This article was first published on Huffington Post.
The argument advanced by leading Remain campaigners during the referendum was if the UK left the EU a trade war would ensue causing the loss of 3 million jobs. With a month having passed already since the vote to Leave the EU in the referendum, these prophecies of doom have failed to materialise. Trade wars and job losses are not in the economic interests of the UK or the EU. Worse still for Europhiles, a punishment policy would destroy the European Project, and as a consequence destroy their chance of creating a European federation.
The 3 million jobs claim was incorrect right from the beginning. This claim first appeared in a report by NIESER which argued 3 million jobs are linked to trading with EU Member States. The use of this statistic was manipulated to make people believe 3 million jobs would be lost if the UK left the EU. To reach this figure, the UK would not trade at all with any of the EU Member States following Brexit. To put this in context, it is premised upon, for example, no BMWs or champagne etc. being sold in the UK after Brexit. In fact, to reach this figure you would have to believe France would trade more with Zimbabwe than the UK outside the EU, a risible argument. The misuse of the NIESER report has been described as ‘pure Goebbels’ by Martin Weale – the director of NIESER!
However, if one used the same flawed analysis in relation to jobs in the EU which depend on UK trade, it would result in 5.5 million EU jobs being lost! In reality these EU and UK jobs are safe because trade will continue once Brexit occurs.
Trade will carry on because the UK is such an important market to the EU. To refuse to trade would be the most extraordinary act of spite, and would be a case of cutting off their nose in order to spite their face. The UK is the EU’s largest export market in goods, making up 16% of the total, and the UK only has a trade surplus in goods with Ireland, Luxembourg and Malta. In relation to goods and services, the UK has a trade deficit of £67.8 billion with the EU, and a trade surplus of £31.1 billion with the rest of the world.
The UK also has global economic influence through membership of the G7 and the G20. Our economy is the 5th largest in the world and the 2nd largest in the EU, after Germany. Most EU countries are not even close to the economic might of the UK. We have heard a great deal from EU leaders about their attempts to achieve comprehensive trade deals with large economies, surely the UK – whose economic policies are currently harmonised with the EU’s – presents an excellent opportunity for EU leaders to celebrate success.
There is a deep understanding of this in Germany, where senior politicians – right up to Merkel herself – are calling for a conciliatory tone in Brexit negotiations. Merkel understands the disastrous impact on the EU’s economy if the EU and the UK don’t forge close economic ties.
The EU’s economic influence around the world is falling too, and this is even before Brexit is finalized and which will increase the decline. The EU’s share of world GDP has fallen from 30% in 1980 to 16.5% in 2016. This is due to the over regulatory model of the single market, which creates standards which are so onerous only large companies with sprawling compliance departments can cope with the enormous amount of rules. As a result, smaller companies without these departments are denied a place in the market. Clearly the enormous amount of lobbying by multinational corporations is paying off, and therefore no surprise they supported the Remain campaign. Due to this lack of competition, some large companies have become inefficient, resulting in them being overtaken by companies from the rest of the world.
Since the financial crash of 2008 the EU has been in the grips of a crisis of its own making – the Eurozone crisis – which has still not gone away. Many of the Eurozone countries’ banks are heavily laden with debt, with some describing the Italian banking crisis as a greater threat than the perceived risks of Brexit on the continent. If the Eurozone was plunged back into another financial mess, then this would surely be the end of the Euro. The Euro has exhausted all its political capital with the previous bailouts, and another bust after only a vague trace of a boom would cause the Euro to run out of all economic capital too. Once this occurs the Euro cheque will be marked ‘insufficient funds’ never to be deposited again!
A Brexit punishment – contrary to popular belief – would not dissuade other countries from leaving the EU, but would encourage others to jump ship, specifically Ireland. Ireland’s economy is heavily dependent on trade with the UK, as it imports £26.9 billion and exports £17.1 billion worth of goods and services to the UK. The reason for this enormous amount of trade is political, historical and geographical, with very little room to trade elsewhere. Consequently, EU trade barriers with the UK would increase the cost of their imports and exports to the UK, forcing Irish companies to sacrifice profits, downsize, relocate or go out of business. The sacrifice of Ireland’s trade relationship with the UK would be another boost for an already Eurosceptic nation after the disgraceful deception which occurred during the ratification of the Lisbon Treaty.
It could be argued the EU isn’t even allowed to dish out punishments on the basis of Brexit under its own law – Article 3(5) of the Treaty on European Union states the EU shall contribute to free and fair trade. To refuse to strike beneficial free trade deals because a country left the European Union would surely fall foul of this provision.
An EU which fails to create trade deals of mutual benefit to all parties involved, will not strengthen the EU, but weaken it. The economic argument was the only argument which the Remain campaign had during the UK’s EU referendum. Erecting trade barriers would reduce this perceived benefit even further. If the EU wishes to survive, it must scrap the Euro and restore national governments’ vetoes. This would facilitate a genuine intergovernmental union and not a European superstate. A failure to heed these warnings will reduce confidence in this bloc even further and lead to its destruction. However, no tears will be shed at Get Britain Out HQ if the undemocratic EU does collapse!