Proponents of more EU integration always concentrate on a small part of the UK’s balance of payments, our goods exports to the continent, which in turn is a small part of our total economy.
Whilst the goods balance is well in deficit anyway, with the EU selling us much more than we sell them, the position on the transfer accounts is far worse.
The UK earns a healthy surplus of dividend and interest income from the rest of the world, amounting to a net £25.3 billion in 2011. The balance with the rest of the EU was a negative £8.5bn, meaning they earn more from us than we earn from them.
Worse still we send the rest of the EU a net £11.4billion, much of it our contribution to the EU club paid by UK taxpayers.
Our total surplus with the rest of the world was a positive £17.6 bn in 2011, whilst the total deficit with the rest of the EU was a depressing £46.6 billion.
It would be good if the UK could reduce its deficit on foreign account. We are as a country exporting more cars and still doing well with exports of services. Meanwhile, the government’s large transfers to the EU institutions drag us the other way. The EU is also a weak area for us making investment abroad. Most UK companies expanding overseas prefer to go the Americas or Asia than to the continent. As a result the UK ends up having to pay more out in profits and dividends to the rest of the EU than we earn from them.
At a time of need to bring our costs more in line with our income, the government should turn its attention to the big deficits we are running with the EU. Business says it likes the single market, but the figures show us that UK businesses do not by and large invest on the continent and create jobs and dividends out of doing so.