5 Jul 2012

We’re better together… for now

I found myself voluntarily toeing the Tories’ party line last week with regards to the Government’s stance on the Euro. This will be one of those rare posts in which I dabble in the dark arts of economics, about which I woefully know very little. My personal opinion is that we are genuinely better together whilst the UK and the EU are in such an economic struggle. After things are looking better, when the EU has emerged in whatever ‘evolved’ form it will take and when we go back to living blissfully unaware of the next recession in the ‘boom’ period, we should then give the British people a chance to leave the EU then. And only then.

The advocates for leaving now wish to do so mostly because of what it costs the UK. Not once in the last 32 years has the UK received more money than it has paid into the growing organisation and with the EU bailouts of Ireland, Greece and Spain, we are having to borrow more money to prop up a dying currency. However, leaving the EU won’t stop the bailouts. Through the IMF, we would still end up contributing money to the EU bailouts, and any European economic struggles would be reflected in our own economy.

Last week, Cameron said that he did not believe that ‘voting to preserve the exact status quo would be right.’ He brought in the potential for a referendum on the EU under a future Conservative government. This was mostly for political reasons, trying to counteract the growing amount of voters moving from the Conservatives to the UKIP. By appearing to be more Eurosceptic, he hopes to win over their allegiance for the next election, as well as appeasing the more Eurosceptic Tory backbenchers.  The point still stands, however: the Conservative Party believes that we cannot continue having the same, unsustainable relationship with the EU, which currently acts like a leech on our already strained public finances. But it is not the time to act. Not whilst both bodies have to adapt to balance the books.

Leaving would have a significant impact on our country. We pay just under £5 billion annually to the EU, and for that, we gain influence on the negotiating table of Europe, which decides common laws, financial regulation and agricultural policies. We would also lose the single market, which gives us the security of exports without fear of tariffs or other negative incentives. We would also lose influence: politically, as we would not be able to influence the currency bloc and would seem less significant; and financially, as there are many businesses, such as the German bank Deutsche Bank, that are key to London’s financial sector, which many not want to be based in a non-EU country. All in all, leaving the EU may result in tariffs reducing our exports, European products becoming more expensive to the UK consumer, and a reduction of financial ties to key European partners. Many would still say, however, that these losses would be worth it for the gain in sovereignty and capital we would gain from leaving.

This link sums up well the main reasons why the current form of the EU is counter-productive. 

Uncontrollable immigration; budget-busting bailouts; restrictive, expensive and counter-productive bureaucracy. If the EU continued in such a way after its needed change, the UK should have a referendum on our membership. For the time being, we should remain in the EU. This is because leaving it would have very few and relatively insignificant advantages, far outweighed by its disadvantages. Imagine the scepticism it would create for the EU, and how its bonds will drop. Regardless of whether we are in the EU or not, our economics bonds would still exist, and so any EU economic woes would be reflected in our economic outlook. So, I say, let’s ride it out for the present time. As Cameron said, ‘we should neither pay for short-term measures, nor take part in longer-term integration’; we should just continue for the short-term with the status-quo, until the EU emerges in its new form to deal with the single currency’s problems, and the UK stabilises its economy. 

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