago, enabling countries to make individual trade deals with the rest of the world. Opening Britain up to the new emerging economies is the only way to ramp our exports up and start paying our bills.

But we can only do this if we are free to apply our own laws, not the ones of the EU, which drive new commerce with other nations. While certain moves are welcome, such as ones MEP Dan Hannan has been making to make Britain part of a new devise trade area based on the highly successful Association of Southeast Asian Nations (ASEAN), more needs to be done, and quickly. 

With over 40 per cent of our trade conducted within Europe, over 3 million jobs linked to EU trade, not to mention nearly 6 million EU jobs linked to British trade, it would be foolish to propose measures that puts any of this at risk.

That said, these latest ONS figures prove that, if nothing else, Britain can ill afford to head into the New Year with the same old narrow attitude towards trade through only the eyes of the EU. Serious reform needs to be put onto the negotiation table and Brussels needs to start listening.

Otherwise, Brits may have to start seriously considering Swiss roll instead of Christmas pudding for future Christmas’, if the country is really serious about getting out of the red, or should that be blue, and into the black in order to truly lay claim to “paying its way in the world.” 

Tim Focas is a financial services consultant based in London @TimFocas66


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