The UK would be stronger if it remained in the European Union. Whilst I admit that the case for remaining has been exaggerated somewhat by the StrongerIn campaign, just as Vote Leave have exaggerated their argument in support of Brexit, on the facts a Britain in the EU would be far stronger than a Britain outside the EU.
The UK is currently part of the world’s largest trading bloc, with the European Union accounting for around 22 percent of world Gross Domestic Product (GDP) according to International Monetary Fund figures. This makes the EU the world’s second largest economy in terms of GDP, after the United States. The effect of this is that countries like China and the United States are forced to take the EU seriously when it comes to trade negotiations. If we were to leave the EU, and then had to go to Washington or Beijing for a trade deal, we would be doing so without this bargaining power. Without the might of the combined EU economy, a trade deal with the UK would not be a priority for the likes of the United States and China. Even if we did get a trade deal, it would likely take many years to come about, as international trade deals typically take rather a long time to negotiate it could be years before we manage to do a proper trade deal with the United States. Indeed, on a visit to London in April, President Obama said the following: “I think it’s is fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen anytime soon because our focus is on negotiating in a big bloc, the European Union, to get a trade agreement done. The UK is going to be in the back of the queue.”
Without the might of the combined EU economy, a trade deal with the UK would not be a priority for the likes of the United States and China.
In addition, the UK would be unlikely to be considered to be an especially important trading partner to these countries. Indeed, when David Cameron visited China in 2013, newspaper the Global Times said, “The Cameron administration should acknowledge that the UK is not a big power in the eyes of the Chinese. It is just an old European country apt for travel and study.” As a result, we would be unlikely to get the preferential treatment that we can receive as members of the EU. In short, leaving the EU would cause a significant loss of power and leverage when it comes to negotiating international trade deals.
As well as the difficulties that would be inherent in negotiating trade deals following an exit from the EU, there are other significant benefits to trade which come courtesy of EU membership. The EU incorporates the free movement of good, services, capital and people. The so-called ‘four freedoms’. The free movement of goods means that companies based in the UK are able to sell their goods in EU countries without being subject to tariffs or other protectionist trade policies. This lack of tariffs can mean a huge saving for businesses who export their goods, meaning higher profits. Whilst it is true that European Union membership does bring with it some added red tape for business owners to have to deal with, the truth is that the gains from avoiding trade tariffs offset the irritation of this red tape significantly. If we were to leave the European Union, there is no guarantee that we would be able to retain a trade deal as beneficial as the one which we have access to today. In fact, it seems highly likely that any trade deal that we secure with the rest of the European Union after we leave will be on far worse terms than we currently enjoy, particularly if the Vote Leave campaign continue their mission to curtail the free movement of people which will likely come at a severe cost in terms of a worse trade deal with the European Union. Switzerland and Norway both benefit from some of the European Union’s trade rules, however they must also accept the free movement of people. If the UK leaves the European Union, and is then intent on also curtailing in the free movement of people (in itself a terrible idea) then we will almost certainly be landed with relatively poor trading terms. In any case, there is little doubt that exporting would become more expensive for British businesses. The imposition of tariffs would also likely mean that goods being imported into the UK for sale would be more expensive. As always, this increase in cost would be passed onto the consumer. The head of the World Trade Organisation (WTO), Robert Azevedo, suggested in May that leaving the European Union could cost British consumers around £9bn a year. Although it is almost impossible to truly estimate the costs of leaving of the European Union, it is virtually indisputable that trade would become more expensive.
Therefore, in terms of securing our position as a competitive trading nation, the UK must remain members of the European Union.
Another significant benefit of the single market is that companies choose to base themselves in the UK, or at least have a significant presence in the UK, in order to gain access to the single market and thus benefit from the free movement of goods. Many American companies choose to have significant presences in the UK due in part to the common language and strong business infrastructure, but also in order to gain access to the single market, in particular the free movement of goods. For example, American investment bank JP Morgan employs 19,000 people in the United Kingdom, whilst Japanese car manufacturer Nissan employs 4,000 people in the UK. The same is true of many other multinational companies, who have a significant presence in the UK, in part, because of our membership of the European Union. Whilst it seems unlikely that any of these companies would completely leave the UK in the event of Brexit, there is a strong chance that they will end up reducing their presence in the country as a result. CEO of JP Morgan, Jamie Dimon, suggested that JP Morgan could cut 4,000 jobs in the the UK, if the UK were to vote to leave the European Union. Of course it is easy to simply dismiss statements regarding potential job losses as scaremongering, but there is genuine risk. Seeing as these companies extract real benefit from the UK being in the EU then it stands to reason that they will move their UK business into a country which remains an EU member in order to capitalise.
Of course it is easy to simply dismiss statements regarding potential job losses as scaremongering, but there is genuine risk.
There is a big reason why so many international financial services companies choose to locate their European headquarters in London, and that reason is our membership of the European Union. The access to the single market which comes with our European Union membership has been a key reason behind the City of London becoming the global financial centre which it is today, leading to over half of the world’s largest financial services firms choosing to base their European headquarters in the UK. This sector provides over one million jobs all around the UK, with many of these jobs intrinsically tied to our membership of the European Union. Indeed, 100,000 of these jobs are said to be at risk if we were to vote to leave the European Union.
Access to the single market also offers significant benefits to manufacturing companies as they can export their goods tariff-free throughout the European Union. Access to the single market has been a key reason behind Britain’s thriving car manufacturing sector. Both Nissan and Honda have a significant presence in the UK, in part because of our access to the single market.
Many European companies also choose to have a significant presence in the UK because of our membership of the EU. This is because of our access to the single market. For example, German multinational Siemens employ 13,760 people in the UK. Chief Executive of Siemens UK, Jurgen Maier, has been vocal about the company’s wish for the UK to remain members of the European Union stating that, “it is very important”, for Siemens that the UK remains members of the European Union. The same is true of many other European companies who have significant presences in the UK. In February, a survey of 700 businesses carried out by the Bertelsmann Foundation found that 29% of British and German companies polled would relocate completely or reduce their capacities in the UK in the event of a vote to leave the European Union. This is an incredibly worrying finding. Even more worrying is that the wish to leave the UK in the event of a vote to leave the European Union, was particularly prevalent amongst companies operating in the IT and technology sector. This is currently one of the fastest growing business sectors and with continued innovation will continue to grow at great speed, meaning that it is absolutely crucial for our future prosperity. The possibility of technology companies leaving the UK in the event of a vote to leave the European Union would be a huge blow.
Ultimately, leaving the European Union could be a huge blow to the UK in terms of loss of jobs. Therefore, it is vitally important for employment that the UK votes to remain in the European Union on 23 June.
Aside from trade and employment, leaving the European Union would also have wider implications for the UK’s economy as a whole.
In a poll conducted by the Financial Times at the beginning of the year, 100 economists were surveyed. Three-quarters of these economists predicted that leaving the European Union would have an adverse effect on the UK’s economic prospects in the medium-term, with only eight per cent suggesting that a vote to leave the European Union would have a positive effect on the UK’s economy. This alone shows that there is a broad consensus amongst economists that a vote to the leave the European Union would be damaging to the UK’s economy. At the very least in the short to medium-term.
Evidence suggests that if we vote to leave the European Union, then the UK economy will suffer an immediate negative shock. In addition, if we were to vote to leave the European Union then there would be a transition period which would likely last around two years. During this period there would be significantly heightened uncertainty surrounding Britain’s trading relationships which would have the potential to significantly damage trade and investment. Traditionally, trade and investment decreases significantly in times of uncertainty, and that would be unlikely to be any different in this case. This would be likely to have a significant knock-on effect on the UK’s economic growth, and on household income levels.
There is also the fact that the UK depends upon migration from the European Union in order to meet our economic targets. Chancellor George Osborne has set the target for the UK to achieve a budget surplus by the end of the current decade. Analysis has suggested that this will not be possible without an increase in migration. Therefore, if leaving the European Union has a significant impact upon migration, which surely it will do, then this could have far wider reaching implications for the UK economy.
It has also been suggested that a vote to leave the European Union could leave a hole in the UK’s public finances. The Institute for Fiscal Studies (an independent think tank) has forecast that a vote to leave the European Union would lead to a hole of £20bn to £40bn in government finances, as a result of lower economic growth and higher borrowing costs. In turn this would be likely to mean the necessary extension of austerity for at least two further years, until 2022. This would clearly offset any financial benefit that we might gain my no longer having to make a financial contribution to the EU budget. The deputy director of the Institute for Fiscal Studies, Carl Emmerson stated that, “the overwhelming analysis suggests that the economy would shrink by more than enough to offset the positive effect on the public finances of the reduced financial contribution to the EU budget.” Therefore, leaving the European Union could deal a hammer blow to the UK economy.
The economy would shrink by more than enough to offset the positive effect on the public finances of the reduced financial contribution to the EU budget.
Overall, it is the uncertainty which could be most damaging to the UK’s economy. Leaving the European Union could lead to years of uncertainty, with the potential to plunge the UK into another recession. This uncertainty would have far-reaching effects on the UK’s future economic growth, and household income. Therefore, the UK should vote to remain members of the European Union on 23 June. Economically, voting to leave is just too big of a risk to take.
European integration was originally seen as a way in which to reduce the chance of a repeat of the Second World War, which saw huge loss of life and destruction throughout Europe. Although there seems little chance of war between European countries in the near future, membership of the European Union still remains crucial for the UK’s national security.
The European Union has significantly contributed to a safer Europe through its ability to impose sanctions upon Russia, with the European Union taking the lead in the confrontation of Russia over its annexation of Crimea. The European Union has also been a key player in confronting Iran over its nuclear programme.
In addition, the danger from terrorism around the world has scarcely been greater. Fighting terrorism is incredibly difficult as it is, but membership of the European Union does make it somewhat easier. Cooperation between European Union countries on the exchange of aircraft passenger records for example, can go a long way to help foil a potential terrorist attack. Continued cooperation between European Union countries will be absolutely integral to continuing success in the fight against terrorism, and remaining members of the European Union is the only way to ensure this.
Overall, remaining members of the European Union will benefit our national security greatly. Continued cooperation between European Union countries is the best way to maximise our chance of success in foiling terror attacks, and minimise war, in order to ensure our national security and the safety of our citizens.
I have tried to keep this relatively brief by focusing purely on the economy and national security. I could comfortably have talked about the environmental protections brought in by the European Union, or the workers rights and safety standards which have been brought in by the European Union, but I felt that to focus on the effect that Brexit would have on the UK’s economy and its security would really hammer home the negative effect that leaving the European Union would have for the UK. I also felt that these were the areas in which the leave campaign’s erroneous claims about the European Union could be addressed. One of Vote Leave’s major campaigning points is that the UK sends £350 million a week to the European Union. However, when we account for the money that the European Union sends back to us, as well as the European Union spending on the UK, then the net amount that we pay to the European Union is closer to £120 million a week. This cost amounts to a fraction of the economic benefits which we gain from being a part of the European Union and, even if leaving the European Union means that we will no longer have to pay it, the uncertainty caused by our exit will hit economic growth and investment so hard that it will offset any saving. Therefore, there seems to be no monetary benefit to be gained from leaving the European Union at all. As for sovereignty and democracy, the UK remains a democratic country regardless of our membership of the European Union, and European Union law actually comprises relatively little of the legislation enacted in the UK each year. UKIP leader Nigel Farage has claimed that an astonishing 75 per cent of the UK’s law originate from the European Union. This is patently untrue. In fact, the figure is difficult to calculate for certain, but it closer to between 15 per cent and 25 per cent than Farage’s claim of 75 per cent. Once again this is a small price to pay for the economic and national security benefits provided by the European Union. As well as comments about the proportion of law made in Brussels, Vote Leave also regularly comment on some the ridiculous laws constructed by the European Union. For example, Boris Johnson has recently been keen to talk about European Union regulations regarding ‘abnormal curvature of bananas’. Yes, laws like this are somewhat ridiculous. But is this really a good reason to leave the European Union? No. The fact that Vote Leave are having to resort to arguments like this shows that they realise they are losing the argument in terms of the economy and national security.
Overall, the European Union is not perfect. Realistically, no trading bloc or indeed sovereign country can ever be perfect for everyone. However, the benefits of European Union membership vastly outweigh the costs. For the sake of our future economic success and national security, the UK must vote to remain members of the European Union on 23 June.
For the reasons which I have outlined here, I will be voting for the UK to remain a part of the European Union on 23 June. For the sake of our country’s future success, I hope that you will do the same.