EUROPHILES should look away now. Of nearly 800 votes cast in the latest Financial Director/Accountancy Age Debate, which proposed leaving the EU would damage the UK economy, only 28% voted in agreement.
A robustly argued debate began on 25 March, running through to the end of the week, up to Good Friday. The main protagonists were Business for New Europe (BNE) director Phillip Souta, who spoke in favour of the main proposal, while opposing him was UKIP economist Tim Congdon, who had recently produced UKIP’s Europe Doesn’t Work report.
The debate began with Souta’s claim that leaving the EU would jeopardise the 49% of foreign direct investment in the UK that comes from the EU. The UK could also lose a number of foreign companies based in the UK looking to access the EU. “The EU is the foundation of our shared economic future and leaving would damage the UK economy for many years to come,” stated Souta.
Congdon argued in his opening statement that the fund transfers made from the UK to the EU far outweighed any economic benefit. “Britain should leave the European Union for a simple reason – that membership makes us worse off. It makes us worse off – financially, economically and politically,” he stated.
“Cross-party parliamentary committees and other experts agree this returned money is badly spent. So the direct financial cost of our membership should be seen as about 1% of what we produce as a nation, equivalent to roughly £750 per household each year.”
The second day of the debate saw Mark Gregory, chief economist at Ernst & Young, enter the fray as guest commentator.
Gregory said that the “‘steady as she goes’ scenario”, where the UK’s current arrangement with the EU continues, is “unrealistic”. But he warned that the consequences of a full-scale withdrawal from the EU were “highly uncertain”.
While the potential benefits and risks from withdrawing were clear – such as reducing budget and subsidy contributions as opposed to the risk of reduced inward investment – a key issue would also be stepping away at a time when the EU’s own restructuring could see it improve economically in the near future. “The UK may find it would be difficult to participate fully in any liberalisation of the market from outside the EU,” said Gregory.
The Swiss pivot
The debate’s penultimate set of arguments saw Souta and Congdon use Switzerland as a pivot for their rebuttal statements. Congdon claimed Switzerland has benefited from the autonomy of not being in the EU, while enjoying a close relationship with member states. But Souta claimed Switzerland has suffered as a result of this, while Norway has had to take on a raft of EU legislation to maintain its relationship with the union.
“Since 1992, Switzerland has signed 120 separate bilateral agreements, which the EU largely dictates the terms of. They contribute to the EU budget and have no say in EU decision-making,” said Souta. “Perhaps most importantly, this option is unlikely to be available to Switzerland for much longer, as the EU doesn’t consider there’s any way of reliably monitoring those 120 agreements.”
Congdon countered: “[Switzerland] stayed out [of the EU] because its government conducted careful analyses of costs and benefits, and these showed that the costs were many times higher than the benefits.”
The EU’s “distortions and inefficiencies” also have the overall effect of making food more expensive for the UK, Congdon added.
The final gambits came from Souta and Congdon on Thursday 28 March.
Souta said arguments that flagged up growing markets such as India and China as more important to the UK were misguided. The UK’s membership of the EU makes trading in the Far East easier. “We would not be allowed leave the EU while enjoying the benefits it offers,” Souta summed up.
Congdon claimed that the UK’s membership of the World Trade Organisation gave access to £50trn of economic activity, with a much lower cost base than that of being part of the EU.
“China exports more to the EU than the UK, but China is not an EU member state. To repeat my point … membership of the EU is not a condition of trade with EU member nations,” said Congdon.
It seems that europhiles have a terrific job on their hands to convince many business leaders – and in turn the general public – that the EU is the place to be.