Understanding Brexit 3.

Whilst all the Brits are arguing about Brexit, it seems that there are only two sides of the conflict, it all boils down to ‘stay’ or ‘leave’.  Not many people are asking;  What is it we are staying with, or leaving?  What are the aims of the EU and what does the future hold for the EU? What are the lessons to learn from our actual experience?

We all agree that the EU has evolved from the EEC.   A trading alliance has evolved into a political federated group of nations.

The aims of a federal Europe are peace and prosperity for its member states. Its history has certainly delivered a relatively peaceful period in mainland Europe, though conflicts have continued on the European perimeters, particularly on the Eastern fringes.  The EU has survived a number of issues but has shown itself hesitant and unsure about its collective defence.  This has been exacerbated by the eccentric USA leadership and the NATO alliance.

The Eurozone quarterly economic growth was confirmed at 0.2 percent in the second quarter of 2019, slowing from a 0.4 percent expansion in the previous period. UK performance is slightly ahead at 0.3 percent. Germany’s gross domestic product shrank while Italy’s economy stagnated, Spain’s GDP growth slowed and the French economy expanded at the same pace as in the first quarter.

Most countries in the EU were meant to pass certain minimum standards before joining the Euro currency. Sadly, political enthusiasm got the better of the establishment with the consequent disaster for the PIGS.  Looking forward Italy for example has 130% of GDP as debt, Greece at 182%,Portugal 123% Belgium 105%,  this is not sustainable and it is hard to see how the European Central Bank will keep the Euro from an early crash.

The UK pays a net figure into the EU each year.  This figure is £9bn.

This made up of an allocated budget contribution of £17Bn less a rebate of $4bn plus and inward grant to UK’s least prosperous areas of $4bn, (such as Wales and the Cornwall).

The UK’s budget net contribution is about £9bn, but this varies year on year and is forecast to grow.

Boris Johnsons original red bus claim that £350mn a week could be spent on the NHS was an exaggeration of 100% , the real figure we pay to the EU net per week is closer to half that amount.

This 9bn per annum is by no means a reflection of the costs or benefits of being a member of the EU.

We can be pretty sure about how much cash we put in, but it’s difficult to be sure about how much, if anything, comes back in economic benefits.

So overall we paid in £8.9 billion more than we got back. 

The Treasury figures show payments the EU makes directly to the private sector, such as research grants. In 2016, these were worth an estimated £2.3 billion, so including them could reduce our net contribution further still.

The money we get back will be spent on things the government may or may not choose to fund upon leaving the EU. It’s not enough to look at the net contribution in isolation because what we get back isn’t fully under our control.

A membership fee isn’t the same as the total economic cost or benefit of EU membership.

Being in the EU costs money but does it also create trade, jobs and investment that are worth more?

We can be pretty sure about how much cash we put in, but it’s difficult to be sure about how much, if anything, comes back in economic benefits.

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