The EU Referendum: Economy

 Willie Drennan

The EU Referendum on June 23^rd is going to be the most significant political event of my lifetime.   From the start of the campaign a lot of people have already decided if they are on the Vote Leave or Vote Remain side. For the duration they will passionately support their side, in the same way as they will their team in the Euro 16 football finals.  For many, as in the game of football, logic will not enter into the game as the partisan faithful will loyally cheer on their side until the final whistle blows on June 23^rd.

I suppose I fit into that category as I have been a Eurosceptic since the early 1980’s when I was living in Canada, close to the Bay of Fundy in Nova Scotia. Nova Scotians explained to me that the picturesque harbour in nearby Margaretsville was one of many dotted along the Fundy shore that had been developed and maintained to facilitate a massive fishing industry. Now, all those fishing villages were home to only a few recreational fishing enthusiasts as commercial trawl fishing had wrecked the sea beds and killed-off the local industry.

Similarly, it was the same story with the once lucrative forestry industry.  The general consensus of the local Nova Scotians was that it was the fault of the government, based in far-off Ottawa, who were in bed with large multi-national corporations: who were just out for short term riches with no concern for the livelihoods of those in the Maritime Provinces. And there was really nothing the Maritimers could do about it as they were too small in numbers to have any political clout with the  government in Ottawa. It was clear that there was a strategy by the super rich and powerful to become even more rich and powerful at the expense of the average working person.

When I connected this scenario to the situation in Northern Ireland there were obvious parallels. In particular with farming it was obvious that Eurocrats in far-off Brussels were dictating the nature of farming in Northern Ireland and there was nothing the farmers could do about it: for the same reasons as the Nova Scotian fishermen.  So, the June 23^rd referendum will give farmers, and the rest of us, an opportunity to do something about it for the first time.

But, it is all very complicated as there are many factors to consider and so before I go out and buy the Vote Leave t-shirt I want to get a few things straight and I’ll start off with the economy.

Here are some of my understandings of the potential economic implications of an UK exit from the EU, now being referred to as Brexit.  I’m sure someone will inform me and enlighten me if I’m wrong.

The British taxpayer gives more money to the EU than they give us back in subsidies and grants for projects. There has been no lofty scheme in the UK that has been a gift from Brussels: ultimately they have all been sponsored by the British taxpayer. There are different ways to calculate the percentages but it is obvious that a huge chunk of the (£1billion per month,) UK donation vanishes into various nooks and crannies along the maze of EU fiscal corridors.  Possibly no one really knows, in real terms, just how much British money goes astray in the tangled bureaucratic web that feeds the hungry mouths of Eurocrats and their friendly corporate lobbyists.

We import more from the EU than the EU imports from the UK. So, even if the Eurocrats wanted to punish the UK for divorcing them, the French will still want to sell us wine; the Spanish, their fruit and vegetables and the Germans, their cars. There will still be trade deals between EU countries and the UK after a Brexit. 

Currently, while the UK remains part of the EU, it cannot have free trade deals with countries outside of the EU: and there is a big wide world out there. In particular we are part of the ‘Commonwealth’ of 53 independent sovereign states, which includes the likes of Canada, Australia and New Zealand. The world of trade beyond the EU would be our oyster: an exciting adventure of exploration to the shorelines of the Seven Seas.

 It is feared that Brexit would cause large multi-national corporations to relocate to Europe. Well they have already been doing that for a long time. What happens is that our government invests millions of our pounds in large foreign companies who set up shop here for a number of years: training and employing a British workforce. Once their funding obligations to the British taxpayer have been met they then, predictably, take off to countries with cheaper labour leaving thousands of local workers hanging out to dry. Brexit will not change that but it should lead to a new, more sensible, strategy of investment to support and sustain local British companies and promote the ‘Made in UK’ label.

 Brexit could give the UK the impetus to revitalise British manufacturing. EU laws seem to determine what each EU country manufactures and there are laws to ensure fair trading within the EU. So following Brexit, perhaps the Belfast City Council will then be able to purchase new busses from an internationally respected nearby local company: instead of being compelled, by EU law, to buy them from another EU bus manufacturing company even when the local deal was preferable? Perhaps also, the next time the Scottish government needs to repair the Forth Road Bridge they will buy steel from British Steel to help maintain that local industry?

In broader economic terms there is no way to know for certain how a Brexit vote on June 23^rd would impact on jobs, investment and tourism.  On the short term, there probably would not be too much noticeable difference but in the long term surely the potential for increased prosperity would be greater in a UK free to make its own crucial decisions and creative investment: free of the shackles of an EU economy that seems to be floundering. If that great big EU ship is going to sink – and it certainly looks like it –then surely it is best that we jump it and get our money out before it drowns in a sea of irrelevance?

So, on all things financial, that’s me in the Leave camp for now.  But as I said, this is a crucial decision and if I am getting facts wrong, or my figures wrong, I do hope someone will enlighten me soon.

There are many other crucial aspects to consider: including control of our borders, control of our laws and concerns specific to Northern Ireland. I will write about those once I have digested the economic matters.