Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Would Britain Benefit From Leaving The EU?

Richard Lambert and John Springford 27th June 2014

Richard Lambert, Leaving The EU

Richard Lambert

Membership of the European Union has shackled Britain’s economy to a corpse. The United Kingdom has been bound by swaths of costly red tape to a bunch of moribund economies with no growth prospects. As a result, UK exporters have been held back from the fast-growing markets of the Commonwealth and the developing world.

That, in a nutshell, is the view of British euroskeptics, and it has gained considerable force in the past few years of Europe’s slow-motion crisis. The facts, however, tell a very different story.

A new study by the Center for European Reform (CER) asks the question: What is membership of the single market actually worth to the UK? The standard answer is that close integration with the rest of Europe brings access to a market of more than 500 million people and injects healthy doses of competition and investment into the British economy, helping to raise productivity.

John Springford, Leaving The EU

John Springford

The CER has taken this analysis a lot further, by measuring UK trade with countries inside and outside the EU and adjusting the results for economic size and other factors that affect trade, such as distance to markets. On this basis, one can work out whether British trade with other EU countries is higher or lower than one would expect, given the size and location of their economies.

The model shows that EU membership has boosted Britain’s trade in goods with other EU countries by more than half – accounting for roughly £130 billion ($219 billion) of total turnover of £364 billion in 2013. For comparison, the value of Britain’s bilateral trade with China was £43 billion last year.

What explains this big “EU effect”? The answer is that the single market is much more than a free-trade area. Trade has been tariff-free for decades: the big impact has come from reducing non-tariff barriers arising from different national regulations. A British-made car can now be sold anywhere in the EU without having to comply with 28 member states’ safety and emissions standards.

Moreover, EU membership has helped the UK to attract very large investments from elsewhere in Europe. In 1997, other EU states accounted for 30% of inward foreign direct investment: by 2012, the EU’s share had risen to 50%. Britain is also a preferred location for investors from the rest of the world who seek an attractive base within what is still a growing single market. European economies as a whole have stagnated relative to the developing world. But trade among EU member states has still grown at a brisk pace over the past decade.

The CER study finds no evidence that EU membership has held back Britain’s trade with the rest of the world. It points also to the explosive growth of Germany’s exports to China as evidence of the fact that it is possible to prosper both inside and outside the single market.

Euroskeptics claim that leaving the EU would enable the UK to dictate terms in trade negotiations with other members by virtue of the fact that Britain runs a trade deficit with them. They export more to us than we do to them, so they need us more. But that, too, is a weak argument.

The EU buys half of Britain’s exports, whereas the UK accounts for only a little more than a tenth of exports from the rest of the EU – hardly a strong negotiating position. Moreover, just two member states – Germany and the Netherlands – account for half of the EU’s trade surplus with Britain. Any new agreement would need the support of other EU countries, some of which buy more from Britain than they sell to it.

So much for dry analysis. If you want to know what all of this means in practice, pay attention to recent statements from Diageo, the world’s largest producer of Scotch whisky. The company says that its ability to move goods freely within the single market is a significant benefit, one that eliminates the need for expensive paperwork for intra-EU shipments and brings direct cost savings and economies of scale.

Membership allows Diageo to influence the rules that make it possible to compete on fair terms across Europe. And, as Diageo’s trade reach extends beyond Europe and North America, the EU’s ability to push for free trade and common standards around the world will become “even more important, especially in the emerging markets where we and other consumer goods companies tend to face more significant market access issues.”

Of course, there are plenty of things that need fixing in the EU, and Britain’s membership cannot be weighed only in terms of pounds and pence. But the CER’s report provides strong support for the view that in economic terms, the UK would have a lot more to lose than it would to gain from embarking on a different course.

© Project Syndicate

Richard Lambert and John Springford

Richard Lambert, a former chairman of the Confederation of British Industry and editor-in-chief of the Financial Times, is currently Chair of the UK’s banking standards review. John Springford is the secretary to the Center for European Reform’s commission on leaving the EU.

You are here: Home / Politics / Would Britain Benefit From Leaving The EU?

Most Popular Posts

Visentini,ITUC,Qatar,Fight Impunity,50,000 Visentini, ‘Fight Impunity’, the ITUC and QatarFrank Hoffer
Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic

Most Recent Posts

transition,deindustrialisation,degradation,environment Europe’s industry and the ecological transitionCharlotte Bez and Lorenzo Feltrin
central and eastern Europe,unions,recognition Social dialogue in central and eastern EuropeMartin Myant
women soldiers,Ukraine Ukraine war: attitudes changing to women soldiersJennifer Mathers and Anna Kvit
military secrets,World Trade Organization,WTO,NATO,intellectual-property rights Military secrets and the World Trade OrganizationUgo Pagano
energy transition,Europe,wind and solar Europe’s energy transition starts to speed upDave Jones

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

Social policy in the European Union: state of play 2022

Since 2000, the annual Bilan social volume has been analysing the state of play of social policy in the European Union during the preceding year, the better to forecast developments in the new one. Co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), the new edition is no exception. In the context of multiple crises, the authors find that social policies gained in ambition in 2022. At the same time, the new EU economic framework, expected for 2023, should be made compatible with achieving the EU’s social and ‘green’ objectives. Finally, they raise the question whether the EU Social Imbalances Procedure and Open Strategic Autonomy paradigm could provide windows of opportunity to sustain the EU’s social ambition in the long run.


DOWNLOAD HERE

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

Discover the new FEPS Progressive Yearbook and what 2023 has in store for us!

The Progressive Yearbook focuses on transversal European issues that have left a mark on 2022, delivering insightful future-oriented analysis for the new year. It counts on renowned authors' contributions, including academics, politicians and analysts. This fourth edition is published in a time of war and, therefore, it mostly looks at the conflict itself, the actors involved and the implications for Europe.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube