Safety in staying in
UK deserves better than fantasy future
by Graham Bishop in London
Mon 2 May 2016
I shall be voting to stay in the European Union on 23 June. With the leaders of the exit camp having revealed their reckless policies on our vital foreign trade, it is the only way to safeguard Britain’s economic future.
There are three strands to the arguments for and against the UK’s EU membership – Project Future, Project Fantasy and Project Fear.
Project Future is about building on what we know today. The UK has great influence in a bloc which accounts for one third of the world’s imports. A wide-ranging analysis of the 'balance of competences' between the UK and the EU ahead of Prime Minister David Cameron’s February EU renegotiation concluded that the UK did not need to demand the repatriation of powers from the rest of Europe – the balance was already about right.
Russian adventurism in Ukraine and Syria has reminded us of Nato’s founding purpose. And the euro area is still adjusting to the reverberations of the 2008-09 financial crisis – potentially presenting a huge opportunity to the City of London to consolidate its position as the world’s leading financial centre.
The people of Britain deserve better from those who argue for historic and irreversible change but fail to provide a substantial, precise plan for creating a good outcome. This is Project Fantasy. Boris Johnson, the mayor of London, argued for a trade deal modelled on that agreed between the EU and Canada but changed his mind within a couple of weeks. The Canada deal does not cover services, took seven years to negotiate even after years of preliminary work, and has yet to be ratified unanimously by all EU states.
Under the mantle of what opponents have dubbed Project Fear, Peter Mandelson, Britain’s EU trade commissioner between 2004 and 2008, has branded as ‘fantasy politics’ the concept of a quick and simple renegotiation of trade deals around the world. In a similar vein, EU Commissioner Jonathan Hill told the Bruges European business conference in March that, ‘If the UK were to vote to leave, it's fantasy to suggest it could quickly secure access to the single market on the same terms as it has today’.
One obvious example is the risk to the City of London. Unless the UK slavishly follows any new EU rules on financial markets, the City’s earnings will be progressively eroded. The recent UK budget forecast the government’s deficit next year at £72bn – even with City tax contributions of well over £60bn.
According to the UK office for national statistics, Britain’s current account deficit rose to a peacetime record of 5.2% of GDP last year – £96bn, even after the City’s trade surplus of £72bn. This is proportionately the biggest deficit among all industrialised countries and more than four times that of any other EU state except Cyprus. No wonder Mark Carney, governor of the Bank of England, has warned of relying on the ‘kindness of strangers’ to fund this deficit.
Project Future is moving to deal with the legacy of the 2008-09 financial crisis and create a more competitive European economy that can thrive in the years ahead. If Project Fantasy turns out to be well named, UK citizens have every right to be fearful of the possible consequences.
Graham Bishop is Chairman, Consultancy on EU Integration at GrahamBishop.com. This is No.46 in the series.
OMFIF’s series on the UK EU referendum presents a wide variety of perspectives from Britain and around the world ahead of the 23 June poll. We are assuring a balance between many different points of view, in line with OMFIF’s overall neutral stance on the issue.
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