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Would leaving the EU fix the British economy?

Here is a comment at Coffee House on this posting:

Brown will pull a rabbit out of his hat. He will declare that he will hold a referendum on the UK being IN or OUT of the EU! He will promise to accept the decision and make policy changes following the result!

SUCH a policy, such a move would instantly wipe the smiles off the Tories as we will have the spectacle of Cameron/Osborne etc in the IN camp and forever losing their eurosceptic labels!

Brown knows that being out of the EU will bring in massive investment and also save the country billions.

Expect this in late Autumn.

This is from “alan” and is comment number nine, at 8.09am. As a political prophecy I think it is barking moonbattery. But as a description of economic reality, does what alan says, suicide note capitals and all (“SUCH a policy”), perhaps have merit?

I have long believed that leaving the EU would be good for Britain’s economy, quite aside from such incidentals as the rule of law rather versus rule by the mere say-so of rulers, and in due course getting dragged into whatever European civil wars accompany the eventual break-up of the EU. But I have tended to assume that leaving the EU in the nearer future would inevitably involve a period of economic bad news, during which the associated dislocations – and the EU’s enraged punishments – would be immediate, but during which the clear eventual benefits to Britain’s economy would be somewhat slower to materialise.

However, would leaving the EU be a short-term fix for Britain’s present economic woes? Would it have the immediate benefits that alan claims for it? If so, that would be a meme worth getting behind.

UPDATE: Some interesting EUro-commentary from Guido.

30 comments to Would leaving the EU fix the British economy?

  • As usual, it depends.
    It depends on whether, along with the EU, Britain dumps it’s socialist policies. Fat chance. (On both counts).

  • Ian B

    The question is how you leave, and what the EU would actually do to punish us. The EU could impose sanctions, but would look petty and ridiculous. Also, they would harm European exporters to Britain too. They would have few grounds if our exporters to the EU continued to obey their regulations on product standards etc. The worst they could do is impose some tarriffs. A wise prime minister, so we’re not talking either Broon or Cameroon here then, would make sure of having the USA on side to bring their diplomatic and trade muscle to bear to keep the EU in line. So I think the economic shock would be rather minor. I can’t see the financial markets minding very much, especially with the continuated independence of the City being a consequence, and deregulation on offer.

    Then we could set about realigning ourselves with our natural allies in the Anglosphere and Commonwealth, and become fabulously rich and stuff.

  • Ian B

    Anyway, the scary comment is the one by David Lindsay at 6:33pm.

  • There would be a Congress of Vienna style refomring of Europe with France Germany and Benelux on the inside, the PIGS countries and ex Soviets on the outside. Tariffs aren’t a problem: we would fall back on WTO levels and what are they going to do, not sell us their stuff? But the benefits would not accrue for 2 years, when our less regulated labour market allowed companies to benefit from the initially lower values of sterling

  • I’m not sure that leaving the EU would do us much good on the way down to the bottom what with the slide in house prices, negative equity and bank failures.

    And seeing as the UK has always been outside the Eurozone it would do nothing to help with the fight against inflation.

    There might be some advantages when we’ve hit bottom (two years time I’d guess). No CAP, so that should reduce food bills by about £5 a week. Lower tariffs so imports will be cheaper.

    I’d like to say getting out of the EU would help the railways. Implementing EU Directive 91/440 probably costs us around £3-4bn a year but undoing the damage could well take time.

    Unfortunately, the EU has done a lot of good in the world of air transport. Would open skies be unpicked?

    We might see the return of pounds and ounces. That would be a definite bonus.

  • grumpy old man

    Leaving the EU as a trade Bloc would be counter-productive. Leaving the EU as a political construct is essential. Even as a market, strong action should be taken to hasten reform. If the UK stopped paying any contribution until the accounts were finally passed TO THE U.K.’S SATISFACTION, and refused to pay into the CAP until that was reformed, some continental minds would rapidly be focussed. The founders of the EU were certain that Democracy should not survive because “the people made the wrong decisions”. We are now stuck with a situation where the EU is effectively run by an unelected oligarchy of beaurocrats, with the connivance of Socialist leaders

  • not the alex above

    when our less regulated labour market allowed companies to benefit

    However, as British politicians acquiesced to demands from the Unions and the right wing tabloids to restrict immigration from Eastern Europe (let alone the rest of the world) labour costs would soon rocket.

  • Ian B

    not the alex above, are you saying that those Marxists who claim that western capitalism only sustains itself by exploiting poor foreigners is correct then?

  • Ian B

    *are correct…

  • Kevin B

    In order to maximise the economic and political benefits of leaving the EU, I reckon we should go the whole hog and join the USA as the 51st state.

    Better yet, join as the 51st, 52nd, 53rd and 54th states.

    The EU would be quite spiteful towards a go-it-alone UK, but as a US state, they would have to be a bit more respectful, (at least outwardly).

    Politically, a state government in England would have more power than the current set-up and us voters would not only be able to vote for our state senator and governor, but for our Federal senators and the President as well. (Unlike now, where we have no input into who rules us from Brussels.)

    We wouldn’t have as many ‘rights’ as we might have under the Lisbon treaty, but those rights we do get would have less of the small print that EU rights have. (You know, where it says “The State can take away these rights for any or all of the following catch all reasons”.)

    Let’s face it, our only chance of winning the right to defend ourselves from the bad guys is through SCOTUS.

    Economically we would have access to some major capital markets, (though the battle between Wall St and the City might be a bit fraught), and tradewise, the US access to China and the Pacific rim would be a big plus.

    I’m not sure what would be in it for the US, but our national guard isn’t too shabby. (Though with the trashing of the Scots, Welsh and Irish regiments the other new states might struggle for a while).

    There would be a few loose ends to tidy up, like the Royals, but I’m sure they could be disposed of. (The loose ends I mean. Not the Royals….)

    And the Guardianistas would get the chance to vote in the US elections. They’re always whinging about that. Of course the state of England might be a bit more conservative than they’d like.

    It might be better to wait for the outcome of the November election before putting this plan into effect, but all in all I reckon it’s a winner.

  • lucklucky

    The biggest problem is in Britain itself not in EU.

  • Laird

    You certainly have to give Kevin B credit for “outside the box” thinking. It’s an intersting idea. We do have one remote state already (Hawaii), but the distance from New York to London is about 900 miles more than the distance from Los Angeles to Honolulu. Still, these days that really isn’t much.

    But you’d all have to learn to spell properly.

  • Philippe HERMKENS

    I don’t know any UK politician who will be moderately in favor of freedom. NHS, education, social security, the level of taxation and civil liberties are not conduct from Brussels.

    To my knowledge, the actual Prime Minister is a control freak. His predecessor was in favor of a real nany state. And, David CAMERON is a very moderate center-right politician.

    Euroscepticism without explicitely claiming a libertarian or classical liberal policy is a non-brainer.

    But, I am a french-speaking Belgian living in Brussels.

  • Alice

    Grumpy Old Man has it right — there can be (and are) economic agreements without political union.

    But the interesting part is the OP’s speculation that the Broon man might do something like that. Old Gordie really seems to be in deep do-do, and desperate people sometimes do surprising things. A referendum on the EU might really shake things up in Blighty, and breathe life back into Gordon Brown’s dying prime ministership.

  • John K

    I can’t see any reason for the USA to welcome another 60 million disarmed, gun phobic wussies as citizens. I think we should have the common decency to sink into the mire without trying to drag the USA down with us.

  • Isn’t it just a matter of time before the EU suffers the same economic woes affecting the U. S. and the falling dollar?

    As a citizen of Texas, a country that asked to be treated as a state long ago, I strongly recommend the UK keep the right to succeed.

    Tell you what, We will trade New York and California to the EU for the whole UK.

    Thoughts?

  • Laird

    Kelly H, I second your trade offer.

    But as to your caveat about the UK keeping the “right to seceed”, several states explicitly did that in their resolutions ratifying the Constitution, and look how far it got them (c.f. 1861-64). Didn’t Texas do so too? Unfortunately, the “compact theory” of the Constitution has been rendered inoperative by military force; once you’re in there’s no turning back.

    In fact, as I recall Texas also explicitly retained the right to divide itself into several (4?) separate states. That might be a strategy worth pursuing, as you would quadruple your Senate representation (and greatly increase your Electoral College votes) overnight.

    No charge for the advice.

  • Would leaving the EU fix the British economy?

    In the short term no, in the long term it cannot be fixed without leaving the EU. We desparately need less regulation and even if the provincial leadership in Westminster wanted to deregulate however fast they cut the red tape they are allowed to more will be piling in from Brussels.

  • Sunfish

    As much as I would love to welcome Kevin B to America, I have to agree with John K. The folks who elected New Labor DO NOT WANT.

    On the other hand, I suppose we could tell the good guys “Welcome to America. Please be selective about who you bring with you.” Except it can’t help but be just a little bit insulting when we tell all of the sensible people in England to ditch their home country and immigrate.

    Even in the darkest days of 1997, I would have been a little cranky at being told to ditch the USA. I’d say the same about the Carter years, except I was still learning to walk upright when they ended and my parents to this day thought he was a good President.

    As for ditching the EU: YES YES YES. England invented (only about 800 years ago) all that is good and right[1] about the proper relationship between individual and state. There’s no good reason for allowing Brussels to ruin that. What’s the worst Brussels can do: ban importation of the UK’s share of North Sea oil? To steal a line from Perry: “Your word of the day is ‘fungible.’” We’d buy it and I’d rather buy from friends than from Saudis.

    [1] Maybe not EVERYTHING, but the Magna Carta sure started the ball rolling.

  • Paul Marks

    Leaving the E.U. would do a bit of good even if there were no change in the beliefs of the British political leaders.

    Because it would mean no more tax money going to the E.U. – and no new E.U. inspired regulations (some 80% of new regulations are the result of E.U. orders).

    As for E.U. punishments – I agree that the fact that companies in E.U. countries export a lot more stuff to people in Britain than companies in Britain export to people in E.U. countries, means that “punishments” would not happen.

  • Ian B

    What is all this craziness about America? It’s been state socialist since the 1930s. It has the Patriot Act. There’s a good chance it’s going to nationalise healthcare if Obama gets the win. It just nationalised its big government-sponsored mortgage lenders. It’s no different to us, except for the tattered remains of a noble constitution. Look at the demolition of the intent of the interstate commerce clause, for instance. And it has just a many socialists as we do, and it’s american intellectuals and technocrats who are the source of much which assails us, from drugs laws and passive smoking to prohibitionism to aggressive greenism to socialist ideas like “stakeholder” and “libertarian paternalism” to the big socialism/nannyism promoting charitable foundations pouring in the dollars. So can we stop comparing rugged pioneer 19th century America with modern day Europe? The same problems affect the entire western world.

  • Unlikely, but amusing to think about.

    You could have an effect immediately by slashing VAT by at least the savings you will get from not contributing to the EU budget. Longer-term savings would require going into the legal and regulatory codes and stripping out all the things the EU has mandated over the years.

    Trade should be handled by immediately executing a trade and residence agreement with the EU. Europe is a net exporter to the UK, so why shouldn’t they? They can hardly afford the unemployment hit that would come from disrupting current trade patterns. Similarly, Brits living in the EU tend to be retirees spending money earned in the UK; Continentals are mostly job-seekers keeping themselves out of home labor markets. Again, it’s in their domestic political interests to keep the current situation.

    Oh yeah, on the day the withdrawal goes into effect, you can expel all the EU-nation criminals remaining in the UK after their sentences have finished. Dump them off in Calais and say “Here. You keep them.”

    Statehood for the British Isles nations is more problematic. Most of the benefit could be got by the UK joining NAFTA, which would take about two months to finalize. And maybe enlarging NORAD into a general US-UK-Canada alliance and command. Kind of like NATO without the nations that don’t actually fight.

    But statehood would be amusing. NHS would be much more solvent — it could become a Medicare provider, so that it would be reimbursed by the Federal government for any care for anybody over 65, or permanently disabled. It would get Medicaid reimbusement for care provided to poor people. And military veterans would get VA hospitals for free treatment. Of course, NHS would have to pass a Health Care Finance Administration independent audit, which would be very interesting.

    OTOH, the London finance markets would absolutely refuse to be brought under Sarbanes-Oxley. Better stick with NAFTA and NORAD.

  • Vercingetorix

    Ian, I’d keep the Democrats and wash their feet with my toothbrush before I’d take in European politicians, including New Labor and T. Blair (who I personally like).

    There is a reason that Democrats look to Europe for inspiration for their latest psychopathic social scheme. You guys are much farther along the road to hell.

    No argument against American problems and socialism. But calling the US a socialist country would be like calling Europe Communist. Some truth, but much more exaggeration.

  • guy herbert

    My answer, to both questions, which are different, is no. Anti-EU moonbats are as irrational in their expectations as any other sort, and tend to see every problem as its fault. The problem with the EU is not the ambition of political union or the that it brings foreign ideas to a afflict the natural vigour Anglo-Saxon polity. It is that it is the biggest, best designed conduit of the prevailing statist culture, a means to bring the stifling foam of bureaucracy to every corner of our lives bypassing the few constraints in the parliamentary system. Don’t think for a moment that Whitehall’s culture of control would suddenly vanish if we were out of the EU. Most of the EU’s mechanisms were invented in SW1.

    Of course leaving the EU is unlikely. And extirpating native governmentalism is even less so. But even were it to happen, no way is it sufficient in order to create a diplomatic revolution for freedom, even just economic freedom. The international system is built round the cartel of states and the policy dominance of the States. We’d also need to repudiate the OECD and stop doing whatever Uncle Sam says just because Uncle Sam says it.

    In the short term it might even be damaging to quit, as one should expect the EU to indulge in economic sanctions and try to shut down British trade with the continent, in order to “prove” even at a cost to its own citizens and businesses that withdrawal was a bad thing, and discourage others from trying.

    The idea that withdrawal would bring foreign investment in itself is just mad. Large corporate investment is driven by two things – productivity and access to markets. Withdrawal from the EU would make no immediate difference to productivity, and there are reasonas to suppose that in the short-term it would reduce the access to EU markets from Britain. If anything foreign investment might be expected to fall in the very short term.

    If leaving the EU were part of a policy of liberalisation and unilaterally opening up to the world, then it would probably return, but that would be a consequence of what we do next, and not of some kind of world-wide conception that Britain is inherently best.

  • guy herbert

    In any case Britain’s present economic woes have almost nothing to do with EU activity, trade or private investment. They are the interaction of some international financial movements with the legacy of the crazy expansion of government spending under the prudent Mr Brown’s tenure at the Treasury.

  • I have to agree with Guy, leaving, in and of itself, would achieve little, although I am not as pessimistic as he is. If we left that would by itself offer a fillip to British views on freedom.

    However, I do believe that there needs to be a long term, multi generational, change in attitudes, and it needs to start by taking back education.

    Remove the schools from producer capture. In short – abolish state mandated curricula and introduce vouchers for schools. Let schools choose what and how they teach, and allow parents the choose the schools they prefer. Introducing competition will push up quality, and, in years to come, produce a better educated and more discerning electorate. They will then force change, in, I hope, a direction I would approve of.

    Get the government out of the classroom, and a whole lot of good will flow.

  • Ray

    YES, YES, lets get out.
    On membership alone we would be £4billion a year better off and that’s before CAP savings etc:

    Just remember
    “THAT ALL CHANGE BRINGS INCONVENIENCE, EVEN FROM WORSE TO BETTER”

  • Paul Marks

    As I have already stated, leaving the E.U. would do a “bit” of good – even if there was no change whatever in the philosophy of the British government.

    This is because tax money would no longer be going to the E.U., and the regulations that the E.U. demands, on top of the ones the British government itself thinks up, would no longer be comming in.

    Guy Herbert has in no way refuted these points.

  • Clayton

    You people make me laugh

    First of all, Paul Marks, – Guy Herbert has most definitely refuted your vague points. Your claiming otherwise changes nothing. The only reasons I can think of for you denying he has is one of two things. You are so insecure about your weak stance or because Guy is so illiterate you simply could not understand what he was trying to say. People like guy are always good for a laugh. His type are everwhere and they are known as psuedo-intellects. You can spot them by their excessive use of “big words”, in the case generally incorrectly, and by their absolute perspective

    People simple fact – Britian’s economy would be completely crushed within 6 months if the UK left the EU and the truth is it would probably never recover. Most of you seriously need to study economics before you start commenting on what the government should do regarding the EU. Your opinion and picking out what little supporting evidence you can think of does not make it a good idea.

    The current UK states joining the US? Funny but equally silly. First and foremost the US would not take UK. This country has absolutely nothing to offer them but the bunch of BS you are reading here.

    What the UK should do is stop letting its citizens run their mouths and make them start taking some responsibility for their own actions. Drop Dole benefits, force them to take ID cards, drop NHS benefits for the unemployed, actually punish criminals like the good old US of A does and start collect centralized records. When they were done with that they could start teaching their citizens that England, Scotland, Wales and Ireland are NOT countries and have not been for hundreds of years.