Proponents of staying in just have one set of scares to push, related to trade. They begin by telling us more than half our trade is with the rest of the EU.This is not so.
They commit two statistical errors in saying this that are reasonably well known. The first is they are only talking about trade in goods, not trade in services as well where the EU share is lower. Second, they do not adjust the EU figures for the Rotterdam and Amsterdam effects, where we export goods there which are shipped on to export markets outside the EU.
There is a third error. They amalgamate imports with exports, but talk about the consequences as if the figure was our export figure. As we import so much more than we export, it gives a very misleading result.
According to Bank of England figures the EU accounts for 44% of our exports of goods (unadjusted for re export) but 53% of our imports of goods.
If you turn to the definitive figures in the Pink Book published annually by ONS that shows in 2014 the EU accounted for 42% of all the credits to our current account, and 51% of all the debits. It meant the EU accounted for more than 100% of the deficit.
The figure the trade worriers should concentrate on is the 42%, not the more than half which is more imports than exports. If you adjust for re-exports it is under 40%. My recent discussions with the representatives of the German government have confirmed again that Germany has no wish to face new tariffs and barriers to her trade with us should we vote the leave the EU, and would be very keen to find alternative arrangements that allowed her to carry on exporting so much on favourable terms. I reassured them that Vote Leave is not seeking to impose new restrictions on UK/EU trade, nor would we be paying any contribution to the EU which we had just left as some kind of payment to keep the imports flowing!
I was pleased to see over the week-end that the CBI is toning down its position and beginning to recognise that it undermines its own wish to see a successful renegotiation to say they want to stay in come what may. What we need to know now is what renegotiation does the CBI wish to see? What reforms do they want, as they usually say they wish to stay in a reformed EU.
November 9, 2015
Indeed, and it includes trade with Ireland which went on well before the the EU even started. Even if the EU did introduce tariffs or other trade barriers (which would be foolish for them) the UK could simply switch production and marketing to the home market or other World markets. Any tariffs we had to pay could be more than covered by similar tariffs imposed on EU exports to the UK if we had to.
Anyway we would get a huge boost our productivity by getting rid of the bonkers EU regulations, getting cheaper energy, sensible employment laws and costs of the EU.
It seems the control of the borders is going to be just a pathetic change in migrant benefits and even this will be resisted – it sounds as though Cameron letter of demands is just as expected – nothing, nothing and nothing. He is asking for a totally unsatisfactory deal the whole renegotiation is a long grass fraud.
November 9, 2015
How can there be a successful renegotiation for the CBI when nothing of substance is even being requested by Cameron? Four years restriction on benefits is totally irrelevant to the big picture and even that seems to be a problem for the EU.
November 14, 2015
You sensible employment laws are far from sensible, proof being that you cannot say what they are, leaving one to presume that they are based on hire and fire at will with no safety or minimum wage and who but the most desperate wants to work under those conditions? Self employed accountants maybe, but for the rest of us we ain’t doing it. Its a strike you can understand.
November 9, 2015
Good morning.
There is only one thing, just one, that I want from these so called ‘renegotiations’ regarding our membership of the EU. And that is, the removal in all perpatuity, of the UK’s commitment “To ever closer UNION”. đ
Anything other than that is a waste of time.
November 9, 2015
That logic has a flaw somewhere.
So that means it would be okay if your elected representatives allowed the Uk to be subsumed into the EU in fits and starts as options are vetoes are continually traded away on a whim, just as long as there was no open commitment to convergence anytime soon?
November 9, 2015
Mark,
My fear with Cameron and his ‘NEVER CLOSER UNION’ is that it will simply be ignored by the EU and our future leaders and the process will continue by stealth.
Besides, no matter what Cameron says, the UK will still be locked into an orbit around planet EU and wherever it goes – we go.
November 9, 2015
Of course it will be ignored. Were we not promised “subsidiarity” (yet all power is always drawn to the EU) and the reform of CAP.
Cameron is asking for nothing of any substance and even that seems unavailable What little he gets will be ratted upon within months. He is just another Ted Heath/John Major type. Not to be trusted one millimetre as they would have it.
I just heard Osborne going on about his plan for sound finances. Did this man not double government borrowing and is still pissing money down the drain on all sorts of complete nonsense, green crap, HS2, over prised nuclear, over regulation and the likes. If he wants sound finances he need to start firing all those people doing nothing of much use, about half of them I estimate. Then cut the rest’s pay and pensions to match those in the private sector. Osborne is about as believable as Cameron is claiming he is a low tax Conservative at heart. He is neither, he is a no nation socialist in essence.
November 14, 2015
The private sector hmmm lets see..
Pissing money on privatisation dogma that gifts money to companies that have only one customer, the government is part of the problem. You will no doubt blame bad negotiation of the contract, but often the state run one is already very efficient especially in the NHS. In many cases we are seeing the private companies badged as the NHS charging more and providing a worse service. The deluded public will not tolerate a private name such as ACME Health care. catchphrase.WE CARE! For good reason and no amount of right wing spin will fix this as you well know don’t you?
So when private is worse and more expensive than state owned how does you deal with this. Housing a prime example of this council houses sold off and replaced with a massive benefits bill and homelessness.
Why not label the homeless and those unable to afford rental or mortage scroungers? Or just deny they exist as there is not many on the streets is there? Watch this space.
November 9, 2015
To remove the words is meaningless. I was again reading yesterday the Five Presidents report on the EU’s own website and the fact that they are working on more integration within the Eurozone, with completion of a Country by 2025. An interim report will be prepared by 2017 with requisite actions and a new treaty by 2018.
It beggars belief that Mr Cameron and his quislings don’t know this. Of course they do as there is now a House of Lords Committee tasked at the end of October 2015 with understanding the implications of the proposals. Where are the investigative journalists reading this stuff and putting it to our leading politicos? Anyone would think there was an establishment cover up to hide these very easily found actions and proposals. The only group exposing the truth is UKIP who have been vilified for it! Where’s the Channel 4, ITV, Sky or BBC exposĂ©? Anyone would think we’re living in an unelected dictatorship!
Cameron’s renegotiation is and always has been a farce. His work is about affiliate membership to dovetail in with the EU’s plans. Nothing more.
Freedom of movement restrictions? No. Reduced membership fees? No. Repatriation of powers? No. Removal of Human Rights nonsense? No.
We want our independent sovereign democracy returned. This will NEVER happen under the jackboot of the EU.
November 9, 2015
I suppose in theory the UK could stay in the EU but with an opt-out protocol saying that we were not committed to the process of “ever closer union”, just as we have an opt-out protocol saying that we are under no obligation to join the euro. I’m not sure how that would work if the rest of the member states were still committed to it and so it was still the EU norm. When the UK went to the ECJ and complained that a new EU law had ignored the fact that the UK was not committed to “ever closer union” would the eurofederalist lawyers on that court agree with that, or would they say that it made no difference and we were still bound by the new EU law? In the absence of a unilateral power to disapply that new EU law, which Hammond has ruled out, what could our Parliament do about it?
November 9, 2015
Matthu, Tim L, LL, Timeaction and Denis. The commitment to ever closer UNION is sacred. That is why it is mentioned in the Treaty of Rome pretty much right from the beginning. It is the thing that underpins and drives the EU and integration. Without it we can say that we are not bound by it or any of its rules, laws and / or fines. That is why I said what I said. I want out !! I want to leave the EU and be a nation amoungst nations again.
November 13, 2015
The ‘ever closer union’ statement in the Lisbon Treaty is simply a statement of commitment and principle, a sort of preamble, on which the rest of the clause are built. If that is removed the raison d’etre of the entire treaty is undermined. However, all the clauses giving effect to ‘ever closer union’ remain in place os it is illogical and pointless.
If, alternatively, one party to the treaty is given exemption from this principle, again all the effective clauses still apply but the logical inference is that that party should not be a party to the treaty.
The illogicality in Cameron’s position is explained by the fact that what he is talking about is not the current treaty but the revisions to the treaty (probably in 2019) when the EU moves to complete economic and monetary union as described in the Five presidents’ report. Since that is intended to be the penultimate step towards founding the Federal State of Europe on the EMU states. I doubt whether the other countries like Poland would agree to it since most non-EMU states would like the option to join the Federal State of Europe if it proves a success and the EU will want to maintain its central purpose: a Federal state encompassing all of Europe.
November 14, 2015
Good morning.
There is only one thing, just one, that I want from these so called ârenegotiationsâ regarding our membership of the EU. And that is, the right in all ‘perpetuity’, of the UKâs voters’ to elect all the people who govern them. ?
Anything other than that is a waste of time.
(my thanks to Lifelogic, please excuse the plagiarism !)
November 9, 2015
I see that the proximity of public defibrillators seems to being used to fiddle 999 response times. This must be wasting lots of workers time unproductively, working on such underhand fiddles, when they could be manning the ambulances instead. It must be a great consolation to callers to know that a defibrillator was under half a mile away as they perhaps fade away.
http://www.telegraph.co.uk/news/nhs/11982591/NHS-accused-of-scandalous-999-response-time-policy.html
November 9, 2015
I reed that Jeremy Corbyn has sensibly dropped his female only rail carriages agenda. But now it seems that Bercow may give the house of commons some transgender loos.
November 9, 2015
There is a female only waiting room at Coventry train station. You see equality doesn’t count when it favours the chosen ones.
November 10, 2015
That’ll be the ladies’ waiting room which the Victorians thought was desirable to afford members of the fairer sex some protection from the unwanted attentions of men with lax morals, which was most of them, and especially ladies who were travelling unaccompanied. More or less every station still had one when I was young.
November 9, 2015
John
How much of that <40% of UK exports is trade with Ireland as that is also hardly trade for which we should feel beholden to Brussels?
November 9, 2015
Off topic abit, I see that the un-elected house will try and get the vote for 16-17 year olds for the EU referendum, let’s not hope they do because most off the kids have been brain washed by the education system to be EU friendly
November 9, 2015
I quite agree .
Last week I attended a EU in/out symposium at our local secondary school .
It was quite well run except that it had on the panel : two German professors [M + F]
from LSE and UCL , a failed Labour candidate from Maidstone and Suzanne Evans of UKIP.
So the panel was 3:1
The event was organised by the sixth -formers who deserve credit for arranging it.However I felt that the staff had abrogated their resposibility by allowing such a
skewed event to take place .
It would have been much better to have had a proper debate with outsiders proposing /opposing the motion and student seconders .
What did I learn from the evening ?
-that the majority of our local students are pro EU
-that the German view is one of process and that process in itself is democratic therefore the EU is democratic.
-that Labour still believes in supra -national government at both EU and world levels and regards it all as inevitable. Shades of the old Communist line ?
-that UKIP has a coherent and well thought through case .
After the event [not selected to ask a question ] I chatted with the female University lecturer and asked her how democratic was it of Merkel to unilaterally tear up the Dublin Agreement and invite 800,000 migrants into the EU ,to be shared around with quotas and presumably then free to travel to Schengen countries
She said some aspects might have been better handled but it was the right thing to do .We cannot keep all the Syrian migrants in camps .
I said that the EU had failed in its duty to its citizens by not securing it external borders .
And there we parted company .
November 9, 2015
They’ve already tried and failed on that during the Committee stage of the Bill:
http://services.parliament.uk/bills/2015-16/europeanunionreferendum/documents.html
However they can and are trying again at the Report stage:
http://www.publications.parliament.uk/pa/bills/lbill/2015-2016/0072/amend/am072-a.htm
They also want the government to say beforehand what future relationship with the EU they would envisage in the event of a vote to leave the EU; that seems to be asking too much, given that the government even refuses to put into law that if we vote to leave the EU then we will leave the EU.
Unfortunately Lord Green’s attempt to restrict the franchise to UK citizens also failed, as he decided not to press his amendment.
Even though the case for excluding foreign citizens from a referendum which is repeatedly billed as being an exercise to establish the will of the British people seemed pretty unanswerable to me.
Reply The pro EU people are quite unable to say what the EU will be like in three years time if we stay in!
November 9, 2015
The children, even the brighter ones, are ones (and the teachers) are also “school brain washed” on the catastrophic warming agenda.
Even though most lack any understanding of physics, science or power engineering nor even the units energy is measured in quite often.
November 9, 2015
John,
Thank you for this blog, long may it continue. Eventually of course, I am hoping you won’t need to talk about the EU so much!
After EU-exit, will our exports to the non-EU world via Rotterdam be subject to EU regulations, despite not being for the EU market place?
Reply No
November 9, 2015
I read that Mr Cameron is going to claim that leaving the EU will be a threat to national security. It seems that the trade argument is to be relegated, presumably because it has lost traction. The threat to our national life and to our security results from the increasing loss of sovereignty to the EU. Changing the issue to an emotive issue from a calculated issue suggests to me that we can expect a campaign of smoke and mirrors. I also read he is seeking to hold the referendum in June next year. Clearly talk of negotiations is nothing more than a shameful sham.
November 9, 2015
Mr Cameron is starting to look a bit silly. He seems to bounce from spurious reason to spurious reason why the UK should remain in the EU, whilst preaching to people who agree with him.
Most people who comment regularly on this site have said for a long time that they want to know why he’s so desperate to stay in.
He gives weak arguments for staying in, with no solid figures or evidence, doesn’t even seek to rebuke those who argue to leave, and presents a pathetic list of”reforms” which will realistically make absolutely no difference to anything.
When is someone going to put him on a platform and ask him the very simple question:
“Why are you so desperate for the UK to stay in the EU when there seem to be so many negatives for the country whose interests you are supposed to protect as our elected PM?”
Although if he is anything like the Home Secretary there will be no answer. She made it through a whole interview on Marr last week without answering a single solitary question.
November 9, 2015
If Britain leaves the EU it will have consequences far beyond these shores, and far beyond issues of trade and economy. Predictions of doom range from the break-up of the Union to the breakup of the EU itself. It could turn out to be one of those seminal international events that define an era. I should very much welcome an analysis by Mr Redwood, with his customary cool lucidity, impartiality and penetration, of the wider fallout he foresees for Europe and the world should Britain vote to go.
November 9, 2015
I should like to use your arguments JR to convince the blokes down at the pub, but in this instance I have found your statistics a bit hard to follow. However I shall concentrate on 40% being the true proportion of our exports (goods only) ending up in EU countries. If services were included, I presume that percentage would be even less.
November 9, 2015
Duyfken
We also need to keep in mind that this 40% is export activity. The vast majority ( over 80% ) of economic activity happens within the UK. Yet ALL of that activity is subject to EU rules, regulations, directives and costs. That is the biggest reason that business is better off out.
November 9, 2015
Thanks for that Libertarian, a most telling point. All the more depressing that the CBI take the stance we see.
November 9, 2015
40% of exports may very well go to the EU but that export account for about 6% of the economy, that means 2.4% of GDP. With the overseas aid and EU membership fees it doesn’t make sense to belong to this archaic club.
But it’s about more than trade, it’s about who rules us and accountability. This is now
(A) Brussels
(B) No accountability.
This has to change.
We now have the crazy idea of paying African Governments to repatriate their own people. What a bunch of tossers.
November 9, 2015
I’m afraid your numbers are way out.
November 9, 2015
They may not be accurate Denis but if the figure was 20% it would mean only 8% dedicated to exports.
John still doesn’t give us a complete picture as intra company components are excluded plus the Dublin factor.
The EU is dying a slow death and we are being dragged down by it.
November 10, 2015
Total exports account for about 28% of UK GDP*, with exports to the rest of the EU accounting for about 12% of UK GDP**.
I’ve no idea how it has come about, but your 2.4% number is out by a factor of about five.
* Taking total exports in 2014 as ÂŁ508 billion from this:
http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06091
and UK GDP in 2014/15 as ÂŁ1809 billion from this:
http://www.statista.com/statistics/281744/gdp-of-the-united-kingdom-uk-since-2000/
gives the 28% I have quoted.
If it is said that to align the two statistics in time GDP for 2013/14 should be used, that was ÂŁ1732 billion, which would give 29%.
** The figure of 12% to the rest of the EU corresponds to 43% of the total exports going to the rest of the EU, less than the 45% quoted in the first reference in order to take into account some but not all of the likely distortions.
However as I have said in another comment, not yet published, the answer to the headline question is indeterminate – it could be zero if it is assumed that new arrangements will ensure no disturbance of the existing trade, or it could be higher than the 43% if it is assumed that not only would our trade with the rest of the EU entirely cease when we left the EU but also all our other trade based on EU trade deals around the world would entirely cease.
November 9, 2015
According to an article in the DT today, the EU is the CBI’s paymaster for data analysis and very rarely criticizes or questions the myriads of regulations that flow from the EU or the adverse effects they have on UK businesses.
The CBI appears very much to me to be biased in favour of staying in the EU, which hardly makes it a reliable source of information, I would have thought?
November 9, 2015
I don’t know much about the economics of the EU but I did say to my husband this morning that I thought the CBI might be getting money of some kind from the EU, similar to that of the BBC. Thanks Martyn G for clearing that up.
November 9, 2015
Indeed Martyn G
Oh and the so called voice of British Business the CBI has actually less than 3,000 direct members. Their own figures which adds on all the members of affiliated organisations still only comes to 200,000. There are 5.4 million businesses in the UK , and the CBI has the smallest membership of any of the business support organisations. They basically represent a handful of PLC multinationals.
All the surveys so far done by Chambers of Commerce & FSB show that businesses like the population in general are currently split roughly 50/50
November 9, 2015
There is no definitive answer to the headline question:
“How much of our trade is really dependent on the EU?”
because it depends upon an estimation of the intelligence/stupidity and goodwill/spite of the governments of the EU countries and of other countries around the world.
If you take a sanguine, or possibly complacent, view, then it could be said that the answer is “zero”, because all those governments are sensible and well-disposed and even if the UK left the EU they would still want to agree new trading arrangements which were not dissimilar to those which already exist with and through the EU.
On the other hand if you are committed to the EEC/EC/EU federal project then you will suggest that if we dared to leave the EU then our lovely “European partners” would turn out to be stupid and spiteful, and they would be as vindictive as they possibly could, even being prepared to accept significant damage to their own economies not only by cutting all their trade links with the UK but also by seeking to prevent the continuation of UK trade with countries around the world where the EU has negotiated trade deals on behalf of its members. Then the loss of export business would be at least your 40%, JR, but with some upper limit which is difficult to define without analysing in detail how much of our trade with other countries depends on the EU trade deals.
So which is it to be? Our “European partners”, and the governments of other countries such as the US, are intelligent and well-disposed, in which case they will be prepared to accommodate the new reality that the British people no longer wish to participate in the EEC/EC/EU federal project; or they are stupid and spiteful and will seek to make our life outside the EU as difficult as they can, in which case one might ask why we are letting these stupid and spiteful people have such a large hand in running our country and in determining our government’s policies.
November 10, 2015
Comment missed for moderation here.
November 9, 2015
” stay in a reformed EU”?
Why? Given that continental European nations seem to have a very different agenda to ours (or we wouldn’t need to reform the EU) what are the advantages to us in staying in with a revised deal, as against being out and negotiating a new relationship as an independent state in full charge of our own laws?
(And I know that “full charge” means “decided against today’s world background” – but decided by us.)
November 9, 2015
It’s not only the CBI which says that it wants to stay in a “reformed” EU, that is also the standard line issued by the Tory government and the Tory party.
http://order-order.com/2015/11/03/tory-lines-to-take-on-osborne-eu-speech/
“This is what Tory MPs have been told to say by CCHQ ahead of Osborneâs big speech outlining his renegotiation demands in Berlin:
We have been returned to office with a very clear mandate to improve Britainâs relationship with the rest of Europe and to reform the European Union. Quite frankly, the British people do not want to be part of an ever closer union … ”
As I’ve pointed out before, the fact is that we already live in a “reformed” EU, just that it’s been “reformed” by Merkel to her liking through her “Reform Treaty”, later renamed the Lisbon Treaty, which Cameron and colleagues made a show of vigorously opposing for about two years but eventually agreed to swallow whole.
Browsing around recently I happened to come across this from 2007:
http://www.federaleurope.org/fileadmin/files_euromove/downloads/Briefing_on_RT_and_climate_change.pdf
“CRT Briefing on the Reform Treaty and Climate Change”
“The Coalition for the Reform Treaty (CRT) is a network of organisations and individuals advancing a positive view on the proposed EU Reform Treaty.”
“There is now overwhelming scientific evidence regarding climate change, the role of human activity in creating it, and the damage it is creating. The consequences for our planet will be destructive and possibly catastrophic if governments, business and the public do not act over the next decades.
The Treaty of Lisbon includes, for the first time, an explicit reference to European policy to address climate change.”
So it is now a matter of EU treaty law that climate change exists and the EU must act to combat it, even if such actions do lead to the lights going out in the UK.
Reply The Conservative party is officially neutral on whether to stay in or leave. Individual MPs and members will make up their own minds. A large majority of members of the party clearly want Out.
November 9, 2015
Neutral? Please!
Why is your leader speaking at the EU funded CBI? Why does he endlessly peddle the (FUD) fear, uncertainty and deceit about the true intentions of the political club known as the unelected EU?
November 9, 2015
The EU is bound to “cook the books” like the other vested institutions – the CBI and the BBC ; if you are in receipt of funds you are going to be biassed in the way you publish and state information .
Whether we are in balance or in deficit with our trade and commerce with the EU does not matter ; governing our own affairs is much more important . The EU makes a great mistake in believing that it is the economics that will determine whether we stay with it or leave ; its management and bureaucracy over the years has been a shambles and the rules imposed on us a ludicrous imposition on the way it influences our lives .
Germany rules the roost in the EU due to the size of the nett contribution it makes ; it knows full well that with Brexit it will be obliged to cough up more – this at a time when it faces a reaction crisis to the migrant influx as the result of the stupid decision of its Chancellor . We must not be led astray by Germany’s will – the figures of the trade balance they have with us underscores our whip hand . Furthermore , if the USA decides to throw its hat in the ring in support of us remaining in the EU , they must also be aware of the looming Presidential election and the extent that our alliance with them will also feature .
November 9, 2015
How is the EU going function coherently if one group the euro-zone members are going to become fully politically integrated and are committed to do so. Whilst the other group consist of states most of which want to also become fully integrated eventually and others notably the UK say they will never integrate fully. One administration for all will mean non euro-zone members will still be subsidising the euro-zone overtly and covertly and many rules for the euro-zone will be non exemptable. EU is not on the side of competition and will not allow non euro members to have freer economies that will disadvantage the euro-zone.
Associate membership works fine for those who will eventually sign up to the full deal. As they will accept nearly every existing rule that the EU has except the euro even the new integration ones when they are brought into force. For those who do not want either the euro or political integration there is only one solution because staying in the EU is totally impracticable The remain inners would be right we would we would have to abide by the rules but lose what little influence over them we currently have. However they are wrong it is not leaving that causes that but staying in.
The only solution is to leave and and primarily opt for the Norway option where only 21% of EU rules apply and full sovereignty is restored. If we find we are happy with that position then all for the good. If not then we progress to fully opting out and trading and cooperation through bilateral agreements. The latter being the goal to strive for.
November 9, 2015
Q: “How is the EU going function coherently…etc”
A: It’s not. Time to leave.
Next?
November 9, 2015
How many businesses does the CBI get membership contributions from, how many of these are SME’s? Who do they question in order to reach their advice to government and the EU?
November 9, 2015
a-tracy
Good questions. The CBI claim 200,000 members BUT that includes all members of affiliated organisations so the NFU is an affiliated member & the CBI count their 50,000 members as members of the CBI. They infact have less than 3,000 direct members. There are currently 5.4 million businesses in the UK . So by the CBI’s own figures they represent less than 5% of businesses and based on the real number of direct members the CBI represent 0.1%
The FSB currently has 200,000 direct SME members & their latest survey of the members show business is split 50/50
November 9, 2015
Off-topic, JR, listening to your excellent Analysis programme:
http://www.bbc.co.uk/programmes/b06mcfdp
I heard the SNP’s Stewart Hosie MP tell a (fairly typical) little porkie:
âWe saw the currency union between Belgium and Luxembourg last for eighty years before they both joined the euro.â
Well, according to wikipedia we didn’t actually see Belgium and Luxembourg sharing a single currency in the same way that the SNP suggests an independent Scotland could continue to share the pound sterling with the rest of the UK, instead we saw the two countries continuing to issue their own currencies but with an attempt at maintaining a fixed exchange rate between the two, an attempt which failed after fourteen years in 1935 when the official exchange rate was changed from parity to 1.25 Belgian francs for one Luxembourgish franc:
https://en.wikipedia.org/wiki/Luxembourgish_franc
During the wartime occupation the German Reichsmark was first declared legal tender in Luxembourg and then declared the only legal tender, with abolition of the franc, so that’s not an unfamiliar story in some ways.
That said, if the eurozone disintegrated, for example because the kingpin Germany opted out, it wouldn’t be surprising if Belgium and Luxembourg and possibly the Netherlands decided to continue to share a currency with each other, but probably not with any of the other more disparate countries which are presently in the eurozone.
Reply Indeed – there was not time to pull him up on that, but it did seem such a silly example given the war, and the relative size of Luxembourg
November 9, 2015
We saw the entire world share a currency for 100 of the most productive economic years , probably ever, up until 1913. And also for 25 years post WWII.
That currency was gold. A single, sound currency is always better than currency wars and a devaluation race to the bottom
November 9, 2015
Gary
The solution to fiat currency, government manipulation and boom and bust isnt a return to gold. It will be based on blockchain technology an evolution probably of bit coin and if not then a whole series of market chosen micro finance M-banking initiatives
November 10, 2015
I agree that the cryptocurrency that emerges, and it may yet prove to be blockchain based, is going to turn the world upside down. Not least, it will do what the peer to peer internet does best : eliminate the middleman. And we all know what is at present the world’s largest middleman. The one that soaks up almost all the private money in the economy , just to keep it afloat.
November 9, 2015
Not the entire world, and gold coins can be debased.
November 9, 2015
The gold standard did not really get going until the last forty years before the First World War, but Gary is basically right. Countries on the gold standard experienced solid economic growth and itâs always nice to know that if you put your cash in a bank, itâs going to be worth at least the same in twenty years time.
So whatâs gone wrong with the Euro? Why does it seems to be grinding the economies of southern Europe into the dust?
The gold standard worked at a time when government interference in the economy was minimal. As currencies were fixed to gold, economic adjustments had to be made via the prices of goods and wages. With little government intervention, this was relatively easy. In the present day there are a plethora of government hindrances to rapid adjustments in price levels. For instance, when there is another recession and UK wages may need to fall to remain competitive, will the UK chancellor be calling for a reduction in the minimum/living wage? I think not. In these circumstances, it seems sensible to have an independent currency which can make the necessary depreciation.
November 9, 2015
The proponents of staying in the EU are constantly asking the question as to how the UK would look if it left the EU, with the clear underlying meaning that the UK would suffer financially and go through enormous changes.
In fact the question really needs to be asked the other way round.
How will the UK look if we remain in the EU ?
It is both EU and Conservative Party policy to expand the EU to include Turkey and all the Eastern European countries as far as the Urals.
The proponents of staying in the EU need to tell us how admitting these countries to the EU will financially affect the UK, being as it is a net contributor to the EU, and how the resulting inward EU migration into the UK will affect the country.
In addition, how will the UK be affected by the EUâs continued acceptance of very large numbers of immigrants from Middle Eastern and African countries.
November 9, 2015
If we remain in the EU then sure as eggs is eggs we will eventually join the euro.
November 9, 2015
John,
On the Marr show yesterday morning, Philip Hammond said that many of our trading allies did not want us to leave the EU, as they liked to use the UK (which is friendly and familiar, with a well established legal system) as their base to access the rest of the European single market. Although he didn’t say it, I imagine that they probably also think that they can potentially achieve at least some diplomatic leverage in restraining some of the EU’s worst market harmonisation ideas through their UK political contacts too. Financial Services is perhaps a significant case in point, as the EU is regularly coming up with some really not very sensible ideas (e.g. the financial transactions tax), which the UK helps to squash / water down.
If we were to leave the EU, sure these other countries would still want to trade with us, but do you not think that they would in due course find it will be more beneficial for them to use other more EU friendly countries to access the European single market and to more directly influence the EU in future? Taking Financial Services as a case in point, it really annoys the Germans and the French that so much European Financial Services takes place in London and I would have thought it will be likely that they will push hard in future to make it more difficult for London to continue all of its existing business in the EU from the outside. Apart from anything else, if and when we do leave, this would cause a big hole in the EU’s budget (as a significant net contributor to the EU’s coffers) which the remaining richer countries (like Germany) will have to pick up, so they will be pretty upset with us and they will want to try and make it easier for their own banks to pick-up EU business we currently service in London, I suspect.
I should say that I am as frustrated as you and everyone else about the lack of EU accountability, the huge democratic deficit and the many unsatisfactory EU policies that annoy and harm us in many ways, but I still find it hard in my mind to balance possible withdrawal to fix these issues with the potential adverse trade effects we must surely suffer longer term if we are outside the EU. I fully accept your argument that other countries around the world and the EU are going to want to continue trading with us, but at the same time, we would no longer be a fully paid up EU member, so we have to accept that at least some business that is located here in the UK for the sole purpose of accessing the EU market would, over time, relocate to a more committed EU member state than the UK.
Rupert.
Reply We were told that if we stayed out of the Euro when it started we would lose much of our currency and financial business to countries in it. that did not happen. Nor will your fears come true if we leave.
November 9, 2015
They are the inadequate/useless negotiators (see Trump on the subject). No doubt they are well in love with each other…to the detriment of all others. The likes of them I believe are one of the largest lobby factions in the EU, distributing funding (grants whatever) from the EU to their foot soldiers. All VI’s. We’ll have a hell of a job stopping the troughers of the EU no matter how much common sense/logic is applied. Not sure who mirrors here?
Similar the World Bank..who report that we might boil, bubble and fry if something is not done. And poverty, that we know is worsened by financing of CO2 reduction. Thats apart from most of us knowing that plants are close to starving at 400 ppm. They starve further and we die (see Patrick Moore – ex GreenP).
No, not pleasing at all.
November 9, 2015
The whole ‘exports to EU’ saga is not very important but the only one the Inners hold on to, and needs to be scotched once and for all. Can you, JR, encourage an expert think tank or similar to do a proper analysis (the stats will be out there somewhere)?
Not only the Rotterdam effect, but also the many other similar ones e.g. DHL effect via Frankfurt (my former company’s high value industrial engineering products exported to China are all air freighted via Frankfurt). And all the diamonds from London to India for cutting that go through the VAT exclusion zone in Antwerp.
Furthermore how many of these exports would continue to be duty free under WTO rules? e.g. semi-manufactures are usually exempt – my old company’s exports to USA are import duty exempt because we ship them in a few bits and assemble and box them in a warehouse in Akron. Probably applies to Airbus wings and of course Eurofighter parts would be exempt as they are military. They are a much bigger component of our EU exports than a few Discoveries.
November 9, 2015
So far, this is the most sober and thoughtful set of posts to one of your articles that I have read. No hysterical ad hominem attacks on politicians; instead, a set of interesting questions seeking precise information about what actually happens or is likely to happen. Long may it continue.
November 9, 2015
Mr Cameron is now on TV as I type speaking to the CBI and as he says “debunking” the arguments of the Leave Campaign and pointing to the virtues of being IN yet he says “renegotiating” with the EU. He asks for CBI support for STAYING.
How much Mr Cameron can judge what amount of trade is dependent on the EU is pretty well unlikely. Even the so-called “Free Trade Agreements” in this world are not actually free. They are dependent as with Canada/EU on a certain percentage of components for example in their cars being derived from EU countries and vice-versa arrangements in regard to other goods.
Of course building any car anywhere on earth requires hundreds of goods and materials being bought from numerous countries. Canada, UK, USA and the EU does not have rubber plantations for example. Interestingly China does. It was forced to have them due to an American and British ban on allowing rubber to get into China prior to the Common Market/EU. Attempting as they did with Japan prior to WW2 to crush a competitor completely out of existence and even basic economic survival of its people.
The USA is quite open via its TV business programmes that US Industry uses the UK to “piggy-back” its products into the EU and via the EU into countries such as China where they might not buy American goods unless they have an EU brand name and are felt to be EU products.
The unanswered and largely unasked questions for the Leave Campaign are:
1. The British people never had any true “sovereignty” in that the UK Parliament irrespective of democratic considerations did just what it liked both in terms of say “Hanging” and decisions about who we should wage war against. How do you intend to change that should we exit the EU? How dare you have an official government policy of “bombing Syria” without a UK referendum on such a murderous measure?
2. Do you intend a written Constitution for the UK preventing the British Parliament from ever joining such a foreign body as the EU again. That any attempt to give our sovereignty away again should be regarded as High Treason and punishable by a death sentence. That Chilcot type “enquiries” are forbidden and are also seen as treasonable?
3. Do you intend to immediately abolish the House of Lords and any other unelected monstrosity? And will this be enshrined within the new Constitution?
Unless the aforementioned are guaranteed by the Leave Campaign then there is no point for citizens to vote to Leave. There is no evidence a domestic dictator is any better than a foreign one. And it was the British Parliament who gave sovereignty away. Tough! The Speaker should start German language lessons for MPs or are most them already fluent?
November 9, 2015
Foreign Affairs Committee – Tuesday 3 November 2015
Debate EU/Trade gets a bit hot and a bit of climate change thrown in?
16:29:21
Witnesses: Professor Patrick Minford, Cardiff University, and Dr Stephen Woolcock, London School of Economics and Political Science
http://parliamentlive.tv/Event/Index/0f50831c-89a6-42b1-9a1a-19ee1dd4830f
November 9, 2015
Yes, I watched some of that đ
Prof Minford, says “cost of living” will go down by 8% the day we leave the EU.
No need to worry about trade agreements as the global market will be the arbitrator of prices and anyone foolish enough to put up trade barriers will only detriment their own population.
All good fun…
November 9, 2015
I see today Cameron has said that leaving the EU would threaten our national security. In that case he can never do anything other than advocate staying in even if his negotiations result in nothing – so the EU have no incentive at all to offer him anything.
November 9, 2015
The comment “3m jobs will be lost if we leave the EU” has been said many times. Has being part of the EU actually CREATED 3 million jobs?
November 9, 2015
Cameron’s negotiation is turning out – as could be expected – to be more fiction and farce than a serious attempt to deliver all that he promised in that Telegraph article before the election. For me I want to know that people I elect are in charge of our laws and that they can’t be overruled by unelected bureaucrats or a court made up of European liberal intelligentsia mindsets. We’ve taken centuries to develop our culture, rights and freedoms and these must not be watered down further or given way.
November 9, 2015
This Eu membership has shown us all and continue to show us, politicians do not respect democracy, they cheat, lie to self serve their ambition.
November 9, 2015
It shows the utter decadence of British Business, the almost hallucinogenic off-world interpretation of productive work when as now Mr Cameron is addressing a large audience at the CBI.
He is speaking on our trade being dependent on the EU.
Do any of the people in the audience have a supervisor, a department head, a manager, a ganger? Why is not a person from their companies strutting purposely through the doors and saying to them: “What on earth are you doing sat on your backsides here. Get back to work immediately. Before you leave tonight for home, call in at the Human Resources Department where you will be given authorisation of Garden Leave and a cheque of salary in lieu of your Notice of Termination of Employment.
Oh I know, I know, I know, British Upper-Upper management believe their time-wasting in multitudinous meetings is essential. Only they think that. They have the work-ethic of the madhouse that is UK Plc.
PS. Could Mr. Cameron be given something useful to do and have him return his salary and expenses for his day with the glassbacks of the CBI.
November 9, 2015
We euphemistically and metaphorically talk of ship of state. There is a reason for that a state like a ship has to be a cohesive, rigid and with a clear line of command structure. The EU is a ship of state and if a ship does not have all it’s components moving in the same direction and at the same speed then that ship must by any measurement be sinking. It physically cannot be otherwise.
So the idea that the EU can have different parts moving differently and survive intact is not possible. So either the EU will recognise that and it will batten down everything into rigidity or it wont and the whole project will disintegrate. They will not go for the latter. Mutineers like the UK in the end will not be tolerated and will be keel hauled or forced to become pliant members of the crew. Jump ship now is the only safe option.
November 9, 2015
I have read the ONS webpage on the Rotterdam Effect ( http://www.ons.gov.uk/ons/rel/uktrade/uk-trade/december-2014/sty-trade-rotterdam-effect-.html )
This does rather seem to belittle the effect and I am extremely doubtful of their estimate that it only distorts the figures only by between 2% and 4%.
Nevertheless, there are three very significant and inarguable statistics that the No campaign can rely on to make our case :
1. As Dan Hannan has been pointing out for the last few years, our exports to the EU have been falling significantly while our exports to the rest of the world are rising.
2. Our exports to the EU now represent less than 40% of our total exports.
This number will continue to fall while the Eurozone remains the sick man of Europe.
( i.e. indefinitely )
3. Our Trade deficit with the EU was ÂŁ56bn in 2013 (ONS figures ) which was offset by a ÂŁ12bn surplus in Services. Even the ÂŁ44bn net deficit will certainly be enough to concentrate minds in Brussels and Berlin and ensure we get a good trade deal without having to contribute to the EU budget.
Fishing rarely comes up in the news these days but regaining control of our fishing grounds is an emotive and sovereign issue. It will undoubtedly give a big boost to employment in Scotland, the North of England and the West Country as long as we can take back control of quotas and reallocate them to UK fishermen.
Has there been any work done on calculating the effect this will have on our trade figures and how many jobs will be created in the UK fishing sector as a result ?
November 9, 2015
The ONS admit they can’t quantify the Rotterdam from official data so they simply make a guess based upon assumptions mainly to do with oil exports for refining in Rotterdam. This is not the type of basis on which official statistics should be compiled.
November 9, 2015
In addition Chris, there was a good article in today’s Mail, research suggesting that UK airlines will all need to re-equip and expand their ageing fleets in the next 20 years. So hundreds of new Rolls-Royce engines, Airbus wings, seats, undercarriages, et al giving a huge boost to UK employment. Even 25% of each Boeing is made up of British-manufactured parts, a tribute to our Aerospace industry’s success, second only to the States.
November 10, 2015
According to this:
http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06091
in 2014 our trade deficit with the rest of the EU was ÂŁ62 billion, goods and services taken together.
November 9, 2015
Those of us who think that we would do much better off out of the EU should relish the in-crowdâs trade argument. It is so pitifully weak. We just need to get into peopleâs heads that trade is a two-way street. If the EU restricts the purchase of British goods, we wonât have as many Euros to buy their goods. Why would they want to take that approach with a country that wants to be friends with them and may be called upon to help with their defence?
A further point to mention is that the Germans have already shot themselves in the trading foot with regards to this Ukrainian nonsense. Russia has one of the biggest markets in Europe and Germany was its largest exporter. Sanctions against Russia have already damaged German industry and they surely do not wish repeat this experience with the UK. I stress the importance of the Germans because it seems to be pretty clear that they are running the ramshackle shop called the EU, where everything seems to be put on tab â the German tab that is.
November 9, 2015
Glad to read your analysis and the thread of comment. For the non-economist and the non-specialist in business affairs, it is very difficult to make a judgement on the consequences of leaving the EU without the sort of analysis that you give. So thank you!
It seems to me that we can either make decisions on principle without reference to empirical data (e.g. as you pointed out on another occasion: it is a self-evident truth that self-governing countries are more content than countries governed by others) or by an attempt to calculate the consequences. In this instance, the consequences of leaving are that the tax burden on the UK is lifted, new opportunities are given for entrepreneurial activities with the rest of the world, and Parliament becomes an altogether more meaningful body.
The more unpredictable consequences concern the behaviour of a nationalistic Scotland and a Republican Northern Ireland.
November 9, 2015
I wrote a stiff letter to Mr Cridland of the CBI informing him of all the mistakes he made in an article which he wrote for the Telegraph. He is so ignorant of how the EU works that I was horrified he has such a high-ranking position representing business.
Needless to say I told him a few home truths (similar to JR above) and also that the EU is becoming irrelevant because CODEX now makes most of our global rules which are handed down to all countries. I also told him that if we wrote a piece in a National Newspaper to do some research first rather than rely on his ignorant opinion.
November 9, 2015
I see the Met Office is at it again, pronouncing that the world is 1 degree Celsius higher than pre industrial levels.
What a load of cobblers. I suppose they have digital and satellite records going back to the 17th century. I don’t think for one minute they have an accurate record of temperatures before 1900.
There must be a climate conference due somewhere.
November 9, 2015
Not only that, they are comparing January to September of this year to the average of all the temperatures from 1850 to 1899
A very partial and carefully chosen data set.
For example the temperatures for 2015 do not include October November and December which are cold months whereas every year from 1850 to 1899 obviously does.
November 9, 2015
Just for fun. In the South of France producing collioure and banyuls wines (near the Spanish border), using the same traditional methods, the local wines over the last thirty years have increased their alcoholic content by 3 degrees and decreased their acidity, making these wines more difficult to keep. As for picking the grapes, the start has moved from 15-20 September to end of August.
The local winemakers even say that Bordeaux grapes should be at ease in South of England around 2050. Maybe it is time to develop oenological departments in some UK universities.
November 10, 2015
Not surprising, Hefner.
There has been an average increase in global temperatures of 0.85c since 1900
I believe the Romans used to grow grapes for wine in this country many centuries ago as it was once warm enough and there are also paintings of Londoners walking and skating on a frozen River Thames
The global temperature has never been constant.
November 9, 2015
“There is a third error. They amalgamate imports with exports…”
JR is being too kind: this is a deliberate act of obfuscation by the Europhiliac Tory government controlled BoE to spin the case for remaining in the EU.
November 9, 2015
Why can’t he ask for the ‘free movement of Labour’ (not people) to be based on clear, unfilled vacancies?
November 9, 2015
I thought the CBI were meeting today to discuss EU trade!
November 9, 2015
Pardon my ignorance, but why do so many of our exported goods go to destinations outside the EU via Rotterdam? I could risk answering my own question, but if it is something we agreed to in some (weak) negotiation with the EU, then getting out will presumably mean we can export directly from our own ports again, if of course our negotiators have any backbone at the time.
That leads to another question – where is our shipping industry now? Last time I looked we were still an island, isn’t it about time we rebuilt it and owned some ships again? We may need them too in an emergency. Someone elsewhere would have to build them for us, hopefully only initially, because we closed that industry down too; naturally others had a longer and more imaginative view and took over where we left off (as with countless other industries we often grieve over) and made it worthwhile.
November 9, 2015
I thought the cbi were discussing trade with the eu today
November 9, 2015
I noticed on the news tonight that Cameron said he was negotiating with the EU over benefits for migrants. Hasn’t Mr Cameron got the message yet? It’s not the benefits we’re concerned about – it’s the numbers of immigrants which he will have no control over if we stay in. All that will happen is that immigrants will for the period of time they cannot have benefits will work on the side, paying no tax etc or revert to crime as many already have in their own countries. Not good enough Mr Cameron.
November 9, 2015
Off Topic:
If the Russian athletes were doped up to hell, on Planet G’phaster, how were British athletes and those of America able to beat them in so many events so soundly? Just a thought.
November 9, 2015
Interesting perspective on the single market from the FTs Wolfgang Munchau: it’s a cosy corporate club with regulations and standards fixed in the interests of large companies which has been regressing from free market principles for 10 years. The single market should not be glorified as it is by the pro EU side, he says.
The debate and the referendum could well turn on this. floating voters on the political right support the EU because of the single market – if Outers can show we have freer markets without it that could clinch it.
November 10, 2015
Even if there are net benefits from the EU Single Market – open to question – they are greatly over-rated and it would not be a catastrophe if we were not in it.
November 9, 2015
The downward manipulation of the price of the Euro is doing immeasurable damage to British exports and negatively affecting Britons living and working in Europe. Two million expatriate Britons scattered throughout Europe are watching aghast as the Euro plummets against the Pound and sinks to parity with the Dollar. Expatriate Britons’ purchasing power and wealth are being eroded daily as a result of the ECB policies of Quantitative Easing and zero interest rates, together with the economic uncertainty caused by Germany’s cave-in to Turkish demands. Currencies in non-Eurozone territories like Poland are being dragged down with the Euro. Only British pensioners who have no Euro assets stand to gain some benefit from the fall of the Euro. British exporters to Europe suffer the most from a collapsing Euro. This risk alone is reason enough for Britain to reduce its EU dependency and diversify its trade to the rest of the world.
November 9, 2015
Mr. Cameron recently said that the UK would suffer if it followed the Norway model if it left the EU.
Mr. Cameron said that Norway pays as much per head as does the UK for access to the single market. I do not know if this is true or not but it is missing the point.
Norway is in a position to make its own decision as to whether or not to pay for its enhanced access to the EU sigle market and has presumably negotiated the price and decided it is worth paying. But this is not the case for the UK as a member of the EU. We have to accept whatever we are charged and we are always liable for any additional charges the EU may want to levy when needing additional money to prop up the Eurozone or pay for inviting unlimited migrants from the Middle East and Africa etc..
Much is made of Norway getting its EU instructions by fax. But it is no difference for us – our influence at the EU is no greater than our ability to obtain votes in the Eurovision Song Contest.
November 10, 2015
Norway is a net exporter to the EU, and if the principle is that the country which benefits most from the trade should pay a fee for market access then the rest of the EU should pay us, not the other way.
Norway is expected to accept only about one tenth of new EU laws, but has some power of unilateral rejection which it has exercised on a number of occasions.
November 10, 2015
Yes point taken,
and if you deficit of 90 billion last year and say that average company profit of 10% because some companies export at a lose which would be 9 billion profit back to the uk and then that money has to find it way into the tax system but not all of it will, it dose not look like a big loss when you compare it against 10 billion in net contributions, it look like a profit.