The price of being in the EU is a price worth paying

Douglas Carswell recently wrote a short article entitled: “The price of being in the EU – can we afford it?” In it, he included a table of spending, which calculated expenditure on police pay, armed forces pay, and spending on special needs education (among other things) against the UK’s contribution to the EU budget. As well as the £9.2bn direct contribution, there are “all manner of hidden costs” such as “red tape, external tariffs, bad governance”. The “Eurosystem” demands more of “our money”, whereas spending in police pay, armed forces, and education has “largely” been frozen. Basically, Carswell asks: “Why don’t we just quit the EU?”

Carswell is stoking a fire which hardly needs encouragement.

Even many Tories have been alarmed at how much support UKIP and anti-EU policy have gained in recent opinion months. A Guardian/ICM poll found that those considering voting the UK out of the EU if the referendum was held tomorrow numbered 51%. Of that 51%, 36% would “definitely vote to leave” and 15% would “probably vote to leave”. The same poll recorded support for UKIP at 7% for the second month in a row – a record high documented by that poll. Despite the flawed nature of opinion polls (ultimately there is no referendum tomorrow) there has in recent months been a general hardening of attitudes towards Europe in a year when the European Union won the Nobel Peace Prize for creating lasting peace on the continent.

So, what would happen if the UK left the EU? The short term gains which the blinkered ‘UK out’ voters so jealously desire would soon be dwarfed by the medium and long term losses. Firstly, the UK would regain some sovereignty which is vital to Eurosceptics for the image of this nation as a world power. If the UK left the EU now, the nation would save around £8bn in net budget contributions. Furthermore, without conforming to the common agricultural policy its food could become cheaper. Labour directives, which regulate European labour law in order to make workers’ contracts transparent, could also be avoided if the UK withdrew from the single market. The City would not be constrained by European finance rules or a financial-transaction tax.

Then again, financial-transaction tax would, if implemented, charge 0.1% against the exchange of shares and bonds and 0.01% across derivative contracts. According to the European Commission this could raise €57bn each year, of which €10bn (£8.4bn) would go to the UK, which hosts Europe’s biggest financial centre. The interests of the City lie very much within the EU. Furthermore, leaving the EU would damage trade with a market that accounts for over half of the UK’s exports. Car manufacturers such as Nissan are currently using the UK as a base for European operations. The Nissan factory near Sunderland employs 5,700 working-class people who are highly trained and use advanced technology in their car production. Some 500,000 cars are produced per year, and production is expanding. Investments like these have this year resulted in the UK exporting more cars than it imported for the first time since 1976. Leaving the EU would rob the UK of its appeal as the gateway to Europe across a number of industries, and manufacturers would slowly fall away, as would large parts of the finance industry.

Furthermore, the UK would have to rely on its membership of the World Trade Organisation to re-negotiate many trade agreements with individual members states, which as well as containing unpredictable political and economic risks, would see the UK negotiate from a much weaker position than if it were a member of the EU. A lack of preferential trade agreements with the EU would burden exporters in the UK with new tariffs. The UK would not be free of EU regulation (except perhaps concerning the labour market), instead it would be subject to it without the power to influence change. In consequence, the influence on the world stage (something the re-gained sovereignty would somehow bring in the eyes of UKIP) would be significantly diminished.

In sum, what the UK pays out in net contributions to the EU budget is more than matched by the access granted to free markets. Furthermore, much of the EU’s budget is dedicated to developing the markets in poorer member states, creating further opportunities for the UK to gain from free trade.

Rather than a clean break with Europe, one of the suggested routes is one which would lead to a settlement in which the UK was not a member of the EU, but could still freely trade with it. Perhaps this could involve the UK joining Norway in the European Economic Area. But in this scenario, the UK would be subject to EU regulations which it would be powerless to shape. The Open Europe think-tank explains that "Norway as an EEA member has to abide by EU regulations with regards to the single market such as product regulations as well as EU social and employment laws. This is a significant body of legislation over which Norway has no voting rights, although it does have some influence." The Eurosceptics that want the UK out as well as freedom of trade, would shudder at the thought of the country abiding by European law without the right to stamp its foot and wail about it, in the hope of concessions. Some say the UK could get a Switzerland-type deal, which allows the Swiss access to the single market without full EU integration. In this case the UK’s access to the single market would be dependent on the deal it could strike with the EU. However, the ‘Swiss option’ excludes the majority of services, including financial services, and is already regretted by the EU, which would hardly consider giving the UK – a bigger, more difficult customer – the same form of settlement.

What is proving damaging to the UK’s position in Europe is the willingness of politicians to use the issue as an opportunity to point-score over rival political parties. In October Labour MPs voted alongside anti-European Tories over the EU budget in order to supply the government with its first significant defeat. Picking sides in order to take a swipe at the government at the expense of voting in the interests of the UK is no way to solve the problem. Furthermore, bolstering the anti-Europeans may force the Conservative Party’s hand in offering a ‘yes’ or ‘no’ referendum in terms of EU membership. If that happened, the Labour Party would be forced to promise the same. This is a dangerous predicament. What the country needs is time, time for the benefits of EU membership and the consequences of leaving to become common knowledge. Playing for time on the issue of monetary union did, after all, prevent the UK from joining the Euro.

What is required is a separation of vague ideas about British pride and sovereignty from economic and political consequences. Margaret Thatcher was known as a stern defender of UK privileges. But she recognised that in certain areas European integration was prudent. On meeting her, Carswell said she “was a great leader”, and “knew how to get this country back on its feet”, and that it “is a real honour to listen to her”. But Thatcher did not campaign for the UK to leave Europe. She balanced her support for global economic liberalism with support for the nation state. Although I disagree with this stance, and hold that there is no such thing as a free trade area without political commitments, those who feel Brussels has too much power must call for a modification of the UK’s membership within the EU in a constructive way, rather than whip up hysteria over Europe as some kind of oppressor, and lumping the UK with a moody teenager attitude as some kind of crude bargaining tool. Angela Merkel recently, and diplomatically, stated that “I want to have a strong UK in the EU”, and warned that the UK would struggle in the world if it left. But if this talk of an exit from Europe is used by Cameron as a way of threatening the EU to negotiate with more consideration of British interests, European leaders will soon grow tired and demand a clear answer: does the UK want to be part of the Union or not? Both economically and politically, the answer should be ‘yes’.

References to ‘British’ pride, and this ‘country’ which should be ruled from London is paralleled in the idiom of Scottish independence. The language of Scottish politics is designed to win votes based on intangible concepts. According to Alex Salmond, Scotland will stand “taller in the world”, rejoin “the family of nations”, and “stand on our own two feet” after a vote taking place on the anniversary of Bannockburn. These apparent advantages of Scottish independence from the UK are hard to imagine in real terms. Would a “taller” Scotland be a good thing? What is a “taller” Scotland, in any case? It is similarly difficult to grasp how the UK would take a more privileged 'seat' around something ambiguous like the 'table of nations' as an island isolated from Europe.