How Joining the EU led to a Big Decline in UK Industry

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John Redwood’s latest blog deals with how the EU has rendered British industry uncompetitive and how leaving the EU could once again turn us into a global trading nation.

There are also crucial issues to understand about how the asymmetric single market did damage to Uk industry. When we joined the EEC, now the EU, in 1973, more barriers to trade had been pulled down in manufacturing than in services. EU rules were often such that UK industry was badly damaged by the shock of joining and the continued shock of staying in as the rules increased and tightened.

When the UK joined the EU we had a 45 million tonnes a year steel industry. Today we are battling to save an 11 million tonnes industry.

When we joined the EU we had a 400,000 tonnes a year aluminium industry. Today we have just 43,000 tonnes of capacity left.

When we joined the EU we had 20 million tonnes of cement capacity. Today we have 12 million tonnes.

Just before we joined the EEC in 1971 we had a 1 million tonnes a year fishing industry. Today we have 600,000 tonnes.

The October 2013 government “Future of Manufacturing” Report shows that between 1951 and 1973 metals output rose 3% a year. Since joining the EEC/EU it has declined by more than 6%

Between 1951 and 1973 food and drink output rose by 5.6% per year. Since joining the EEC/EU it has fallen by 1% a year.

Between 1951 and 1973 textiles output expanded at 2.6% a year. Since joining the EEC/EU it has fallen by more than 6% a year.

Whilst it may not be fair to blame all this decline on membership of the EU, as there are other factors, it nonetheless shows categorically that joining the EU and helping create the so called single market has not helped us grow and has not saved many of our industries from decline.

In some cases EU policies are the main driver of the disaster. The Common Fishing Policy is clearly the main reason for the dreadful decline of our fishing industry, as many foreign vessels were licenced to take our fish. Our energy intensive businesses were often damaged by the high energy prices required by the EU common energy policy.

The EU has prevented UK subsidy of industry under its state aids rules, but has often provided subsidised loans and grants to businesses to set up elsewhere in the EU. The UK has seen a spate of factory closures balanced by new and expanded facilities in poorer EU countries. The UK lost van production to Turkey, car capacity to Slovakia, chocolate to Poland, domestic appliances to the Netherlands and the Czech Republic and metal containers to Poland amongst others in recent years. In various cases there was an EU grant or loan involved in the new capacity.

Looking at our huge balance of payments deficit today in goods with the rest of the EU, we can see the long term impact of the EU’s damage to our manufacturing capacity.

This April’s balance of payments figures show us in heavy deficit in machinery, vehicles, electrical machinery, mineral fuels, plastics, iron and steel, wood and clothing. Last year our total goods trade deficit hit £85 billion with the rest of the EU. Between 2008 and 2015 our exports grew at 5% with the rest of the world, whilst falling with the EU.

Perhaps remain might like to answer the following questions:

Why have we suffered industrial decline and closures with production shifting elsewhere in Europe since joining the EEC?

Why do trade in surplus with the rest of the world but have such a huge deficit with the EU?

Why have we ended up importing fish, electricity, steel and much else when we used to self sufficient?

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