At £14.7bn a year the EU seems a pretty expensive club to be part of. So why are we? The logical answer is that we, as a vested interest, must be getting something significant in return. But what? This blog aims to justify the spending £14.7bn in return for membership of the EU. No easy task.
Firstly, out of the £14.7bn we get about £5bn back in rebates. So actually, I am going to try and justify the expenditure of just over £10 bn. To put this into context that is about one tenth of our current health expenditure.
The UK is currently incredibly reliant on trade with the EU. Three and a half million jobs are reliant on the EU’s single market. That’s roughly one in ten British jobs. Being part of the EU gives us access to a 500 million strong consumer market. 50% of UK trade, that’s about £200bn year, is with other EU Member States. Not to be sniffed at. I do not accept however, the argument that we would lose access to the EU market if we left and negotiated trade terms. I do however think that we would lose a competitive edge. Quantifying the long term impact of this is difficult. It is feasible however to imagine a scenario where we gradually lose leverage within future negotiations. By staying in the EU, and playing a positive role within it, we can at least guarantee access on an equal playing field.
Equally, the EU, through competition and consumer rights laws have driven down prices for consumers and increased consumer protection. One simple example is the reduced roaming charges for using your phone throughout the EU. Again, would we lose this if we left? Probably not. Can I imagine a scenario where we miss out on future benefits if we were not full members? Certainly.
Our trade outside of the EU is also highly dependent on the EU. Being part of the single biggest trading bloc in the world means that we can enter the world’s markets with far more clout than if we were acting alone. To illustrate, the recently signed EU Free Trade Agreement with South Korea has eradicated all tariffs for UK businesses. It is estimated that this will bring in £500 million a year of benefits to British businesses. Free Trade Agreements (FTA) are being negotiated with countries around the world and if they are all completed, they would bring considerable benefit to the UK.
In light of this, I would argue that although I think we could function as a politically autonomous country with economic links to the EU; I think we would be severely disadvantaged. Being part of the EU is good both for British business but also for you as a consumer.
Outside of the economics, there are a plethora of reasons why our de facto £10bn membership fee represents value for money. The EU is central to the UK’s ambition of tackling climate change for example. The EU looks like it will stick to a 20% reduction in Greenhouse Gas Emissions (GHG) by 2020 while the UK is calling for 30%. Be under no illusion however, the EU is doing more to bring about a global movement than the UK could dream of by itself. The potential within the EU is huge. For example, the Emissions Trading Scheme is the biggest of its kind, and although not currently working, has the potential to effectively reduce GHG emissions on a massive scale.
The list of benefits could go on, from counter terrorism (frontex) through to workers rights (minimum wage). The EU is at the heart of many things that we take for granted (such as the right to work anywhere in the EU).
When you look at £10bn a year in isolation it can feel (and indeed is) a lot of money. In context however, I feel it represents value for money. Think of the strategic benefit of spending £97bn on replacing Trident compared to the £10bn on EU membership. Think of the strategic benefit of spending £18bn on an ID card scheme in comparison to £10bn on EU membership. Think of strategic benefits of the £11.2bn spent on the NHS database scheme in comparison to £10bn on EU membership. Suddenly, £10bn on EU membership seems like a bargain!
The sad truth however is that most people in the UK do not want the UK to keep its membership. If we held a in/out referendum tomorrow we would leave. I cannot stress strongly enough how counterproductive that would be. We need to be inside this lumbering beast to install the reforms it so badly needs. We need the EU and all the benefits it brings, even if we don’t realise it.
Of course, our politicians know all this. That’s why we are still a member, that’s why we haven’t had a referendum as we were promised. Our politicians, even the Tory’s, know that we need to be part of the EU.